The Magnitude of $2.55
For the roughly 646,000 workers in North Carolina supporting themselves and, in many cases, their families on $7.25 per hour, a federal increase of the minimum wage to $9.80 per hour could bring an annual wage (for a full-time, year round worker) to $20,384. While this annual wage continues to be approximately half of what it actually takes for the typical North Carolina family of three to afford basic expenses, it would be an extremely important step in the right direction. An increase would help struggling families across the state, while at the same time providing a much-needed boost for the economy.
A new report released today by the Economic Policy Institute takes a closer look at the potential impacts of The Fair Minimum Wage Act, introduced by Sen. Tom Harkin (D-IA) and Rep. George Miller (D-CA) on July 26, 2012. The proposed increase would raise the federal minimum wage from the current $7.25 to $9.80 by 2014, through three incremental increases of $0.85 and raise the tipped minimum wage, currently sitting at $2.13 per hour, to 70 percent of the regular minimum wage.
The report examines the demographic characteristics of affected workers and finds, for instance, that contrary to the perception that most minimum wage workers are teenagers, 92 percent of those who would be affected by a minimum wage increase in North Carolina are at least 20 years old. Similarly, data on educational attainment of those who would be affected by an increase shows that 44.6 percent have some college education, an associate degree or more.
While increasing the minimum wage immediately benefits the lowest-paid workers through boosted earnings, it also has positive effects on the larger economy. Raising the minimum wage puts much needed earnings into the hands of those who need it most, and are most likely to spend in the local economy. The report notes that the GDP impact for North Carolina is estimated to be close to $848 million with the possibility of an additional 3,400 net new jobs created in the state.