The federal minimal wage for nonexempt workers in the US is $7.25 as of 2023. It is meant to be a dwelling wage however this isn’t the case in observe. The hourly price hasn’t saved up with the price of dwelling for the reason that late Sixties. The earnings of a minimal wage employee with a household of 4 fall nicely beneath the poverty line.
Thirty states and the District of Columbia have minimal wage charges larger than $7.25 as of October 2023, nonetheless.
Key Takeaways
What Is the U.S. Federal Minimal Wage?
The federal minimal wage has been $7.25 an hour or $15,080 a 12 months since 2009. Many economists consider that that is woefully insufficient and unjust. The minimal wage peaked at an inflation-adjusted worth of $10.15 in 2018 {dollars} in 1968, which was value 28.6% greater than the federal minimal wage in 2018.
Historical past of the Federal Minimal Wage
The minimal wage has been a political subject since its inception. President Franklin Delano Roosevelt mentioned in 1933, 5 years earlier than the primary minimal wage grew to become legislation, that “…by dwelling wages, I imply greater than a naked subsistence degree—I imply the wages of a good dwelling.” The primary U.S. minimal wage was carried out in 1938 as a part of the Honest Labor Requirements Act.
President Barack Obama signed an govt order to extend the minimal wage of some federal employees to $10.10, reasoning that the general federal price also needs to be raised to that quantity. This marketing campaign stalled in Congress however federal inaction prompted many states to legislate their very own minimal wage will increase.
The U.S. Home of Representatives and the Senate each referred the Increase the Wage Act of 2021 to committee in early 2021. The invoice is aimed to progressively improve the federal minimal wage to $15 an hour by 2025. It was final launched in 2019 however it did not make it out of committee. The talk about whether or not to raise the federal minimal wage rages on because of this.
A motion to extend the minimal wage has been largely worker-driven since about 2010. Quick-food and retail employees have staged nationwide walkouts in grassroots efforts to impact change. Dwelling care employees, labor organizations, and ladies’s teams have additionally joined the struggle.
Minimal Wage by State
Thirty states, the District of Columbia, Guam, and the Virgin Islands paid greater than the federal wage flooring on the shut of 2023.
Particular person cities have additionally taken motion. The minimal wage in New York Metropolis was $15 on the shut of 2022, greater than double the federal minimal.
Tom Wolf, Pennsylvania’s governor on the time, amended a earlier govt order in January 2022 to lift the minimal wage for state authorities employees to $15 forward of schedule.
The federal minimal wage applies to most employees in states with no minimal wage or a decrease one.
Florida residents voted to extend the state’s minimal wage incrementally in November 2020, starting at $10 per hour on Sept. 30, 2021 till it reaches $15 per hour in September 2026.
Elevating their minimal wage was on the November 2022 midterm elections poll in two states, Nebraska and Nevada. Nebraska’s Initiative 433 referred to as for a minimal wage of $15 in 2026, up from $9 an hour and with annual cost-of-living will increase after that. It handed by a 17-point margin. A two-tiered minimal wage of $10.50 for employers who don’t supply medical insurance and $9.50 for people who do was changed by a single $12 an hour minimal wage for all workers efficient in 2024 when Query 2 was handed by voters in Nevada.
Voters within the District of Columbia handed a measure within the November 2022 election that may improve the minimal wage for tipped employees, set at $5.05, till it matches the minimal wage for non-tipped employees by 2027.
Can a Household Survive on Minimal Wage?
Full-time workers incomes the federal minimal yearly pocket simply $15,080 in 2023 in the event that they work 40 hours every of the 52 weeks in a 12 months. This locations them nicely beneath the $19,720 poverty line in 2023 for households of two. A full-time minimal wage earner with a household of 4 falls $14,920 beneath the 2023 poverty line of $30,000.
Pay Is not the Solely Downside
Many firms don’t supply full-time hours, even when employees need them. Fluctuating work schedules, cut up shifts, and the dreaded “clopening” of closing the shop at evening, then reporting again to work early the following morning to open it, make it tough for workers to work second jobs, attend school courses, or prepare childcare.
Minimal wage workers are additionally weak to pay discount from wage theft, which incorporates lack of additional time pay, erased time playing cards, and any unpaid time that workers spend whereas at work, akin to going by means of prolonged safety bag checks.
