$5.15/hour effective 6/1/05 (currently $4.05/hour)

$4.25/hour effective 6/1/05 (currently $3.70/hour)

If no room or board provided (currently $140/week)

$215/week effective 6/1/05, $270/week effective 6/1/06, and $315/week effective 6/1/07

If board provided (currently $110/week)

$164/week effective 6/1/05, $217/week effective 6/1/06, and $240/week effective 6/1/07

If room and board provided (currently $91/week)

$129/week effective 6/1/05, $171/week effective 6/1/06, and $189/week effective 6/1/07

If no room or board provided (currently $123/week)

$175/week effective 6/1/05, $225/week effective 6/1/06, and $275 effective 6/1/07

If board provided (currently $92/week)

$133/week effective 6/1/05, $171/week effective 6/1/06, and $209 effective 6/1/07

If room and board provided (currently $74/week)

$105/week effective 6/1/05, $135/week effective 6/1/06, and $165 effective 6/1/07

$10.50 for 18 holes effective 6/1/05 (currently $5.95)

$5.90 for 9 holes effective 6/1/05 (currently $3.35)

Effect of minimum wage increases on Wisconsin's economy

The Department of Workforce Development estimates that 200,000 workers will be affected by the minimum wage increases.

First increase – June 1, 2005. The first increase in the minimum wage from $5.15 to $5.70 per hour is estimated to directly affect the wages of 50,000 hourly paid workers currently earning at or below $5.15 per hour, plus an additional 75,000 hourly paid workers currently earning between $5.16 and $5.69 per hour. Thus, the total number of workers directly affected by this first wage increase is estimated to be 125,000 hourly paid workers.

This first increase to $5.70 per hour will also result in wage compression among those who had previously earned slightly higher hourly wages than the new minimum wage. It is estimated that approximately 50,000 workers who earn between $5.70 and $6.50 per hour could be indirectly affected and receive wage increases as a result of this first minimum wage increase.

Second increase – June 1, 2006. The second increase in the minimum wage from $5.70 to $6.50 will directly affect the hourly wages of an estimated 150,000 workers who would at that time be earning at or below $6.50 per hour. The Department estimates that another 50,000 workers earning at or higher than $6.50 to a cap of about $7.00 per hour will also see their hourly wages indirectly rise due to resultant wage compression.

Industries and occupations. The majority of workers affected by the wage increase are in food preparation and serving related occupations and in personal care and services occupations. The vast majority of these workers are employed in the broad leisure and hospitality sector, which includes the food and accommodation industry. Retail trade employment also shows moderately higher than average number of minimum wage workers.

Workers affected by the wage increases include food service workers, retail clerks, cleaning and housekeeping laborers, personal care attendants, child care workers, telemarketers, laundry and dry cleaning workers, veterinary assistants, home health care aides, office workers, gaming change and booth cashiers, building and grounds maintenance laborers, and many other occupations in virtually all industries in the state.

Demographics of affected workers. It is estimated that nearly 80% of these low-wage workers are over 18 years of age, 65% are female, and over one-third are heads of their household. These workers are African-American, Hispanic, and Asian in numbers larger than their proportion in the population. Over two-thirds of these low-wage workers work more than half-time:

30% work 1-19 hours per week

35% work 20-34 hours per week

35% work 35+ hours per week

Effect on business. The effect of the wage increase on business will be $175 million in increased payroll costs. Low-wage workers will circulate this money back into the economy immediately, representing a 0.1 percent increase in the gross state product. The increased spending by affected workers may be a revenue growth for some businesses. The effects may be slightly greater in northern, rural regions of the state where minimum wage jobs make up a greater percentage of the workforce. Higher wages also have a positive impact on both workers and their employers by reducing turnover, increasing work experience, and saving on training and recruitment costs for both workers and employers. Any increase in the cost of doing business will likely be passed on to consumers as part of the price of the product or service being purchased.

