The Minimum Wage 5

The federal minimum wage has been stuck at $7 25 for 15 years : NPR

Around 20.9 percent of Black workers and 16.7 percent of Latino workers would benefit. The federal minimum wage was signed into law by President Franklin Delano Roosevelt as part of the Fair Labor Standards Act of 1938, at the height of the Great Depression. Its stated purpose was to keep U.S. workers out of poverty, serve as a thriving wage and increase consumer purchasing power to stimulate the economy. In Washington, two cities have raised their minimum wage rates in the middle of the year — and the rates are higher than the state’s required rate of $16.66 per hour.

Regional and Business Size Variations

Some state laws provide greater employee protections; employers must comply with both. Minimum wage laws in the United States operate at both the federal and state levels. The federal minimum wage remains at $7.25 per hour in 2025, unchanged since 2009.

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• Domestic service workers are subject to Hawaii’s minimum wage and overtime requirements.
• The state adopts the federal minimum wage rate by reference if the federal rate is greater than the State rate.
• The State law excludes from coverage any employment that is subject to the federal Fair Labor Standards Act when the federal rate is greater than the State rate.
• A minimum wage of $4.25 per hour applies to young workers under the age of 20 during their first 90 consecutive calendar days of employment with an employer, as long as their work does not displace other workers.
• If an employee’s tips combined with the employer’s direct wages of at least $2.13 an hour do not equal the federal minimum hourly wage, the employer must make up the difference.

It was first introduced in the UnitedStates with the Fair Labor Standards Act of 1938 (FLSA). Passed underPresident Roosevelt, this act called for the first national minimumwage of 25 cents an hour. This created a floor on wages in the labormarket and overall helped to create fairer labor standards throughoutthe country. Employers subject to the Fair Labor Standards Act must pay the current federal minimum wage of $7.25 per hour. Employers covered by the FLSA but who are not subject to the Puerto Rico Minimum Wage Act must pay at least the federal minimum wage of $7.25 per hour.

A raise in the minimum wage puts money into people’s pockets, and that money gets spent at local businesses. The minimum wage is the lowest amount that an employer is required to pay an hourly worker. The hourly minimum wage rate you will be paid depends on the state in which you work and the type of job you are working at.

• Republicans generally believe that raising the minimum wage is nothing more than a foolish proposition that will only inspire an economic downturn.
• The U.S. Fair Labor Standards Act (FLSA) of 1938 established the nation’s first minimum wage and the idea that all American workers should be entitled to a baseline level of compensation for their labor.
• The important issue is whether the individual, under the totality of the circumstances, is “economically dependent” on the business to which the employee renders service.
• Originally, the federal tipped-worker minimum wage was 60 percent of the full minimum wage.
• Raising wages reduces costly employee turnover and increases productivity.

How do employers benefit from a higher minimum wage?

There are some employees who can be paid at hourly rates below the minimum wage, according to the Fair Labor Standards Act (FLSA). Workers in certain categories of employment can legally be paid less than the federal minimum wage, which is currently $7.25 an hour. Finally, some cities have set higher minimum wages than both the state and federal minimums. Typically, higher local minimum wages are found in areas with a higher cost of living, such as San Francisco, which has a $16.99 per hour minimum wage as of 2022.

Wages Councils

Five states—Alabama, Louisiana, Mississippi, South Carolina, and Tennessee—have no state minimum wage laws at all. In all states, employers who are covered by the law are required to pay the state minimum wage or the federal minimum wage—whichever is higher. Some workers may earn less than the federal minimum wage because there are exceptions built into the law.

Under the Fair Labor Standards Act (FLSA), the federal minimum wage for covered nonexempt employees is $7.25 per hour effective July 24, 2009. Where an employee is subject to both the state and federal minimum wage laws, the employee is entitled to the higher minimum wage rate. Municipalities, cities, or counties may also have local minimum wage laws if the laws are compliant with federal and state laws. When an employee is subject to valid local, state, and federal minimum wage laws, the employee is entitled to the highest of the minimum wages. When state and federal minimum wages differ, employers must pay the higher of the two rates. Some states like Alabama, Louisiana, and Mississippi have no state minimum wage laws and default to the federal rate.

Should We Raise The Minimum Wage?

Minimum wage rates exceed the federal rate in 30 states and the District of Columbia as of January 2025. The District of Columbia has the highest minimum wage at $17.50 per hour. We connect businesses with the industry’s leading, independent providers of employer services – everything from payroll to human resources and employee benefits. Combined cash & tip minimum wage rate is $14.00 with maximum tip credit of $1.25.

A small change in the price for low-wage labor could have a large effect on employer demand, they say, leading to increasing unemployment among low-wage workers. Critics also note that minimum wage laws may lead to job outsourcing—that is, The Minimum Wage companies may decide to move their facilities to countries where labor costs are lower. Proponents argue that an increase would help make the minimum wage a living wage—that is, it would be enough for workers to have a satisfactory standard of living. They also claim that a raise would boost worker productivity, reduce income inequality, spur economic growth, and improve employee retention. States usually set a minimum wage that is reflective of the cost of living in the region.

The value of the federal minimum wage has fallen sharply over the past 57 years. In 1968, when its purchasing power was at its peak, the federal minimum wage was $1.60 per hour, which translates to approximately $14.91 in 2025 dollars. The federal minimum wage was last raised on July 24, 2009, when it rose from $6.55 to $7.25 per hour, the last step of a three-step increase approved by Congress in 2007.

What Is the Minimum Wage?

The State minimum wage is automatically replaced with the federal minimum wage rate if it is higher than the State minimum. Germany’s national minimum wage law (MiLoG – Mindestlohngesetz) came into force on 1 January 2015, introducing Germany’s first nationwide legal minimum wage to the amount of €8.50 per hour. The German minimum wage level will be updated every other year by a minimum wage commission and acceptance by the government. Since a legal minimum wage law is a derogation of the constitutional right of a collective tariff autonomy, it is discussed whether and to what extent the minimum wage is consistent with the constitution.