The vulnerabilities of hourly wage earners have been additional highlighted through the COVID-19 pandemic. Workers at grocery shops and a few massive retailers, in addition to supply employees, have been compelled to work on the frontlines on the peak of the outbreak with out being supplied paid sick go away or medical insurance by their employers.
Some retailers briefly boosted pay or supplied bonuses however employees, together with these at Complete Meals, Instacart, and Amazon, maintained that this wasn’t sufficient to place their well being in danger. They staged walkouts in March 2020 to demand safer working situations when a lot of the U.S. was beneath various levels of lockdown.
The Typical Minimal Wage Employee
In keeping with the U.S. Bureau of Labor Statistics (BLS), 78.7 million employees have been paid hourly in 2022, representing 55.6%, greater than half, of all wage and wage employees within the U.S. Of that group, 141,000 earned $7.25 per hour. Almost three out of 4 employees incomes the minimal wage or much less in 2022 have been employed in service jobs, primarily meals preparation and serving-related jobs.
About 2% and 1% respectively of hourly-paid men and women have been paid at or beneath the federal minimal in 2022, in accordance with the BLS. The BLS acknowledged that about 1% of hourly-paid White, Asian, and Latinx employees earned the minimal wage or much less. About 2% of hourly-paid Black employees earned the minimal wage or much less.
Virtually 40 million employees would have seen a rise in pay if the Increase the Wage Act had handed and the minimal federal price had been raised to $15 by the top of 2024, in accordance with the Financial Coverage Institute. Staff who would have benefited embody:
38.6 million adults ages 18 and older23.8 million full-time workers23 million women11.2 million parents5.4 million single parentsThe dad and mom of 14.4 million youngsters
Arguments for and In opposition to Elevating the Minimal Wage
Enterprise teams such because the Nationwide Retail Federation (NRF) and the Nationwide Federation of Impartial Companies (NFIB) opposed the minimal wage improve within the Increase the Wage Act, arguing that it was a one-size-fits-all strategy. It might power companies to rent fewer folks, slash progress plans, and/or increase costs. They believed that the Act would negatively have an effect on early-career and low-wage employees in addition to trigger hurt to the economic system in a wide range of different methods.
The nonpartisan Congressional Funds Workplace (CBO) concluded in a report revealed in February 2021 that it will profit as much as 27 million employees when the minimal wage reaches $15 in 2025. That is considerably fewer than the Financial Coverage Institute’s estimate however would value an estimated 1.4 million jobs. The CBO additionally concluded that 0.9 million folks would see their annual incomes rise above the poverty degree.
Solely 5 states had not adopted a state minimal wage as of October 2023: Alabama, Louisiana, Mississippi, South Carolina, and Tennessee.
Teams akin to Small Enterprise Majority, Fundamental Road Alliance, and Enterprise for a Honest Minimal Wage assist the next wage, believing that it’ll encourage worker loyalty and enhance office morale. This is able to result in extra glad prospects and a rise in client spending.
Some massive U.S. employers that pay an hourly wage have established company-wide minimal wages since 2020. They embody massive retailers akin to:
Amazon: $15 an hourGoal: $15 to $24 an hourCostco: $16 an hour
What Is the Minimal Wage?
The federal minimal wage is $7.25 an hour as of 2023 however many states, cities, and municipalities have a minimal wage that’s larger than the federal minimal. Many firms have additionally carried out minimal wages larger than the federal minimal wage.
What Is the Minimal Wage in California?
The minimal wage in California is $15.50 per hour for all employers. Some cities and counties have larger minimal charges.
What Is the Minimal Wage in Florida?
The minimal wage in Florida was $12 as of October 2023. The minimal hourly wage within the Sunshine State is ready to extend a greenback on Sept. 30 every year till it reaches $15 in 2026. The state will revert to adjusting its minimal hourly wage based mostly on inflation after that time.
The Backside Line
The minimal wage in the US is not a dwelling wage. Many states are paying greater than this quantity however minimal wage earners proceed to wrestle to make ends meet.
The federal minimal wage hasn’t saved up with the price of dwelling in additional than half a century at $7.25 per hour. However there is a rising motion amongst employees, coverage analysts, state and metropolis governments, and even some employers to lift it.