The Minimum Wage
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  Minimum Wage
    Background
    Tipped Employees
    $15 Minimum Wage
    Minimum Wage Controversy
      In Favor
      Opposed to
    Candidates' Positions on the Minimum Wage
 




Background
The federal minimum wage was enacted on June 24, 1938 as part of the Fair Labor Standards Act. Prior to the passing of this legislation, individual states had long experimented with setting their own wage floors, but these laws were typically overturned as unconstitutional by the Supreme Court, with the reasoning that they interfered with employers' freedom to negotiate labor contracts with their hired workers. Reeling from the devastating impact of the Great Depression, however, the American public clamored for a guaranteed base rate of pay, and the federal government responded by making it law that no private employer may compensate his or her workers with a wage less than 25 cents per hour. Adjusted for inflation, this made the nation's first hourly pay equal to about $3.80 in today's dollars.

Congress has mandated numerous increases to the minimum wage ever since. These increases, however, have been sporadic and irregular, with no clear effort to maintain the wage at a specific percentage of inflation or pre-determined purchasing power. As a result, the real value of wage-floor pay has fluctuated over the decades. It reached its peak in 1968, when workers had to be paid not less than $1.60 an hour (about $10.69 today), then slowly declined for the next 38 years until 2006, when it bottomed out at $5.15 an hour (about $5.91 today) – the lowest it has ever been as a percentage of the federal poverty level. Congress then raised it again, and the wage floor currently stands at $7.25 per hour.

In 2007, congress passed legislation permitting individual states to set their own minimum wage levels. As a result, 29 states now require employers to pay their workers more than the federal government mandates, while 19 have either enacted a minimum wage equal to the federal level or have tacitly accepted that rate by passing no law on the matter at all. 2 states, Wyoming and Georgia, have legislated their own minimum wage below the federal level. Because of the supremacy of federal law, however, it is nevertheless illegal for employers there to pay their workers according to these state guidelines.

Minimum Wage History
YearWage
1938$0.25
1939$0.30
1945$0.40
1950$0.75
1956$1.00
1961$1.15
1963$1.25
1967$1.40
1968$1.60
1974$2.00
1975$2.10
1976$2.30
1978$2.65
1979$2.90
1980$3.10
1981$3.35
1990$3.80
1991$4.25
1995$4.25
1996$4.75
1997$5.15
2007$5.85
2008$6.55
2009$7.25

Current U.S. Federal Minimum Wage - $7.25
w.e.f July 24, 2009
 
Minimum Wages Equal to Federal Minimum Wage (14)
Idaho $7.25 North Dakota $7.25
Indiana $7.25 Oklahoma $7.25
Iowa $7.25 Pennsylvania $7.25
Kansas $7.25 Texas $7.25
Kentucky $7.25 Utah $7.25
New Hampshire $7.25 Virginia $7.25
North Carolina $7.25 Wisconsin $7.25
       
No Minimum Wages (5)
Alabama   South Carolina  
Louisiana   Tennessee  
Mississippi      
       
Less than Federal Minimum Wage (2)
Georgia $5.15 Wyoming $5.15
       
Higher than Federal Minimum Wage (29)
Alaska $8.75 Missouri $7.65
Arizona $8.05 Montana $8.05
Arkansas $7.50 Nebraska $8.00
California $9.00 Nevada $8.25
Colorado $8.23 New Jersey $8.38
Connecticut $9.15 New Mexico $7.50
Delaware $7.75 New York $8.75
Florida $8.05 Ohio $8.10
Hawaii $7.75 Oregon $9.25
Illinois $8.25 Rhode Island $9.00
Maine $7.50 South Dakota $8.50
Maryland $8.28 Vermont $9.15
Massachusetts $9.00 Washington $9.47
Michigan $8.15 West Virginia $8.00
Minnesota $9.00    



Tipped Employees
In the United States, employees who consistently earn more than $30 per month from discretionary gratuities given by customers they serve, such as (but not limited to) waiters and bartenders, are legally known as “tipped employees” and are subject to a special, lower minimum wage as compared to their non-tipped counterparts. The understanding is that because these people make most of their money from tips, requiring that they be paid the same as non-tipped workers would place an unnecessary burden on businesses. It should be noted that if such an employee's hourly pay plus tips does not equal or exceed the standard minimum wage, their employer is legally required to compensate them for the difference. However, those attempting to hold their bosses to this obligation often complain that the law is sometimes neither respected nor enforced, or that they are terminated shortly after demanding more money. This system means that the earnings of tipped workers can be wildly inconsistent from one service employee to the next, with some making six-figure pay while others struggle in poverty. The federal minimum wage for tipped employees currently stands at $2.13 per hour, having last been raised in the 1990's.

