The NYT discusses proposals to raise the US federal minimum wage by 40% (from $5.15 per hourÂ to $7.25 per hour by 2009). Advocate Jared Bernstein estimates that it will directly affect about 6 million workers, and indirectly affect another 7 million.
Will it lower employment? The article quotes David Neumark (recently profiled in his local newspaper), estimating that a 40% minimum wage rise will lead to a 4% drop in employment. If he’s right, it would mean that 12.5 million workers would get a wage rise, while about half a million would get a termination notice.
Note that in relative terms, the US minimum wage will still stay well below the Australian minimum wage. A minimum wage of US$7.25 would be about half of the median hourly wage in the US (currently US$14.15, but sure to be higher by 2009), while the Australian minimum wage (A$13.47) is about two-thirds of the median hourly wage here (about A$20).