October 14, 2009 01:35 AM UTC

Minimum Wage to Drop

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• by: redstateblues

AP:

DENVER – Colorado will become the first state to reduce its minimum wage because of a falling cost of living.

The state Department of Labor and Employment ordered the wage down to $7.24 from $7.28. That’s lower than the federal minimum wage of $7.25, so most minimum wage workers would lose only 3 cents an hour.

Colorado is one of 10 states where the minimum wage is tied to inflation. The indexing is thought to protect low-wage workers from having flat wages as the cost of living goes up.

But because Colorado’s provision allows wage declines, the minimum wage will drop because of a falling consumer price index. It will be the first decrease in any state since the federal minimum wage law was passed in 1938. [rsb emphasis]

This is somewhat similar to the education budget cuts that will be seen because of Amendment 23 because it is tied to the rate of inflation. The decrease will be small, but noticeable–according to my calculations, a worker who puts in 40 hours a week will earn around $60 less per year–and it indicates just how badly the recession has affected Colorado workers and their families. Indeed, considering how hard hit some people are, that $60-120 may be all that’s keeping their family budgets from falling off a cliff.

Some would argue that they haven’t seen a huge drop in their own personal cost of living, though nobody can deny that gas is hardly the gouging expense it was even 18 months ago. But it brings up a larger question–is it wise to tie safety nets like minimum wage laws and education spending floors to national economic indicators like inflation? In a down economy, aren’t the working poor and their children (along with the people who were, up until very recently, middle class) the most vulnerable?