The federal minimum wage is intended to be a livable wage; nevertheless, it falls significantly short of this goal.
In the United States, workers who are not excluded from federal minimum wage requirements are paid $7.25 per hour. 1
In theory, it should be enough to support one's basic needs, but in reality, it is not. Since the late 1960s, the hourly rate has not been adjusted to reflect changes in the cost of living. In point of fact, a worker receiving the federal minimum wage who supports a family of four would have wages that are substantially below the poverty level.
Even though the minimum wage in many states and towns is significantly more than $7.25 per hour and continues to be raised (in 2022, 26 states in the United States will raise their minimum salaries), it is still difficult for those at the minimum wage to pay their bills, find housing, and provide for their families.
KEY TAKEAWAYS
- Since 2009, the federal minimum wage has remained unchanged at $7.25 dollars per hour.
- Working at the minimum wage does not provide most people with enough money to support themselves.
- Workers continue to have a difficult time making ends meet despite the fact that the minimum wage has been raised in several states and cities (in some cases, by more than double).
- Those who advocate for an increase in the federal minimum wage argue that doing so will help earnings keep pace with rising costs of living and will pull millions of people out of poverty.
- Higher salaries, according to critics, would require companies to either recruit fewer workers, scale back their growth plans, or raise their pricing, all of which would have a negative impact on the economy.
What Is the Federal Minimum Wage in the United States?
Since 2009, the federal minimum wage has been set at $7.25 per hour, which corresponds to an annual salary of $15,080.
Numerous economists are of the opinion that this is grossly inadequate and unfair. Consider the following: The inflation-adjusted value of the minimum wage reached its all-time high of $10.15 in 1968, which is equivalent to a value that is 28.6% higher than the current minimum wage set by the federal government in 2018.
Since it was first established, the minimum wage has been a contentious topic in political debate. The President of the United States, Barack Obama, signed an executive order during his time in office that raised the minimum pay for some government employees to $10.10 per hour. Obama reasoned that the minimum wage for all federal employees should also be raised to that amount. Despite the fact that this initiative was unsuccessful in Congress, the inertia of the federal government resulted in several states passing their own minimum wage increases.
The Raise the Wage act of 2021 was referred to committee in early 2021 by both the House of Representatives and the Senate of the United States of America.
The goal of the proposed legislation is to raise the federal minimum wage to $15 per hour by the year 2025.
The most recent attempt to pass it, in 2019, failed to get out of committee, and as a direct consequence, the discussion on whether or not to increase the federal minimum wage is still going strong today.
Over the course of the past ten years, the majority of workers have been the driving force behind an effort to raise the minimum wage. Workers in the fast food and retail industries have conducted walkouts around the country as part of grassroots attempts to affect change. Workers in home care, organizations representing working people, and women's rights groups have all been involved in the fight.
State-Specific Minimum Wages
At this time, thirty states in addition to the District of Columbia, Guam, and the Virgin Islands pay more than the minimum wage set by the federal government.
There have been 12 separate actions taken by individual cities. For instance, the minimum wage in New York City is $15 per hour, which is more than double the minimum wage in the rest of the country.
At the beginning of the year 2022, the minimum salaries for all workers in 22 states were increased. During the course of the year, three more people performed the same thing. In addition, in January 2022, Governor Tom Wolf of Pennsylvania made an amendment to an earlier executive order, bringing the minimum wage for state government employees up to $15 per hour one year earlier than originally scheduled.
The citizens of Florida will vote in November 2020 on whether or not to gradually raise the state's minimum wage from its current level of $10 per hour (to be implemented on September 30, 2021) to $15 per hour (to be implemented in September 2026).
There was a proposal to raise the minimum wage in two states, Nebraska and Nevada, on the ballot for the midterm elections in November 2022.
Initiative 433 in Nebraska, which proposed raising the state's minimum wage to $15 an hour in 2026, up from the current rate of $9 an hour, with annual cost-of-living increases after that, was approved by a margin of 17 points.
If Question 2 is approved by voters in Nevada, the state's current two-tiered minimum wage of $10.50 for firms who do not provide health insurance to their workers and $9.50 for employers who do provide health insurance to their workers will be replaced with a single $12 an hour minimum wage for all employees beginning in 2024. At the time of publication, the initiative was leading with 54.3% of the vote to 45.7%, and 83% of the votes had been counted.
CEO pay has skyrocketed a mind-boggling 1,460% since 1978.
— Liz Shuler (@LizShuler) December 21, 2022
Meanwhile, without a raise in the national minimum wage in 13 years, you can’t afford to rent a one bedroom apartment ANYWHERE in the United States on $7.25 an hour! #1u pic.twitter.com/y3yFIphOGh
Additionally, during the election that took place in November 2022, voters in the District of Columbia approved a measure that will raise the minimum wage for tipped workers from its present level of $5.05 to a level that is equal to the minimum pay for workers who do not receive tips by the year 2027.
Is It Possible for a Family to Make It on Today's Minimum Wage?
The goal of the minimum wage is to provide sufficient income for basic needs. Franklin Delano Roosevelt, who served as president at the time, made the following statement in 1933, five years before the first minimum wage was enacted into law: "By living wages, I mean more than a bare subsistence level—I mean the wages of a decent living."
The Fair Labor Standards Act of 1938 was responsible for the establishment of the first minimum wage in the United States.
Full-time workers who earn the federal minimum wage each year take home just $15,080 (assuming they work 40 hours each of the 52 weeks in a year), which places them significantly below the poverty threshold of $18,310 in 2022 for families with two people. In the meantime, a full-time worker earning the minimum wage with a family of four would fall $12,670 short of the poverty line, which is $27,750.
