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Indexing Minimum Wage to Inflation Critical for Low-Income Working Families

Washington State minimum wage workers got a raise January 1st to $8.55 per hour -- now the highest minimum wage in the country.   Like nine other states, Washington automatically increases its minimum wage each year at the rate of inflation to make sure families don't face a de facto pay cut as rising costs eat into family budgets.  Because the federal minimum wage is not indexed to inflation in this way, we have seen a decline in its value from $9.34 in inflation-adjusted dollars down to just $6.55 per hour this past year.  This trend highlights why state efforts to index the minimum wage to keep up with inflation are so critical.

States Still Leading Feds on Minimum Wage

With food and gas prices rising rapidly, low-wage workers can at least welcome an increase in the federal minium wage to $6.55 per hour scheduled to go into effect on July 24th.  Even better, a number of states will also be increasing their minimum wage rates even higher than the federal rate:

Living Wage: Maryland Enacts First State Law in Nation

This week, Maryland became the first state to enact a "living wage" law, HB 430, requiring government contractors to pay their employees a decent wage, in the bill ranging from $8.50 an hour in rural areas to $11.30 an hour in areas of the state with higher costs of living.  Maryland follows the 120 local governments around the country that have required that public money go to companies that pay their workers above the poverty line.

A Case Study in the Minimum Wage

The New York Times looks at the neighboring towns of Lewiston, ID and Clarkston, WA. The neighboring cities lie just opposite eachother, separated by the state border. They're also separated by an economic border -- Idaho's minimum wage is $5.15. Washington's is $7.93. When Washington embraced its higher minimum wage, some business owners cried bloody murder.

CA: A Living Wage for Airport Hotel Workers

This week, Los Angeles Mayor Antonio Villaraigosa approved a new city law requiring hotels near the LAX airport to pay the same living wage as those companies receiving government contracts: $9.39 an hour if the hotels provide health insurance or $10.64 an hour without benefits.

Chicago: Groundbreaking Retail Workers Living Wage Law Passes

By a vote of 35 to 14, the Chicago city council yesterday approved a new ordinance requiring large retailers in the city to phase in a living wage for their employees of $10 per hour plus $3 per hour in benefits-- the highest minimum wage established for any industry sector in the country. If signed by the mayor, the law would raise pay for tens of thousands of workers in retailers such as Wal-Mart, Target, Toys R Us, Lowe's and Home Depot. A broad coalition of organizations including ACORN, labor unions and church groups worked together for its passage.

MA: Minimum Wage Hike Moves Forward, Omits Cost-of-Living Adjustments

The Massachusetts House is likely to approve a hike in the minimum wage following passage of the bill in the Senate. The bill, which increases the minimum to $8.00, does not tie the minimum wage to inflation in order to address cost-of-living adjustments in the future. Governor Mitt Romney pledged in 2002 to support efforts to tie the minimum wage to changes in cost-of-living.

DC: Big Box Wage and Benefits Bill Introduced

Following Chicago's lead, DC Councilman Phill Mendelson has introduced a bill to require large retailers such as Wal-Mart and Costco to pay employees a living wage of $11 an hour plus health benefits worth at least $3 a hour. The bill also would give labor groups and the public access to public areas of a firm to communicate with employees about their rights. As we detailed in last week's Dispatch, a major committee and a majority of Chicago City Council members have endorsed a similar bill for that city.