Wowee - The Federal Minimum Wage Rises to $6.55 Today

Today, about 2 million struggling Americans get a raise as the federal minimum wage rises by a gargantuan 70 cents.

Unfortunately, gasoline has gone up more than $1.00 and food prices are blasting up. Just to make it interesting, businesses will pass the cost of the wage hike to consumers by either raising prices or shrinking product package sizes. (No more Wheaties for me.)

The increase, from $5.85 to $6.55 per hour, is the second of three annual increases required by a 2007 law. Next year's boost will bring the federal minimum to $7.25 an hour. Undoubtedly just in time for gasoline to pass $5.00.

Last week, the Labor Department reported the fastest inflation since 1991 — 5 percent for June compared with a year earlier. Energy costs soared nearly 25 percent. The price of food rose more than 5 percent.

The minimum wage hike is a drop in the bucket compared to the increases in costs, declining labor market, and declining household wealth that consumers have experienced in the past year.

The new minimum is less than the inflation-adjusted 1997 level of $7.02, and far below the inflation-adjusted level of $10.06 from 40 years ago, according to a Labor Department inflation calculator.

Twenty-three states and the District of Columbia have laws making the minimum wage higher than the new federal requirement, a group covering 60 percent of U.S. workers, according to the Economic Policy Institute, a think tank. These folks (They obviously have never had to figure out how to live on the minimum wage.), fail to mention that the 2008 Federal TRIO poverty income level in the contiguous 48 states was $15,600 for a single person and $31,800 for a family of four.

With the new hourly wage rate, a single minimum wage worker will earn $13,624 assuming she doesn't take any days off. For those of you that are math impaired that means they are guaranteed to be in poverty. Even more glaring is that the average social security senior citizen is getting only $1085/month that is equivalent to only $6.26/hour. We are putting our seniors into poverty with an annual income of $13,020.

Now, I'm not a spend and entitlement freaky liberal (I'm actually closer to a Jeffersonian Conservative), but this is a glaring sin.

We've got to fix this quick or we're going down for the count fast.

The Best Money Guy.