When Congress authorized a minimum wage increase in May, it intended to help the poor and ease stretched checkbooks; however, it may not have that effect in Utah.
Minimum wage in the state will increase to $5.85 per hour effective Tuesday, up from $5.15 now. It will rise again by 70 cents in 2008 to $6.55 and 70 more cents in 2009 to $7.25.
But with Utah's economy booming and an unemployment rate at 2.6 percent, few employers in the area pay minimum wage. Mark Knold, chief economist for the Utah Department of Workforce Services, said that in 2005, only 7,000 people earned minimum wage in the state, or 0.5 percent of the employed population.
Knold said now is the best time in Utah to have the minimum wage increase because it will have "no economic effect." During the process of passing the bill, the Bush administration had hoped to provide a provision for small-business owners who might be negatively affected by the hike. Knold, however, said a higher minimum wage won't have negative effects for business owners in Utah.
"The reality of it is in this explosive economy we have, (business owners) are having to pay more than minimum wage, and they're still in business," he said. "I don't think it's a very stressful thing to businesses."
Mark Hale, executive officer and legal counsel for Hires Big H, said most businesses have to pay employees more than minimum wage due to the current scramble for workers. Marc Greeley, owner of Connie's Pizza in Salt Lake City, agrees.
The minimum wage, he said, "doesn't mess with me at all. I can't image anyone paying minimum wage."
The majority of businesses fall under the umbrella of the federal minimum wage law, but the Utah Labor Commission has to make a state rule reflecting the federal law, said Robyn Barkdull, spokeswoman for the commission. But because Congress passed the law so late, the commission didn't have time to review the law and create a new rule. The Utah rule will be in effect Sept. 8.
Barkdull said that although the actual Utah rule won't go into effect until September, it "won't directly effect anyone."
"Really it's a formality to make our statute the same," she said.States can choose to raise their own minimum wages, but they must comply with the federal law if their minimum wage is lower than the federal minimum. Utah chose to stick with the federal minimum wage instead of choosing to look at the issue on its own, Barkdull said.