Minimum wage could rise this year

Many states are considering an increase to required rate

At least 17 states recently raised the minimum wage or are considering doing so in 2012, the most in at least six years.

Republican presidential candidate Mitt Romney broke with GOP conservatives this week, renewing his call for automatic federal minimum wage increases to keep up with inflation.

President Obama has backed raising the U. S. basic wage from its current $ 7.25 an hour to $ 9.50 and indexing future automatic increases to inflation. Many economists cite a growing divide between rich and poor.

The federal minimum wage rate applies everywhere except in states that set higher minimum rates. Currently, 18 states have minimums higher than the federal rate and 23 have the same requirement. Some jobs, such as on small farms, are exempt from minimum wage rules.

Last month, the minimum wage automatically rose in eight states — Arizona, Colorado, Florida, Montana, Ohio, Oregon, Vermont and Washington— that index it to cost- of- living increases.

This week, bills were introduced to boost the minimum wage from $ 7.25 to $ 8.50 in New York and from $ 8.25 to $ 9.75 in Connecticut, indexing further increases to inflation. Seven other states— New Jersey, Delaware, Hawaii, Illinois, Massachusetts, California and Missouri — are also weighing basic wage increases.

“People in California are having a hard time keeping up with inflation and paying for basic living expenses,” says Assemblyman Luis Alejo, who introduced California’s bill.

Paul Sonn of the National Employment Law Project says the federal minimum should be raised to $ 10 to make up for the failure to keep pace with inflation in the 1970s. Since the recession began, he says, the inflation- adjusted salaries of low- wage workers have fallen 2.3%. “We really need to rebuild the middle class,” he says.

About 1.8 million of the USA’S 73 million hourly workers earned the federal minimum wage in 2010 — many in the retail, restaurant and hospitality sectors — but many more earning slightly more also would benefit from an increase to $ 10. Noting low- wage workers spend nearly all of their extra income, the Economic Policy Institute estimates such an increase would generate an extra $ 20 billion in economic output and 160,000 jobs.

Business groups oppose minimum- wage increases. When their costs go up, “they find ways to do more with less” and cut hiring, says Michael Saltsman of the Employment Policies Institute.