updated: 6/22/2007 5:17:32 PM

Employers Must Prepare For Changes in Minimum Wage

Kate Shepherd, Inside INdiana Business

Both the federal and state minimum wage are set to increase in July and that will mean some changes for employers. Indiana Chamber of Commerce Vice President George Raymond says the federal minimum wage is set to see its first increase to $5.85 an hour on July 24. It will eventually rise to $7.25 by July 24, 2009.

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Source: Inside INdiana Business

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Raymond says the new state minimum wage law has an effective date of June 30. However, the new state law ties increases in Indiana's minimum wage to the federal minimum wage. Raymond says the state minimum wage will increase on the same dates that the federal minimum wage increases. Most Indiana employers are subject to the federal minimum wage. Raymond says there are about 35,000 to 40,000 employees in Indiana who fall under the state’s minimum wage.

Raymond says businesses are required to communicate the changes to their employees by displaying at least one updated labor law poster at each of their locations.

Source: Inside INdiana Business

Press Release

INDIANAPOLIS – As many as 36,000 Indiana workers on lower incomes will see increases in pay over the next two years, thanks to changes in state and federal minimum wage laws that take effect in July, according to State Rep. Joe Micon (D-West Lafayette).

Micon co-authored Public Law 165 (House Enrolled Act 1027), which ties increases in Indiana’s minimum wage to the federal minimum wage starting on July 1. Both wages are currently set at $5.15 per hour, but will increase to $7.25 an hour in three stages over the next two years, thanks to action taken by Congress in late May. The wage will increase to $5.85 per hour on July 24, 2007, then to $6.55 per hour in July 2008 and $7.25 per hour in July 2009.

“Indiana is one of more than 40 states that have minimum wage laws to cover those workers who are not covered by federal provisions,” Micon said. “Historically, the pattern has been for Congress to increase the federal wage, with the states following. Since the federal minimum wage has not been increased since 1997, many states reversed the usual pattern and chose to increase the state rate.

“There have been several efforts to increase Indiana’s minimum wage since the last increase nearly a decade ago, but they have all been rejected by claims that the increase will harm businesses and put people out of work,” he continued. “While most studies indicate that the minimum wage does not affect employment rates, legislators decided this year to reach a bipartisan compromise that ties the state and federal rate together.

“From this point on, any time the federal minimum wage goes up, our state minimum wage also increases by the same amount,” Micon said.

The federal minimum wage covers workers for those companies that are engaged in interstate commerce or generate more than $500,000 in sales each year. The state minimum wage covers workers in smaller businesses that are not engaged in interstate commerce or have less than $500,000 in sales per year. That designation would include employees in laundromats, car washes and mom and pop restaurants.

According to the Bureau of Labor Statistics, about 36,000 of Indiana’s 1.8 million hourly workers make less than $5.15 per hour. A 1998 report by the Congressional Research Service indicates that 60 percent of minimum wage workers nationally are adults, and 40 percent of that number are the sole wage earner in the family.

“That we were able to make this change is a credit to lawmakers on both sides of the aisle, including State Sen. Richard Bray (R-Martinsville), who sponsored this legislation in the Indiana Senate, and State Sen. Dennis Kruse (R-Auburn), who chose to give it a hearing in a chamber that traditionally has rejected proposals to increase the minimum wage,” Micon said. “I also must credit those groups who spoke in favor of the bill, including the AFL-CIO, the Indiana Catholic Conference, the NAACP, the Children’s Bureau and the Faith and Labor Coalition.

“Those who will benefit the most will be the thousands of Indiana workers who have no powerful lobbyists speaking on their behalf,” he added. “Whenever we raise the minimum wage, we increase the purchasing power of our lowest-paid workers and recognize the worth and dignity of those who are covered by the law.”

Source: Indiana House Democratic Caucus

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