Business World

Friday 27 April 2018

United States of pay: minimum wage varies in America

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Colm Kelpie

Colm Kelpie

As the Low Pay Commission grapples with the question of whether to raise our €8.65 minimum wage, a similar debate is sweeping across the United States.

While the Federal minimum wage there is $7.25, many individual states and cities have decided to pass laws pushing up their own rates, much to the annoyance of business groups but to the applause of anti-poverty campaigners and left-leaning politicians. In addition, protests by low wage fast food and shop workers at the likes of McDonalds and WalMart are also feeding into the national conversation on pay levels, which is growing more intense.

Los Angeles - the United States' second largest city - voted this week to increase its rate from the current $9 per hour to $15 by 2020.

Businesses with more than 25 employees will have to meet the $15 pay level by 2020, while smaller firms will have an extra year to comply.

The plan comes in the wake of similar wage hikes in other high-cost cities, including Seattle in the Pacific Northwest, and San Francisco.

Seattle is phasing in a pay hike that would bring the minimum wage to $15 an hour over the next two to six years, depending on the size of the business.

Voters in San Francisco have approved raising their minimum wage to $15 an hour by 2018.

And it's not just on the west coast. Chicago last year signed off on a hike to $13 by 2019, while New York Mayor Bill de Blasio has called for raising the minimum wage in his city to about $15.

The arguments for and against are similar to those aired on this side of the Atlantic.

Proponents hope the move in the bigger cities will reverberate nationally.

They believe that higher pay scales would improve the way of life for the poorest and lower income earners.

Not so, say business leaders.

In March, the Los Angeles Area Chamber of Commerce, like its counterparts in Ireland, warned that the proposal would dent the recovery, and the employment gains. And they caution that it could push employers to other areas where the costs are lower.

"The current minimum wage proposal will limit the growth to our economy, limit the growth of jobs, limit funding to city services and not actually reach those it intends to help," said Ruben Gonzalez, LA Area Chamber senior vice president of public policy and political affairs. "It is a well intended public policy, but damaging in reality."

Those states that have announced increases already have rates above the federal minimum of $7.25. Just 29 states and Washington DC have minimum rates above that level. And in some states, hiking a minimum rate isn't an option, because they don't exist.

Some states don't even have a minimum wage at all, such as Louisiana, Tennessee, Mississippi, South Carolina and Alabama.


Irish Independent

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