Minimum wage: about-time or about time?

There is a bill (H.F. 599) currently  in front of the Minnesota House of Representatives that would increase the minimum wage from the federally mandated $7.25 to $10.55 incrementally over several years. This is just for “large” companies. “Small” companies currently are mandated to pay $5.25 an hour, this bill would also increase this pay to $9 an hour.

Several issues exist regarding this bill. Among them, how does one tell whether a company is “large” or “small?” In the bill there is no language regarding the establishment for standards of “large” or “small” companies. The common definition of “large” and “small” is established by the Small Business Administration, using the North American Industry Classification System (NAICS).

But the delineation between “large” and “small” is different from industry to industry. Natural Gas distributors’ (CenterPoint Energy) size is defined by number of employees; specifically, if they have 500+ employees, they are considered ”large.” However, Water suppliers’ size is dependent upon company value. If the supplier is worth more than $7 million, it is considered “large.”

What the bill fails to consider, is that many companies are hiring people not as employees, but as “Independent Contractors.” This classification relieves the company from abiding from the minimum wage bills. This also gives companies an excuse not to provide health benefits, or even offer time-off, in some instances.

The bill also fails to consider the cost of living. Let’s assume you work 40 hours a week at $10.55 an hour. That comes out to $822 each paycheck, before taxes. That’s $21,944 per year. Utilizing data from the Jobs Now Coalition, as of 2010 the minimum wage necessary to be considered above the poverty line is $24,588 per year, or $11.82 an hour.

This means that working a minimum wage job will have you living from paycheck to paycheck, and in need of another job to keep your domicile, keep yourself fed, and pay all the utility bills.

Sources:

https://www.revisor.mn.gov/bin/bldbill.php?bill=H0599.0.html&session=ls88

http://www.sba.gov/sites/default/files/files/Size_Standards_Table(1).pdf

http://www.jobsnowcoalition.org/reports/2010/cost-of-living2010.pdf