The Pew Charitable Trusts

For some employees, the New Year means new income. Five states will give the lowest-paid workers a raise come Jan. 1 when new minimum wage laws go into effect.

The turn of the calendar will bring minimum wage increases in Illinois (from $5.15 to $6.50 per hour), New York ($5.15 to $6.00), Oregon ($7.05 to $7.25), Vermont ($6.75 to $7.00) and Washington ($7.15 to $7.35). New York will be the latest addition to a group of 12 states where minimum wages surpass the federal level of $5.15.

Florida will soon become No. 14 and Nevada may become No. 15 voters in those two states approved constitutional amendments on Nov. 2 setting the minimum wage at $6.15 per hour but workers there won't benefit for awhile.

The effective date of Florida's increase, which was favored by 71 percent of voters, has not been specified by the state Legislature but will likely be within the next six months, according to Warren May, communications director at Florida's Agency for Workforce Innovation.

Once the increase takes effect, Florida will join Oregon and Washington in adjusting the minimum wage each year to cope with inflation, using data from the state's Consumer Price Index, May said.

But Nevada won't raise its minimum wage for at least two years. Since the increase involves a change to the state's constitution, the amendment must pass a second public vote in 2006, the Nevada Department of Business and Industry said.

The federal government last raised the minimum wage in 1997. Since then, a dozen states have taken the initiative and passed laws trumping the federal minimum.

Before Election Day, Alaska, California, Connecticut, Delaware, Hawaii, Illinois, Maine, Massachusetts, Oregon, Rhode Island, Vermont, Washington and the District of Columbia had minimum wages ranging from $5.50 to $7.16 per hour.

Minimum wage policy is a controversial topic that pits employers against workers and conservatives against progressives. Heated debates over its effect on the economy took place this year in states such as California, New York and Wisconsin.

In New York, the state Senate on Dec. 6 followed the General Assembly's lead and overrode Gov. George Pataki's (R) veto of a bill that would raise the minimum wage from $5.15 to $7.15 over the next two years. Labor unions and others cheered the move, but critics namely small business advocates said it would damage the state's already-fragile economy.

Mario Cilento, spokesman for the New York state AFL-CIO, said unions had pushed for the increase for two years. "The day after it was vetoed, the first order of business at our constitutional convention was to put forth a resolution to call for an override," he said. "It was a very public display of unity by the labor movement."

"We're pleased that both houses of the legislature showed that they understand the needs of the lowest-paid workers in this state," Cilento added.

Small-business advocates were less pleased. "We're real disappointed. They have added on a $3-billion tax on small business at a time when we can least afford that," said Mark Alesse, New York state director of the National Federation of Independent Business (NFIB), an advocacy group that opposes any increase in the minimum wage. "They acted as though the business side of the community had no merit whatsoever."

When the minimum wage goes up, small firms feel a bigger pinch than large ones, said Bruce D. Phillips, senior economist at the NFIB Research Foundation. He said his organization lobbied for an exemption that would have allowed small New York firms to increase their wages less dramatically. "That kind of increase will be a big problem," he said.

Wage levels take higher priority when a region, industry, season and local labor market conditions influence the number of workers in minimum-wage jobs, Phillips added.

"The minimum wage level means a lot more in rural areas or the restaurant industry than in New York City or Boston," he said. "It means more in Wyoming, Montana or Texas than in the blue states.'"

Though opponents say a higher minimum wage slows hiring and growth, it's not much of a pocketbook issue for budget-balancers. Most state government workers earn more than the minimum, so when lawmakers pass a higher wage floor, state balance sheets record little change. In Florida, Kansas, New Jersey, Oklahoma, Oregon, Virginia and Wisconsin, for instance, no salaried government employees earn the minimum wage.

In others, minimum wage hikes have a miniscule effect on state payrolls. A handful of summer office aides in Iowa and one Department of Education worker in Wyoming receive the minimum wage. About 1,000 student employees at public universities and a single Games & Parks worker earn $5.15 per hour in Nebraska. Montana employs eight workers at the minimum wage; Missouri has nine.

Lawmakers in at least 14 states considered minimum wage hikes this year, but proposals failed in Arizona, California, Iowa, Kansas, Kentucky, Louisiana, Massachusetts, New Hampshire, New Jersey, Oklahoma, South Dakota and Virginia, according to the National Conference of State Legislatures (NCSL).

Mississippi lawmakers rejected a bill that would have required state employers to keep their lowest wage at least 15 percent higher than the federal minimum, and attempts to peg the minimum wage to inflation failed in Connecticut, Hawaii and Minnesota, according to NCSL.

Wisconsin Gov. Jim Doyle (D) is likely to win approval of a higher minimum wage next year, according to the Economic Policy Institute, a think tank that receives funding from grants, corporations and labor unions. His proposal to raise the state's minimum to $6.50 was blocked by state Republicans in September but is likely to be reconsidered in 2005.

"(States) have to act individually to get it done because of the agenda of conservative Republicans in Congress and in the Bush administration," the AFL-CIO's Cilento said. "They aren't going to do it."

In California, Democratic lawmakers are trying to breathe new life into a wage increase Gov. Arnold Schwarzenegger (R) vetoed on Sept. 18.

Assemblywoman Sally J. Lieber (D-Mountain View), author of the original legislation, introduced a bill on Dec. 6 stating lawmakers' intent to raise the minimum wage.

"It's something that has to be brought up until we get an increase," she said. "We're talking about jobs that are part of the core economy. Even working multiple minimum wage jobs isn't enough to survive in California."

Lieber said California may take a page from Florida's book. "We saw that an initiative was successful; they increased and indexed [the minimum wage] and I'm very interested in both of those," she said.