U.S. minimum wage gets first federal boost in a decade

July 24, 2007 A federally mandated minimum wage increase for U.S. workers goes into effect today. The 70 cents per hour increase, from US$5.15 to $5.85, is the first hike since 1997.

The increase, which was approved by Congress in May, is the first stage of a 3-step increase over the next two years. Next summer, the minimum will increase by another 70 cents per hour, followed by another bump of 70 cents in the following summer, bringing the minimum wage to US$7.25 an hour by 2009.

The increase is aimed at helping minimum wage earners keep above the poverty level. The United States Department of Health and Human Services considers anyone who earns less than $10,210 per year to be in poverty. At the previous minimum wage level, a person working 40 hours a week would only exceed this by $500 a year.

As many as 20 states took the initiative to raise minimum wages before this federal government action became effective. Those states will only be affected by the new law if they fall beneath the new federal mandate.

By comparison, today's current minimum wage for adults in the United Kingdom is equivalent to almost $11.50. As of 2005, Mexico's minimum wage was Mex$4.50. The lowest minimum wage in Canada is C$6.50 in New Brunswick. The highest in Canada is in Nunavut, C$8.50 or US$8.15.

Many countries in Europe, such as Norway, Sweden, Finland, Denmark, Switzerland, Germany, Austria, Italy, and Cyprus have no minimum wage laws, but rely on employer groups and trade unions to set minimum earnings through collective bargaining. As of December 2006, the Australian standard federal minimum wage is A$13.47 per hour, equivalent to US$11.90.