The federal minimum wage rises 70 cents to $7.25 Friday, increasing the pay of roughly one in seven Virgin Islands workers. To beef up enforcement throughout the U.S. and the territories, the U.S. Labor Department is adding hundreds of inspectors.
In a telephone press conference Thursday, U.S. Secretary of Labor Hilda Solis and Rep. George Miller (D-CA) spoke with national and local reporters about the increase, its effects on the economy, jobs and family incomes, and the Labor Department’s revamping of its enforcement efforts.
"The increase will directly affect between three and five million Americans," Solis said. "Seventy cents an hour may not seem like much to some, but it will give millions disposable income that is so sorely needed … an extra $120 a month will help people shop for school, buy clothes and put food on the table, consumer spending to really improve and stimulate our economy."
According to Solis, the increase should help boost the lagging economy even as it boosts the wages of its poorest workers because those workers will immediately go out and spend the extra money on goods and services.
"It’s good for the economy in general because it will produce $5.5 billion in extra consumer spending over the next year," she said.
The Labor Department’s role in the increase is primarily enforcement, said Solis.
"We are bringing in about 250 new wage investigators to help make sure people out in the field are complying with the law," she said.
Solis did not know how many of the new investigators might be stationed in the Virgin Islands, Puerto Rico and the other insular territories, when asked by the Source. She said, however, that the number of inspectors was increasing by nearly a third, to around 900, suggesting much more enforcement everywhere. Miller agreed.
"That’s about right," he said. "When we did a congressional investigation of wage theft there were around 650 or 700 and we are adding 250."
Without the new inspectors, the Labor Department has collected $82 million in back wages due to 107,000 workers, and with the new inspectors, it expects to do more, she said. And while enforcement is being stepped up considerably the Labor Department has a limited number of people and resources, she said.
"We are barely back to 2001 budget levels," she said. "It’s a lot of lost time. But I can tell you this gives an opportunity to give more targeted enforcement, preventing these types of abuses."
Miller and Solis both dismissed the argument made by opponents of the increase that raising the pay, especially during a recession, might cause job losses because companies cannot afford as many workers.
"That argument has been used year after year and it has been refuted many times," Miller said, citing several studies in Idaho and New Jersey that showed marginal increases in the minimum wage actually tends to increase employment as more economic activity in general is encouraged by the consumer spending of low-income workers. Solis agreed.
"Even more recently, a 2008 study showed minimal effects, but a slight increase in jobs," she said.
This is the second step of a two-step increase in the minimum wage enacted by Congress in early 2007. In July of 2008, minimum wage jumped from $5.15 per hour to $6.55 per hour. The phased-in increase is the first in 10 years.
