Human Resource Blog

Iowa Minimum Wage Changes

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I’m the owner of an

Iowa company that is covered by the state minimum wage, not the federal minimum wage. I understand that the federal minimum wage will soon increase from $5.15 per hour to $5.85 per hour. But, won’t the

Iowa state minimum wage stay at $6.20 per hour?

Under the current state law, if the federal minimum wage increases, the Iowa rate will also go up, but only if the Iowa minimum wage is lower.

Currently the Iowa minimum wage is $6.20 per hour. So, on July 25 2007, when the federal minimum wage increases from $5.15 per hour to $5.85, the state rate will remain at $6.20 per hour.

However, scheduled increases in the next two years will affect the state minimum wage in Iowa.  On July 25, 2008, the federal minimum wage will increase by 70 cents to $6.55 per hour. On July 25, 2009 the federal minimum wage will increase yet again. This increase of 70 cents per hour will make the rate $7.25 per hour.

Under the Iowa state minimum wage law, the state rate will mirror each of these increases. The state increases will be effective on the same date as the federal increases.

By the way, whenever both a state and federal law apply, the employee is entitled to the greater benefit. In practice, this means that almost all Iowa employers will need to continue to pay $6.20 per hour until July 2008.

The Fair Minimum Wage Act of 2007 was signed by the president on May 25, 2007. Under the law, the minimum wage is scheduled to increase in 3 increments of 70 cents each. The first increase is scheduled to occur 60 days after the bill was signed. The remaining two increases will occur one year and two years after that date.

It’s important to note that under current regulations, every Iowa employer must update their current minimum wage posters each time that there is a change. This includes both the federal and state minimum wage posters.

Increasing the minimum wage from $5.15 to $7.25 in just over two years seems like a big change. Keep in mind, however, that the last increase in the minimum wage was more than a decade ago.