Knowing wage and salary trends is important to keep your business competitive and to retain employees. Did you know the US Federal minimum wage increased? Since 1997, the US Federal minimum wage has been $5.15 per hour. That is about to change. Effective July 24, 2007, the US minimum wage will increase from $5.15 to $5.85, or approximately 14 percent. Additional increases will occur in July 2008 (to $6.55) and July 2009 (to $7.25) resulting in a total wage increase of 27 percent.
The increased minimum wage only directly affects employers and employees in states with minimum wages under the Federal rate. The 22 states with minimum wages lower than the new rate are: Alabama, Georgia, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Mississippi, Nebraska, New Hampshire, New Mexico, North Dakota, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, West Virginia, and Wyoming. The Economic Policy Institute estimates these changes will benefit 15 million workers, 10 percent of the entire US workforce, either directly or indirectly. Approximately 6 million minimum-wage earners will be directly affected and 9.4 million workers earning within a few dollars of the new minimum wage will be indirectly affected by receiving a small raise to preserve the existing company salary structure. This insures that new minimum wage hires do not earn approximately the same amount as current employees.
Although most printing industry positions earn more than minimum wage, your business could still be affected. Consider employees of your suppliers, customers, and businesses periphery to you, like the cashier at the office supply store. CNN Money notes that the increase will likely impact large retailers like Walmart, Target, and Lowe’s who employ many minimum-wage earners.
Will the changes impact your businesses competitiveness? Probably not. Given the historical data, the effect on businesses, even small businesses in the 22 states with minimum wages lower than the new rate, will likely be minor. The number of small businesses in the United States and the number of small business employees increased from 1997 to 2003, the years after the last minimum-wage hike. In addition, most states have minimum wages higher than the Federal rate and businesses there are still competitive, both within the United States and abroad. In fact, the United States Federal minimum wage is lower than most developed countries such as Ireland, United Kingdom, Netherlands, and Australia which have minimum wage rates of $11.69 per hour, $11.22 per hour, $10.43 per hour, and $10.50 per hour, respectively.
How will the changes impact employee retention? Higher wages alone do not guarantee employee satisfaction, loyalty, or quality of work, but offering wages much lower than other employers in your area might cause them to look elsewhere. To know if the wages and salaries of your employees are competitive in your area, take our Wage and Salary survey. Participants receive a free copy of the full report to help evaluate their wage and salary competitiveness and make management decisions.
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