Workers in nearly 40,000 of Idaho’s lowest paid jobs will see a pay increase later this month despite the tough economy the state and the rest of the nation are facing.
The final phase of a three-year program raising the minimum wage to $7.25 an hour takes effect July 24. The wage is currently $6.55 an hour.
It is the last of three increases approved by Congress in 2007 and ratified by the Idaho Legislature to bring the minimum wage from $5.15 an hour to $7.25. The wage had not been increased since 1997.
One of the most substantial increases in the minimum wage in history, even if implemented over three years, has combined with the dampening effect of the national recession to actually give minimum wage workers a boost in buying power for the first time in over a decade. When adjusted for inflation during the intervening years, the $5.15 an hour wage in 1997 is equal to $7.05 an hour in 2009, 20 cents less than the actual wage implemented on July 24.
In 2007, the minimum wage increased to $5.85, 67 cents lower than the inflation-adjusted 1997 wage. In 2008, it rose to $6.55 an hour, just 22 cents below the inflation-adjusted 1997 rate.
The two earlier increases affected fewer than 20,000 Idaho jobs each year, likely a reflection of the strong economy and the demand for workers that was pushing up wages overall as employers competed for the best talent.
That twice as many workers are benefitting from this year’s final increase suggests the impact the recession has had on wages as businesses look for ways to cut costs including economic concessions from workers. Idaho has about 650,000 nonfarm jobs.
Forty percent of the affected jobs are in food service and retail sales.
The minimum wage for Idaho employees in jobs where they earn tips — bartenders, waiters and waitresses, for example — remains unchanged at $3.35 an hour. But employers must ensure that tips provide another $3.90 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.
Communities along the Oregon and Washington borders are likely to feel the impact of this month’s wage increase the least since Oregon’s minimum wage is $8.40 an hour and Washington’s is $8.55.
The various labor law posters required to be displayed by employers including the one on minimum wage are available free of charge from the Idaho Department of Labor on its Web site at http://labor.idaho.gov.