The Fair Minimum Wage Act of 2007 (FMWA), which was passed by the U.S. House of Representatives on Wednesday, January 10th and taken up by the U.S. Senate the week of January 22nd, will raise the minimum wage from $5.15 per hour to $7.25 per hour by 2009. The minimum would be raised in three steps: to $5.85 within 60 days of becoming law, then to $6.55 a year after that, and finally to $7.25 the following year.

How many workers might the Act affect if it is passed this year and if the minimum is then raised to $7.25 by 2009? How might the effects differ by race and ethnicity?

These important questions have no simple answers. Informative estimates can nevertheless be produced through analysis of the hourly wages that workers reported in the most recent Annual Demographic Supplement to the Current Population Survey (CPS), which was conducted in March 2006. Workers who reported earnings between $5.15 (the current federal minimum wage) and $5.85 might be affected by the increase that the Fair Minimum Wage Act of 2007 would implement within 60 days of its passage; those earning between $5.85 and $6.55, and between $6.55 and $7.25 might benefit from the second and third increases proposed in the Act. Workers who reported earnings greater than the proposed federal minimum wage of $7.25 by 2009 may also see their wages increase by that time, as some states implement planned increases in their minimum wages that exceed the federal minimum.