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Raise the Federal Minimum Wage

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During his recent State of the Union Address, President Obama announced that he will raise the minimum wage for federal contractors to $10.10 per hour and asked Congress to pass a law to “give America a raise” as well.  

The federal minimum wage, which is the current minimum wage in 31 states, Puerto Rico, Guam, and the Virgin Islands, is $7.25 an hour. Under the federal law, tipped employees, such as waiters and bartenders, can be paid $2.13 an hour, and individuals under 20-years-old can be paid $4.25 an hour for the first 90 days of employment.

Some states have passed higher minimum wage laws. Pennsylvania’s minimum wage is the same as the federal $7.25 per hour, but tipped employees must be paid $2.83 an hour.  Pennsylvania Democrats have introduced bills to raise the minimum wage, but political commentators say the measures are unlikely to see any action in the Republican-controlled state legislature.

The highest minimum wage in the country is in Washington at $9.32 per hour.  This is followed by Oregon ($9.10), Vermont ($8.73), and Connecticut and Illinois ($8.25 each).  Four states have minimum wage laws lower than $7.25 (so the federal law applies) and five states do not have minimum wage laws.  

Some cities have passed laws mandating higher minimum wages within the city limits. In Burlington, Vermont, the minimum wage for certain employers is $13.94 if health insurance is provided and $15.83 if it is not.  SeaTac, Washington, the home of the airport that services the greater Seattle and Tacoma metro areas, passed a ballot measure in November 2013 to raise the minimum wage to $15.00 an hour.  There has been some stalling on the implementation of the SeaTac measure, and its future is unclear.  With this recent wave of local “living wage” and minimum wage ordinances, some state legislatures are now considering taking measures to prohibit these types of local wage ordinances by enacting state laws that specifically preempt local laws.

According to the Bureau of Labor Statistics, in 2011, 59.1 percent of workers in the United States worked hourly jobs.  Of these, roughly 5.2 percent are making at or below the federal minimum wage.  An individual working for minimum wage would need to work at least 31 hours a week to bypass the federal poverty line.  Adding just one child or dependent to that worker’s household would mean that the individual must work 42 hours a week to bypass the poverty line.  If a minimum wage worker is supporting a family of four or more, she would need to work 8 hours every day of the year without a break or sick day to be above the federal poverty line.

President Obama’s proposal to raise the federal minimum wage to $10.10 per hour would mean that a full-time minimum wage worker could support a family of three without falling below the poverty line.  There are currently minimum wage bills pending in both the House and Senate.  The House bill would raise the minimum wage to $11.00 per hour within 2 years and the Senate bill would raise the minimum wage to $10.10 per hour within 2 years.  Both bills call for automatic increases based on the Consumer Price Index after that.  However, pundits predict that passing a minimum wage increase in the current Congress will be difficult.

 Sources:

http://www.bls.gov/cps/minwage2011.htm

http://www.bls.gov/cps/minwage2011.htm

http://aspe.hhs.gov/poverty/13poverty.cfm#thresholds

http://www.dol.gov/whd/minwage/america.htm

https://www.govtrack.us/congress/bills/113/hr3746

https://www.govtrack.us/congress/bills/113/s1737

 

About Jonathan Cohn

Jonathan Cohn (Jon) focuses on employee benefits, labor, employment and class action cases. Jon also litigates individual employment discrimination actions in both federal and state court, advises executives and professionals concerning their employment and non-competition agreements, and negotiates severance packages. Find him on Google+.

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