On the last night of the 2014 Legislative Session, West Virginia’s legislature passed HB 4283, raising the state’s minimum wage. The bill now goes to Governor Tomblin for his signature, making it law.
While we wait for the governor’s signature, let’s take a look at what passage of the bill means to West Virginia’s low-wage workers. The bill raises the minimum wage from $7.25 per hour to $8.75 per hour. That means, for full-time minimum wage workers, their annual pay will increase by $3,120, which for a family of two, is the difference between living in or out of poverty.
The bill passed by the legislature gives low-wage workers in West Virginia a raise in two steps. On January 1, 2015, the minimum wage increases to $8.00 per hour and on January 1, 2016, it increases to $8.75. We’ve looked before at who all would be getting a raise, so let’s now break it down by year.
In the first year, raising the minimum wage to $8.00 per hour will have a direct impact (those who currently earn less than $8.00 per hour) on about 37,800 workers. The average hourly wage for these directly affected workers is $7.45 per hour, and they work an average of 30.4 hours per week. That means that these workers will see an average annual pay increase of about $868, for a total statewide wage increase of $32.8 million.
In the second year, raising the minimum wage to $8.75 per hour will give those workers an average annual pay increase of $1,184, assuming they still average 30.4 hours per week and still make the minimum wage of $8.00. So for those 37,800 workers, the total impact after the wage increase is fully enacted is an average annual increase of $2,052, for a statewide increase of $77.7 million.
In addition to those 37,800 workers, raising the minimum wage from $8.00 to $8.75 in the second year will affect an additional 45,900 workers. These are workers who were already earning more than $8.00 per hour, but less than $8.75. These workers earn an average of $8.20 per hour and work an average of 35.3 hours per week, meaning they will see an average annual pay increase of about $1,010, for a total statewide increase of $46.3 million.
So, all told, after two years, 83,700 workers will get a raise, averaging an annual pay increase of $1,480. But those 83,736 workers aren’t the only ones getting a raise under the bill which also makes changes to the state’s tipped minimum wage. To avoid the messy details, the bill would increase the tipped minimum wage from $2.13 per hour to $2.40 per hour in 2015 and $2.63 per hour in 2016. This would affect an estimated 8,745 tipped workers, who would see an average annual pay increase of $426 in 2015 and another increase of $363 in 2016, based on average weekly hours. That would equal a total average annual increase of $789 once the bill is fully in effect, for a statewide total of $6.9 million.
Aside from those directly affected by the wage increase, there will likely be spillover effects, as those who earn above $8.75 see a raise as the wage floor rises. We estimate that the spillover effects would impact about 34,600 workers. Assuming these workers see an average of a $0.50 per hour increase, they would see an annual average increase of $748, based on average wages and weekly hours, for a total statewide increase of $25.9 million.
So, to sum it all up, raising West Virginia’s minimum wage to $8.75 will give a raise to about 127,000 West Virginia workers. About 83,700 regular hourly workers will see an average annual pay increase of $1,480, while about 8,745 tipped workers will get a average annual pay increase of $789. In additional, 34,600 more workers could see a raise due to the law’s spillover effects, with a conservative estimate of an average annual increase of $748. Altogether, raising West Virginia’s minimum wage from $7.25 to $8.75 will increase wages in the state by an estimated $156.8 million.
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