The Federal minimum wage increase is that higher earnings would improve the overall standard of living for minimum wage workers by providing them with a more appropriate income level to handle the cost of living increases.
Federal Minimum Wage Increase
The increase in the minimum wage estimates that a much larger number of individuals and families will move out of poverty if they earn more money, a related potential benefit is a projected reduction in the need for federal and state government expenditures on financial aid for poor and low-income individuals.
Meanwhile, the benefit for both companies and the employees is improved employee morale resulting from higher wages. Increasing employee morale can easily translate into more benefits, such as increased employee retention and reduced hiring and training costs.
What is Minimum wage?
The minimum wage is the lowest hourly rate an employer can pay an employee, according to the Fair Labor Standards Act. While many organizations pay above the federal minimum, this law helps protect workers with lower wages and fewer job opportunities from exploitation. Regulations at federal and state levels help ensure business compliance.
The first US federal minimum wage was set in 1938 at 25 cents per hour, signed into law by President Franklin D. Roosevelt, the FLSA also banned Child Labor and mandated a maximum 44-hour workweek. Since then the US labor standards have been updated to ensure they align with economic , social, and political changes.
Who sets the minimum wage?
The federal government sets a standard minimum wage that applies to all employees in the United States. However, states and localities can set minimum wage rates, too.
Which state has the lowest minimum wage?
Georgia and Wyoming’s hourly minimum wage is tied at $5.15. However, employers covered by the FLSA must adhere to the federal requirements of $7.25.
Which states have minimum wages of $15 or more?
Seven states and Washington DC have minimum wages of $15 or more –
- Washington
- New York
- Massachusetts
- New Jersey
- Connecticut
- California
- Maryland
Raise Amount of Minimum Wages
Raise the Wage Act of 2023 was introduced in the Senate as a pivotal piece of legislation aimed at incrementally increasing the federal minimum wage to $17 per hour over five years. The proposal also includes provisions to adjust the wage annually to keep pace with inflation and median wage growth, ensuring the minimum wage remains economically relevant.
Despite its introduction, the Raise the Wage Act of 2023 has not advanced significantly in the Senate. This stagnation reflects a broader partisan divide on economic policies, particularly on issues impacting labor markets and business operations.
Many Republicans and some moderate Democrats have expressed concerns about the potential adverse effects of a significant minimum wage increase on small businesses. They argue that such increases could lead to higher unemployment rates, as small businesses might reduce their workforce or hours to manage increased labor costs.
What are the eligibilities for the Federal Minimum Wages
To be eligible for the Federal Minimum wage, worker must meet the eligibility criteria for the Federal minimum wage in the United States, a worker must be nonexempt and not offered a job or agree to work for less than the minimum wage –
- Minimum Wage- As of 1, March 2025, the federal minimum wage is $7.25 per hour.
- Tipped Workers- The minimum wage for tipped workers is $2.13 per hour, but wages plus tips must total at least $7.25 per hour.
- Sub- 20 workers- Workers under 20 can be paid $4.25 per hour for the first 90 days of employment.
- States and local municipalities can set their minimum wage rates, but the state rate must be higher than the federal rates.
- As of March 1, 2025, the District of Columbia had the highest minimum wage in the U.S. at 17 dollars per hour.
- The Fair Labor Standards Act of 1938 establishes the federal minimum wage. The Department of Labor has a duties test to help employers determine who meets the exemption criteria.
Dates of the federal minimum wages in the United States
- September 1, 1991: The Fair Labor Standards Act of 1938 requires that tipped workers earn at least $7.25 per hour, including tips. If the total income does not meet this requirement, the employer must pay the difference.
- August 20, 1996: The Fair Labor Standards Act allows employers to pay workers under 20 $4.25 per hour for the first 90 days of employment.
- July 24, 2009: The Fair Minimum Wage Act of 2007 (FMWA) takes effect