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Bare Minimum Wage

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Increase cold comfort for struggling workers.

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The minimum wage went up last week, but for the nearly 2 million workers who stand to benefit, well, the word "benefit" may be something of an overstatement.

The rate will increase from its current $5.85 to $6.55 per hour and is the second of 3 increases mandated by a 2007 law. But according to the Labor Department, the new wage is actually less than the 1997 rate - adjusted for inflation. With food prices up 5% and energy costs up 25%, the increase is cold comfort for millions of U.S. workers.

A full-time worker making the new minimum wage would earn approximately $13,624 a year, well below the poverty line for a family of 3. Although 23 states insist on a minimum wage higher than the federal government, 40% of Americans live in places where the latter is the going rate.

Also unsatisfied with the wage increase: Companies now forced to spend more on labor.
The new minimum wage will increase the weekly haul of 2 million employees by $23, forcing the business community to pay out an additional $46 million every week. Some economists believe the ripple effect will, in the long run, hurts workers.

But the plight of a company's bottom line means little for workers struggling to make ends meet. In some places minimum wage is so low people can actually make more money panhandling. Like Coos Bay, Oregon, for example, where police reported that beggars outside Wal-Mart (WMT) could make up to $300 a day (it would take workers inside the store a week to make that much). In Manhattan, according to an article in the New York Times, some vagrants can earn up to a dollar per minute for an astounding $125,000 a year.

Sure beats working for $6.55 an hour.

For more on the minimum wage and the business of panhandling, check out Hoofy and Boo's always astute report.

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