Magazine article Workforce Management

Minimum Wage Increase Could Lift All Salaries

Magazine article Workforce Management

Minimum Wage Increase Could Lift All Salaries

Article excerpt

COMPENSATION

Arguments about the impact of raising the minimum wage usually focus on small firms, with warnings that businesses like restaurants might cut back on hiring entry-level workers if they're forced to increase pay.

But as the newly minted Democratic Congress gets ready to make a minimum wage increase one of its first legislative actions in January, large employers may find that a rising compensation tide lifts all salaries.

Under a bill written by Sen. Edward Kennedy, D-Massachusetts, the federal minimum wage would climb from the current $5.15 to $7.25 over the next two years. Even companies that pay well above the minimum may have to make increases to reflect the 41 percent jump at the bottom of the scale.

"There's going to be upward pressure in a lot of these wages that may not be the minimum wage now," says Marc Freedman, director of labor law policy at the U.S. Chamber of Commerce. "There are a lot more employers who may be caught up in this" than realize it at the moment.

Although one researcher says that most studies demonstrate that raising the minimum wage can lead to job losses, especially for low-skilled workers, an increase won't impact employers that currently pay $9 or more per hour.

"I think it's irrelevant," says David Neumark, professor of economics at the University of California at Irvine. …

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