The Lack of Pay Is Not the Only Issue
Even when workers express a desire for full-time employment, a significant number of businesses do not provide it. Employees find it challenging to work a second job, attend college classes, or make arrangements for child care when their work schedules are inconsistent, their hours are split, or they have to endure the dreaded "clopening" (which involves closing the store at night and returning to work early the next morning to open it).
Employees earning minimum wage are also susceptible to having their pay reduced as a result of wage theft. This type of theft can take many forms, such as failing to pay employees for overtime worked, erasing employees' time cards, and any unpaid time that employees spend while they are on the job, such as passing through lengthy security bag checks.
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During the COVID-19 pandemic, the precarious position of workers who are paid on an hourly basis has received further attention. During the height of the outbreak, workers at grocery stores, some large merchants, and delivery services were coerced into working on the frontlines even though their companies did not provide them with paid sick leave or health insurance.
There have been reports of certain retailers temporarily increasing salary or providing bonuses. However, employees, including those working at Whole Foods, Instacart, and Amazon, insisted that this was insufficient to put their health in jeopardy. They staged walkouts to demand safer working conditions in March 2020, when large portions of the United States were under lockdown with varied degrees of severity.
The Typical Employee Making Minimum Wage
According to projections made by the Bureau of Labor Statistics (BLS) of the United States, there will be 73.3 million workers in the United States who are paid on an hourly basis in the year 2020. This number represents more than 55.5% of all wage and salary workers in the country. 247,000 people in the group had an hourly wage of $7.25. In the year 2020, almost three quarters of the workforce that earned the minimum wage or less were employed in service jobs, the majority of which were associated to food preparation and serving in some capacity.
According to the BLS, around two percent of women and one percent of men who were paid on an hourly basis received an amount that was at or below the statutory minimum. In the meantime, in relation to race, the BLS stated that approximately one percent of hourly paid workers of White, Asian, and Latinx descent earned the minimum wage or less, while approximately two percent of hourly paid workers of Black descent eased the minimum wage or less.
According to the Economic Policy Institute, approximately 40 million workers would have experienced a rise in pay if the Raise the Wage Act had been successful in passing and the federal minimum rate had been raised to $15 by the end of 2024. The following employees would have benefited from this: 5
- 38.6 million grownups aged 18 and over make up this total.
- 23.8 million people currently employed full-time
- 23 million females worldwide
- 11.2 million parents
- 5.4 million lone parents
The adults responsible for raising 14.4 million children
A Discussion of the Pros and Cons of Increasing the Minimum Wage
The National Retail Federation (NRF) and the National Federation of Independent Businesses (NFIB) opposed the minimum-wage increase included in the Raise the Wage Act, arguing that it was a one-size-fits-all approach that would force businesses to hire fewer people, slash growth plans, and/or raise their prices. These business groups opposed the minimum-wage increase because they believed it would force businesses to raise prices, reduce growth plans, and/or hire fewer people. They are of the opinion, in general, that the legislation would have a negative impact on workers in early careers and those earning low wages, in addition to inflicting harm to the economy in a variety of other ways.
The nonpartisan Congressional Budget Office (CBO) came to the conclusion in a report that was published in February 2021 that when the minimum wage reaches $15 in 2025, it will benefit up to 27 million workers. This is a significantly lower estimate than the one that was provided by the Economic Policy Institute. However, it will result in the loss of an estimated 1.4 million jobs. In addition, the CBO came to the conclusion that the yearly earnings of 0.9 million persons would increase to a level that would place them over the poverty line.
It is the belief of organizations such as Small Business Majority, Main Street Alliance, and Business for a Fair Minimum Wage that a raise in the minimum wage will motivate employees to remain loyal to their employers and improve workplace morale. This, in turn, will result in an increase in the number of pleased customers and an increase in the amount of money spent by consumers.
In recent years, a number of significant companies based in the United States that pay their employees on an hourly basis have implemented company-wide minimum rates for their workers. They include large stores such as Amazon (which pays hourly employees $15), Target (which pays hourly workers $15), Costco (which pays hourly workers an average of $24 an hour), and Walmart (which pays hourly workers an average of $18 an hour in total compensation, including perks).
Can You Tell Me What the Minimum Wage Is?
However, many states, cities, and municipalities have a minimum wage that is greater than the federal minimum pay. The current federal minimum wage is $7.25 per hour; however, many states, cities, and municipalities have a minimum wage that is higher than the federal minimum wage. A lot of businesses have also adopted minimum wages that are greater than the minimum wage set by the government.
What is the State of California's Required Minimum Wage?
In the state of California, firms with 26 or more employees are required to pay their employees a minimum wage of $15 per hour. Businesses with fewer than 25 employees are required to pay $14.33 per employee.
What is the State of Florida's Minimum Wage Rate?
The state of Florida has a minimum wage of $10 per hour.
The minimum hourly wage in the Sunshine State is scheduled to increase by one dollar on September 30 of each year until it reaches $15 per hour in the year 2026. After that point in time, the state will go back to basing the adjustment of its minimum hourly wage on the rate of inflation.
The Crux of the Matter
In the United States of America, the federal minimum wage is no longer considered a "living wage." Earners of the minimum wage continue to have a difficult time making ends meet, despite the fact that a growing number of states pay more than this amount.
The current federal minimum wage of $7.25 hasn't increased to match the cost of living in any year in the past more than half a century. On the other hand, there is a growing push to increase it among workers, policy experts, state and city governments, and even some companies.