Lifting the wage floor

As of today, the federal minimum wage increases to $7.25 per hour, the final step in a three-step increase approved by Congress in 2007, after a decade when the minimum wage remained frozen at $5.15. Thirty-one states, including Oklahoma, will be affected by today’s increase, which lifts the wage from $6.55 per hour; the other 19 states already have a minimum wage of $7.25 or higher.

The Economic Policy Institute, a liberal economic think-tank, has provided a helpful fact sheet, as well as a more detailed issue brief, on the minimum wage increase. Among the hi-lites:

• An estimated 4.5 million workers (less than 4% of the workforce) will receive an increase in their hourly wage rate when the minimum wage is raised to $7.25 in 2009. Of these workers, 2.8 million workers currently earn less than $7.25 and will be directly affected by the increase. The additional 1.6 million workers earning slightly above the minimum, those we call indirectly affected, will also be likely to benefit from an increase due to “spillover effects.”  These spillover effects preserve the wage structure in a firm.

• Adults make up the largest share of workers who will benefit from a minimum wage increase: 76% of workers whose wages will be raised by a minimum wage increase to $7.25 in 2009 are adults (age 20 or older).

• Almost half (47%) of workers who will benefit from a minimum wage increase work full time and another third (34%) work between 20 and 34 hours per week.

A fierce battle (extensively summarized in the Wikipedia entry on the subject) continues to rage among economists as to whether or not increasing the minimum wage leads businesses to cut hours and lay off workers. Economic theory says that it should, but multiple studies have found no measurable negative effects on employment from previous minimum wage hikes. What seems more clear is that over time, the real wages (adjusted for inflation) of low-wage workers, who are most likely to be women, minorities, and single parents, have declined: according to EPI, the inflation-adjusted value of the minimum wage is 17 percent lower in 2009 than it was in 1968. Increasing the minimum wage can help narrow the gap between earnings and the amount it costs to get by, and, hopefully, get ahead for low-wage workers.  If our goal is to reward work and to allow hard-working individuals and families the chance to become economically self-sufficient, then the minimum wage increases of recent years are certainly positive steps.


Former Executive Director David Blatt joined OK Policy in 2008 and served as its Executive Director from 2010 to 2019. He previously served as Director of Public Policy for Community Action Project of Tulsa County and as a budget analyst for the Oklahoma State Senate. He has a Ph.D. in political science from Cornell University and a B.A. from the University of Alberta. David has been selected as Political Scientist of the Year by the Oklahoma Political Science Association, Local Social Justice Champion by the Dan Allen Center for Social Justice, and Public Citizen of the Year by the National Association of Social Workers.

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