On January 1, 2012 Washington State’s minimum wage will increase to $9.04.  Once again Washington State will lead the nation in having the highest minimum wage.  Oregon’s minimum wage will increase to $8.80. 

The minimum wage level of Washington State, Oregon and 8 other state’s is indexed to inflation and the consumer price index. In 1998 Washington voters passed Initiative 688. It was the first state to index it’s minimum wage to inflation and set the standard for other states to follow rather than every few years waging battles to try to increase the minimum wage when inflation went up. The other eight states are Arizona, Colorado, Florida, Missouri, Montana, Nevada, Ohio, and Vermont.

As CNNMoney notes, “Minimum wage rates in Arizona, Colorado, Florida, Montana, Ohio, Oregon, Vermont and Washington will rise between 28 and 37 cents per hour on Jan. 1 …Rates in these states will range from $7.64 per hour (in Colorado), to $9.04 (in Washington) in 2012.” Nevada does not raise its minimum wage until July 1st and Missouri, even with an adjustment, does not exceed the Federal minimum wage.

Increasing the minimum wage has positive effects on the economy.  As CNNMoney noted:

 ”The small boosts for 2012 are estimated to tack an extra $582 to $770 a year onto the paychecks of full-time workers, according to the National Employment Law Project, a non-profit advocacy group.

What’s more, the increases could be a mini-boost for the economy. The expected rise in consumer spending as a result of the wage increases would add $366 million to the nation’s gross domestic product and lead to the creation of more than 3,000 full-time jobs.”

The Economic Policy Institute calculates the actual impact in even broader terms.

Across these eight states, an estimated 1,045,000 workers will be “directly affected.”  These are workers whose current wages are between the existing state minimum wage and the new Jan. 1 minimum wage. In addition, another 394,000 workers will be “indirectly affected” by the increase. These indirectly-affected workers are those whose current wages are just above the new Jan. 1 minimum, and are likely to also see a wage increase as employers adjust their overall pay structures to reflect the new minimum (the “spillover” effect).

Despite the benefits of indexing the minimum wage to inflation, the national minimum wage is not indexed to inflation. Thus as the cost of goods like food and gas go up, the buying ability of minimum wage workers decreases. The current Federal wage is currently only $7.25.  That’s just a little over $15,000 a year.

The federal minimum wage needs to be indexed to inflation. Congress has a dismal record of increasing the minimum wage.  From 1997 to 2007, the minimum wage was stuck at $5.15 despite increases in inflation. In legislation passed in 2007 it went up to $5.85 in June 2007, then to $6.55 in June 2008 and then to $7.25 in June 2009. No further increase have been made in the last 2 1/2 years.

Barack Obama, as part of his transition team agenda, said he would work to raise the minimum wage and index it to inflation.  We need to hold him to his promise and to put Democrats and Republicans on the spot as to standing up for helping low income workers make it in this economy.  Republicans will voice all their usual objections but there is no better way to convince voters of whose interests they really represent than to challenge them to support working Americans by raising the minimum wage for the lowest paid workers.

And progressives in the states that have initiatives would be wise to run minimum wage initiatives with an inflation index in 2012.  With all the attention on the vast disparity of wealth distribution in this country that has gotten worse, its time to put on the ballot measures that work to redress this imbalance and that point out the differences between the goals of Republicans and Democrats.  Democrats have joined with Labor in working to help raise the pay of lower wage earners. Republicans have not.