The increased wages apply to employees of businesses that receive revenues of at least $500,000 in a year. It applies to employees of smaller firms, if the employees are engaged in interstate commerce or in the production of goods for commerce, such as employees who work in transportation or communications. It applies to employees of federal, state, or local government agencies, hospitals and schools, and it generally applies to domestic workers.

The minimum wage is an important tool in raising the floor for low-income earners. Together with other policy instruments (

Why are the minimum wage and inflation higher in some states and lower in others? Washington state made history by approving a ballot initiative that ties future minimum wage hikes to the rate of inflation. This initiative is I-688 and it gives minimum wage earners an immediate 33% raise by bumping the state’s current $4.90 an hour to $5.70 an hour. By the year 2000, the rate will be $6.50 an hour. In 2001, Washington will become the first state to automatically adjust the minimum wage to match inflation (Seattle Times). During this period unemployment came steadily down, and most dramatically among the very groups most affected by the minimum wage - minorities, teenagers, and people without college degrees. During this period, the unemployment rate among black men hit its lowest level ever (Kuttner) (See Figure 1.0).

According to Audrey Cormack, “the minimum wage should be high enough to allow people to live with dignity. She points out that if the government does not get involve and introduce regular increases to compensate for inflation, the real value of minimum wages will drop. One time increase to the minimum wages will not solve problems. What is needed is a system that makes regular adjustments for inflation.” An analysis by the Council of Economic Advisers (CEA) showed that the minimum wages increase of 1996 and increased minimum wages in some states were responsible for 10 to 16 percent of the decline in welfare caseloads between 1996 and 1998. The increased wages ensure parents can raise their children out of poverty.

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