Minimum Wage Increase Boosts Statewide Payroll Just 0.1 Percent

Workers in the state’s lowest paying jobs will receive up to a 10 percent pay increase Friday when the state and federal minimum wages increase to $7.25 an hour. But the 70-cent-an-hour boost will only increase the state’s total payroll by a tenth of a percentage point.

An Idaho Department of Labor analysis indicates that at the most the third phase of the minimum wage increase will boost the paychecks of workers in nearly 40,000 jobs by just under $25 million a year. The state’s total payroll was over $22.1 billion for 650,000 jobs in 2008.

Food service, hotels and motels, retail trade and clerical workers make up more than half of the people whose wages will be going up. While the maximum increase is 70 cents an hour, the average increase will be about 35 cents an hour.

The increase was authorized in 2007 when the Legislature tied Idaho’s minimum wage to the federal minimum wage. That same year, Congress voted to increase the minimum wage from $5.15 an hour to $7.25 an hour in three stages of 70 cents each. The minimum wage has been $6.55 an hour for the past year.

While the increase affects 6.1 percent of the jobs in Idaho, they are unevenly distributed around the state, and that makes the payroll impact different in the various regions of Idaho.

The biggest dollar impact is about $9 million for employers in southwestern Idaho, where 44 percent of the state’s nonfarm jobs are located. But that is just eight-hundredths of a percentage point of the region’s total payroll. That  appears to reflect the stiff competition among employers in lower wage industries in 2006 and early 2007 when the economic expansion opened up better paying jobs for many, greatly reducing the labor pool and forcing wage increases to attract qualified workers.

The smallest impact is north of the Salmon River where Panhandle employers will spend about $3 million more on wages with employers in north central Idaho spending about $1.6 million more. That works out to just over one tenth of a percentage point of the total payrolls in each region and indicates how many employers – especially those close to the Washington border – have had to boost pay to keep workers from crossing the state line to earn Washington’s $8.55 minimum wage, the nation’s highest.

Businesses in south central and eastern Idaho will increase their payrolls by 13 hundredths of a percentage point – over $3 million in south central Idaho and more than $3.5 million in the eastern part of the state.

The biggest impact – a quarter of a percentage point – will be in southeastern Idaho, where payrolls will increase more than $4 million.

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 to reach the new minimum or employers must make up the difference.

The new labor law posters employers are required to display - including the one on minimum wage - are available free of charge from the Idaho Department of Labor and can be downloaded from its Web site at  labor.idaho.gov.