Similar to what has been done in regards to the federal rate, most states have imposed tipped minimum wages above that already required by the federal government. 19 states use the federal guideline for tipped workers, while 6 states both do not allow tip-earners to be paid a lower hourly rate at all and have instituted a higher minimum wage than federally required. The remainder mandate tipped pay between $2.13 (the federal minimum for tipped workers) and $7.25 (the pay floor for standard employees). No state in the union has legislated a tipped minimum wage below the federal mandate of $2.13 per hour.

$15 Minimum Wage
In 2012, workers of fast food giant McDonald's began demonstrating for an increase in the minimum wage. They argued that their earnings were not enough for them to live, and demanded their pay be raised to $15 per hour. These protests were widely covered by the news media, and in many cases, workers supported them by walking off the job. At first, many people disregarded the precise figure for which they were asking as a bargaining ploy, assuming the protesters would gladly accept even a much more modest pay boost. But the demonstrations intensified, public pressure mounted, and followers of the “Fight For $15” movement have begun to win some victories.

Several large cities in the United States, including Seattle and Los Angeles, have voted to gradually increase their minimum wage to $15 per hour over a few years. New York state does not appear to be far behind. Businesses are planning carefully on how to absorb the coming hikes.

Both those supporting and opposed to the $15 wage have already begun citing statistics out of Seattle, the first to enact the raise, as proof that they were right all along.

Minimum Wage Controversy
Ever since it was enacted, the minimum wage has been a hotly controversial political issue. As a rule, those on the left generally support the minimum wage and even favor increasing it, while those on the right oppose increases or even call for reducing it. As a strongly conservative fiscal position, some believe that the minimum wage should be abolished entirely.

In Favor
Those who support the minimum wage are likely to begin their argument with an appeal to compassion. They often claim that the minimum wage as it stands does not provide enough income off of which to live, and that it is morally indefensible to leave full-time workers unable to pay their bills and care for themselves and their families.

More pragmatic proponents of the minimum wage argue that it is beneficial to the economy. They claim that requiring employers to pay their workers more results in greater consumer spending, since consumers now have more to spend, which stimulates business in the long run.

Also in favor of the minimum wage is the argument that low bottom pay essentially constitutes an unfair back-door tax on the middle class. People of this opinion often point out the fact that many workers earning minimum wage are not able to survive on their pay alone, causing them to turn to public assistance programs (such as food stamps, Medicaid, and cash benefits) for which they qualify. This raises the specter of corporate subsidies, where large employers of unskilled workers effectively pay only a portion of the real cost of their labor, with the remainder being made up by taxpayers at large.

Opposed to
Those against the minimum wage have a principled stand, as well. They are likely to invoke capitalism as a virtue unto itself, and speak of the essential nature of free markets to that virtue. Harkening back to the position once held by the Supreme Court, they say it is contrary to personal liberty and against the values of freedom of business to legislate government interference in labor contracts. Some people who take this position do support some level of minimum wage while opposing increases to it under any but the most severe circumstances, while others with this mindset favor abolishing the minimum wage altogether and allowing the labor market to set its own prices.

Like their counterparts on the political left, those opposed to the minimum wage also tend to summon the economy for discussion, this time by claiming that it is harmed by mandatory base pay. They say that, left to the will of the free market, workers will naturally be paid what their work is worth to an employer (those firms attempting to pay less soon finding themselves crowded out by competitors willing and able to offer better compensation). Forcing companies to pay above this value threatens profits – the foundation of all business ventures. Many businesses, the argument goes, especially in industries such as fast food and retail that would be most directly affected by any minimum wage hike, already operate on slim margins and cannot bear the added strain of paying more for labor. Thus these businesses will be forced to either raise prices (creating inflation), close up shop entirely, or – directly contrary to the hopes of minimum wage advocates – lay off workers and exacerbate unemployment and poverty.

Candidates' Positions on the Minimum Wage


Hillary Clinton
 
Gary Johnson
 
Jill Stein
 
Donald Trump
 



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