Effect on small businesses. The proposed rule will have an effect on small businesses, which s. 227.114 (1), Stats., defines as 25 or fewer employees or less than $5 million in gross annual sales. The primary businesses affected by the proposed rule will be those related to food preparation and serving, personal care and services, and retail trade. The Department has considered the methods listed in s. 227.114 (2), Stats., for reducing the impact of the rule on small businesses. There are no reporting, bookkeeping, or professional skills required for compliance with the proposed rule. The rule requires businesses to pay affected employees at least the specified minimum wage.

The exemption of small businesses from the requirements of the rule would be contrary to the statutory objectives which are the basis for the proposed rule. Pursuant to Chapter 104, Stats., the primary purpose of the minimum wage is to require that every wage paid by any employer to any employee is sufficient to enable the employee receiving it to maintain himself or herself under conditions of reasonable comfort, reasonable physical well-being, decency, and moral well-being. The Department estimates that a very high percentage of workers affected by this minimum wage increase work for employers with 25 or fewer employees or less than $5 million in gross annual sales. If the rule exempted these employers from minimum wage coverage, it would render the minimum wage nearly meaningless.

Fiscal effect on state and local government

It is estimated that 35% of the additional $175 million in consumer expenditures will be on items subject to the sales tax. This translates to increased revenue of approximately $3 million for the state and some increased revenue for counties with a local sales tax.

There may be increased state revenue from the income tax on higher incomes for workers. The Department of Revenue estimates that the additional individual income tax revenue on the additional wages paid due to the minimum wage increase will be $4.725 million. This amount will be offset by the decline of business tax revenue estimated at $5.495 million. The net effect on income tax revenue is estimated to be a decline of $770,000.

It is estimated that 100-200 local governmental employees across the state who work as seasonal summer helpers may be affected by the increase. The increased cost is estimated at approximately $20,000 across all local governments in the state. The minimum wage increase is not expected to affect state employees.

Federal law and adjacent states

Section 227.14 (2)3. and 4., Stats., requires the Department to compare the proposed rule to any existing or proposed federal regulation and rules in adjacent states.

General rate:

Federal     $5.15

Iowa     $5.15

Michigan     $5.15

Minnesota     $5.15 for employers with annual gross sales of at least $500,000; effective 8/1/05, increasing to $6.15 for employers with annual gross sales of at least $625,000

$4.90 for employers with annual gross sales of less than $500,000; effective 8/1/05, increasing to $5.25 for employers with annual gross sales of less than $625,000

Illinois   $6.50

Minor rate:

Federal   None

Iowa   None

Michigan   None

Minnesota   None

Illinois   $6.00

Opportunity rate:

Federal   $4.25 for employees under 20 years old for first 90 days of employment

Iowa   $4.25 for all employees for first 90 days of employment

Michigan   $4.25 for 16- to 19-year-olds for first 90 days of employment

Minnesota   $4.25 for employees under 20 years old for first 90 days of employment; increasing to $4.90 effective 8/1/05

Illinois   No opportunity wage of general application. Employers may apply for a license from the Illinois Department of Labor to pay adult learners 70% of minimum wage rate for initial six months of employment.

Agricultural rate:

Federal   None

Iowa   None

Michigan   None

Minnesota   None

Illinois   None

Camp counselor rate:

Federal   None

Iowa   None

Michigan   None

Minnesota   None

Illinois   $260 per week

Golf caddy rate:

Federal   None

Iowa:   None

Michigan:   None

Minnesota   None

Illinois:   Exempt from minimum wage

Technical correction

The proposed rule also repeals and recreates the policy that travel time for the benefit of the employer is work time. It is rewritten for clarity and with no change in substance.

The Department's Small Business Regulatory Coordinator is Jennifer Jirschele. She may be reached at (608) 266-1023 or jennifer.jirschele@dwd.state.wi.us.

Contact Information and Written Comments