New Federal Wage Hike Helps Low-Income Utahns

07.27.2009 by Elizabeth Ziegler

(KCPW News) About 54,000 Utahns got a raise last week when the federal minimum wage increased by 70 cents to $7.25 an hour. While business leaders in other states are worried about raising salaries in the midst of an economic recession, Salt Lake Chamber of Commerce spokesman Marty Carpenter says it shouldn’t significantly impact businesses in Utah.

“Well, you know we expect it to have a minimal effect on businesses in Utah, really for two basic reasons,” Carpenter says. “One: Wages are already higher in Utah. And secondly because we have a rather unique job market here, where it’s already a pretty tight job market. Our unemployment is only 5.7 percent and so we expect, really, this minimum wage hike to have minimal impact.”

Carpenter says the chamber would only be concerned about the wage hike if unemployment were higher in the state.

The increase means up to $120 dollars a month extra for full-time, minimum wage workers. Melissa Smith with Community Action Partnership of Utah says the boost will especially help minorities, women and single parents, who are more likely to earn minimum wage. She adds that it isn’t just low-income workers who will benefit, but the economy as a whole.

“Again and again and again economists have shown that low-income people spend their money. They spend it locally and they spend all of it,” Smith says. “Whereas, if you give like tax breaks to higher income people, they put it away for a rainy day.”

This was the last of three increases to the federal minimum wage since 2007, when it was $5.15 per hour. However, Smith says this new wage minimum remains well below what would be considered a living wage. Accounting for inflation, Smith says salaries are about 30 percent less than they were in the 1960s.