“Historic Hike: Federal Minimum Wage to Increase After 15-Year Wait”

December 25, 2024 Add Comment
Historic Hike Federal Minimum Wage to Increase After 15-Year Wait
Historic Hike Federal Minimum Wage to Increase After 15-Year Wait

Since its inception in 1938, the federal minimum wage has functioned as a standard for rewarding workers throughout the United States.

This wage floor was designed to ensure a minimal standard of living in order to prevent labor exploitation and poverty, and it has been adjusted on a regular basis to reflect changes in the economy and cost of living.

The federal minimum wage was most recently updated on July 24, 2009, when it was set at $7.25 per hour. This was a raise from the previous rate of $6.55 per hour, which was implemented during the first year of former President Barack Obama’s term.

Federal Minimum Wage Increase

Over the last 15 years, this rate has remained stable for the longest period without an increase since the minimum wage was established. This stagnation persists despite significant economic upheavals, such as inflation and changes in the cost of living.

For example, according to the United States Bureau of Labor Statistics, the purchasing power of a dollar has decreased considerably since 2009, thereby reducing the real income of minimum wage workers.

As of 2023, around 869,000 workers in the United States were paid at or below the statutory minimum wage, with women accounting for more than two-thirds of this total. This focuses on a vital segment of the workforce that is disproportionately affected by current wage rules.

Discrepancies and Exceptions in Wage Laws

While the federal minimum wage is $7.25, not all workers earn it. The statute contains several exceptions, including:

  • Tipped Employees: These workers can be paid as little as $2.13 per hour in direct pay, as long as their total earnings including tips match the federal minimum.
  • Youth Workers and Students: Certain regulations allow employers to pay workers under the age of 20 a lesser wage for the first 90 days of employment. Full-time students may be paid less under certain work-study programs.
  • Workers with Disabilities:Depending on their employment capacity, some disabled workers may be eligible for special certifications that allow them to earn less than the minimum wage.

State and Local Wage Policies

There is significant variation at the state and local levels:

  • Higher State Minimum Wages: Thirty states and Washington, D.C. have set minimum wages higher than the federal level.
  • City Ordinances: Over 60 cities and municipalities, including New York City and Los Angeles, have set their own minimum wage that exceeds both state and federal guidelines.
  • Recent Increases: For example, Chicago’s minimum wage was recently raised to $16.20 per hour.

Federal Employee Wage Increases

In 2022, a significant policy shift occurred addressing the compensation of federal employees and contractors in the United States. This effort, led by the Biden administration, aims to improve the financial stability of federal employees working directly or indirectly.

Federal Workers: The minimum wage for government employees has been raised to $15 per hour. This increase has a direct impact on civil workers and other non-contractual personnel paid directly by the federal government.

Federal Contractors: Similarly, persons working under federal contracts had their minimum salary raised to $15 per hour. This measure was intended to ensure that enterprises contracting with the federal government pay their employees a livable wage, so setting a higher standard that is consistent with the administration’s aims for economic fairness and worker success.

Legislative Efforts to Raise the Federal Minimum Wage

Raise the Wage Act of 2023 was proposed in the Senate as a key piece of legislation aiming at gradually raising the federal minimum wage to $17 per hour over five years. The proposal also includes provisions for annual wage adjustments to keep up with inflation and median wage growth, ensuring that the minimum wage stays economically relevant.

Despite its introduction, the Raise the Wage Act of 2023 has not made substantial progress in the Senate. This stalemate reflects a larger ideological disagreement over economic policy, particularly those affecting labor markets and business operations.

Many Republicans and moderate Democrats have expressed worry about the potential negative impact of a major minimum wage hike on small businesses. They suggest that such increases could lead to greater unemployment rates because small enterprises may cut their personnel or hours to offset rising labor costs.

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