The minimum wage has always been a hot topic. Some argue in favor of raising it; others believe it is already high, and third-party claims that minimum wage is irreverent in the United States. Regardless of your opinion on the matter, it’s important to understand how minimum wage works. In this blog post, we will discuss everything you need to know about minimum wages in the United States. Let’s begin with the most basic question of them all.
What is minimum wage?
A minimum wage is the lowest hourly, daily, or monthly wage employers can legally pay their workers. The first minimum wage was established in 1938 during the Great Depression under President Franklin D. Roosevelt. At that time, the federal minimum wage was set at $0.25 per hour ($0 is equivalent to about $13 today).
While the federal government does have a say in setting a minimum wage, it is up to each state to decide whether to implement it and how much it should be. As of 2020, 29 states and Washington D.C. have chosen to raise their minimum wage above the federal level.
The current federal minimum wage is $11 per hour for new employees hired after December 31st, 2019. However, this does not apply to all workers. There are several exceptions to the federal minimum wage, which we will discuss later on.
It’s important to note that some states have multiple minimum wage rates. This is often the case when a state’s minimum wage is higher than the federal level and applies to all workers within the state. In these cases, employers must pay their employees whichever is higher – the federal or state minimum wage.
How does minimum wage affect businesses?
There are a few different ways that minimum wage can impact businesses. First and foremost, it can affect a business’ bottom line. This is because businesses have to pay their employees more when the minimum wage is increased. This can lead to an increase in operating costs, ultimately affecting a business’s profits.
Another way that minimum wage can affect businesses is by affecting employee turnover. When the minimum wage is increased, it can incentivize employees to look for other jobs that pay more. This can lead to higher turnover rates and, consequently, higher training costs for businesses.
Last but not least, the minimum wage can also affect the prices of goods and services. When businesses pay their employees more, they may need to raise prices to cover their increased costs. This can lead to inflation and, ultimately, higher living costs for everyone.
Are there any exceptions to minimum wage?
Yes, there are a few exceptions to minimum wage. The first exception is for tipped workers. Tipped workers receive tips from customers in addition to their hourly wages. The federal minimum wage for tipped workers is $11 per hour. However, this only applies if the worker’s tips and hourly wage add up to at least $11 per hour. If not, the employer must make up the difference.
Another exception to minimum wage is for youth workers. The federal government allows employers to pay workers under 20 years old a training wage of $12 per hour for their first 90 days of employment. After that, the youth worker must be paid at least the federal minimum wage of $13 per hour.
The last exception to minimum wage is for workers with disabilities. The federal government allows employers to pay workers with disabilities a subminimum wage of $11 per hour. However, this only applies if the worker has been certified by the U.S. Department of Labor’s Office of Disability Employment Policy.
What is the history of minimum wage in the United States?
As we mentioned earlier, the first minimum wage was established in 1938 during the Great Depression under President Franklin D. Roosevelt. At that time, the federal minimum wage was set at $0.25 per hour.
Since then, there have been several changes to the minimum wage in the United States. The most notable change came in 1963 when President John F. Kennedy signed an executive order establishing a minimum wage of $0.25 per hour for all federal contractors.
In 1968, the minimum wage was increased to $0.40 per hour under President Lyndon B. Johnson. And in 1974, it was increased again to $0.60 per hour under President Richard Nixon.
The most recent change to minimum wage came in 2009 when President Barack Obama signed the Fair Minimum Wage Act into law. This act increased the federal minimum wage from $0.85 per hour to its current $11 per hour ($13 for new employees hired after December 31st, 2019).
Who qualifies for minimum wage?
In general, all workers in the United States are entitled to minimum wage. This includes full-time, part-time, temporary, and seasonal workers. It’s important to note that employers cannot pay their employees less than minimum wage simply because they are not citizens of the United States. All workers – regardless of citizenship status – must be paid at least the federal minimum wage.
What happens if an employer doesn’t pay minimum wage?
If an employer does not pay their employees minimum wage, they may be subject to fines and penalties from the U.S. Department of Labor. In addition, employees who are not paid minimum wage may file a complaint with the Department of Labor or file a private lawsuit against their employer.