The minimum wage of $7.25 an hour looks to be on the rise in many states in the country in 2012, with many officials pushing for a change in the federal standard that would automatically raise the basic wage rate based on inflation.
That’s a concern to many businesses, particularly small companies in the country that are barely getting by in the tough economy. Lawmakers, however, said a higher minimum wage will actually help businesses by attracting quality workers and lowering turnover.
The way the system works, the federal minimum wage is the law unless individual states decide to pass a higher wage. States can’t lower the federal minimum wage.
Seventeen states either raised the basic wage rate very recently or are looking to do so in 2012. There are currently 18 states with higher rates.
President Barack Obama, in fact, is in favor of increasing the federal rate to $9.50 an hour and tying future increases to inflation.
Eight states automatically raised minimum wage in January, thanks to laws that automatically paired the rate to increases in cost-of-living.
Officials in favor of increasing minimum wage say it’s vital for the vast number of workers who aren’t rich and don’t qualify for government subsidies.
“We really need to rebuild the middle class,” said Paul Sonn of the National Employment Law Project. He said a $10 an hour minimum wage is needed for workers who were not adjusted for inflation in the 1970s and have lost more than 2 percent of their salaries in the recession.
The Economic Policy Institute says increasing minimum wage helps the overall economy. That’s because low-wage workers tend to spend all of nearly any income boost they get.
Businesses are not on board with the arguments of supporters. Many companies can’t survive any increase in costs, said Michael Saltsman of the Employment Policies Institute, adding that additional costs for many businesses means owners “find ways to do more with less” and inevitably leads to reductions in hiring.