State and federal minimum wages increase another 70 cents an hour on July 24, providing a mid-summer boost of up to 12 percent in the paychecks of tens of thousands of low-paid Idaho workers.
The increase from $5.85 to $6.55 an hour marks the second phase of a three-year plan approved by Congress in 2007 to ultimately set the national minimum wage at $7.25 an hour. The first step from $5.15 to $5.85 an hour occurred last July. The third and final increase will occur on July 24, 2009.
While states are not required to adhere to the federal minimum wage, the Legislature voted in 2007 to make Idaho’s basic minimum wage identical to the federal minimum.
The minimum wage for Idaho employees in jobs where they earn tips – bartenders, waiters, waitresses, for example – remains unchanged at $3.35 an hour. But employers must ensure that tips provide another $3.20 an hour so that tips combined with wages equal at least the new minimum. If the combination falls short, the employer is required to make up the difference.
Nearly 20,000 workers saw their paychecks rise last year when the minimum wage was increased for the first time in a decade. Over 40 percent of those jobs were in leisure and hospitality, which includes restaurants, hotels and recreational businesses. Another 17 percent were in some segment of retailing.
A 2006 analysis by the Idaho Department of Labor estimated that one of every eight jobs in the state paid less than $7.25 an hour. Idaho’s strong employment picture in 2006 resulted in average wages rising nearly 6 percent across the state, more than two percentage points ahead of inflation to provide a real gain in income for Idaho workers. In 2007, however, as the economy began slowing, the average wage increase was less than 3 percent, essentially just matching the rate of inflation.
Idaho currently has about 655,000 nonfarm jobs and another 50,000 agricultural jobs during the summer, which are also covered by the minimum wage law.
July’s minimum wage increase is likely to have the least impact in the northern part of the state where employers in the border cities of Moscow, Lewiston and metropolitan Coeur d’Alene have had to boost wages well over the minimum to compete for qualified workers with businesses in Washington, where the minimum wage is $8.07 an hour. Oregon’s minimum is $7.95 an hour.