For teenage workers, the minimum wage is currently $4.25 per hour during their first 90 days of employment; for disabled workers whose employers are certified by the Department of Labor, wages are based on analyses of prevailing wages and worker productivity. This measure constitutes before-tax family cash income , expressed in 2022 dollars. Changes in real family income include increases in earnings for workers who receive a higher wage, decreases in earnings for workers who lose their job, losses in income for business owners, and decreases in purchasing power because of increases in prices. Users of this interactive tool can index minimum wages to the consumer price index or index minimum wages to median hourly wages. As of December 31, 2016, the first in a series of wage increases went into effect. Rates differ based on region and industry because the increases are calibrated to provide businesses ample time to adjust. The current federal minimum wage is $7.25 an hour; however, many states, cities, and municipalities have a minimum wage that is higher than the federal minimum wage.

However, adjusting for inflation, the minimum wage was technically higher in the past than it is now. In today’s dollars, the highest-ever federal minimum wage was $1.60 per hour in 1968. However, when adjusting for inflation in 2021, this figure is equal to $12.30 per hour. That’s $5.05 greater than the actual 2021 federal minimum wage. California has two minimum wages based on a company’s number of employees.

Minimum Hourly Wages

Although Sanders did not become the nominee, the Democratic National Committee adopted his $15 minimum wage push in their 2016 party platform. Whether growth increases or decreases depends significantly on whether the income shifted from owners to workers results in an overall higher level of spending. The tendency of a consumer to spend their next dollar is referred to as the marginal propensity to consume or MPC. The transfer of income from higher income owners to lower income workers can actually lead to an increase in total consumption and higher demand for goods, leading to increased employment. In contrast in a 1987 journal article, Masanori Hashimoto noted that minimum wage hikes lead to increased levels of property crime in areas affected by the minimum wage after its increase. According to the article, by decreasing employment in poor communities, total legal trade and production are curtailed. The report also argued that to compensate for the decrease in legal avenues for production and consumption, poor communities increasingly turn to illegal trade and activity.

New York City’s minimum wage for companies with 11 or more employees became $15.00 per hour on December 31, 2018. On the same day, NYC’s hourly minimum wage for companies with 10 or fewer employees became $13.50. The minimum wage in Illinois will reach $15 per hour by 2025 with increases beginning in 2020. Most Republican elected officials oppose action to increase the minimum wage, and have blocked Democratic efforts to increase the minimum wage. Republican leadership such as Speakers of the House John Boehner and Paul Ryan have opposed minimum wage increases. Some Republicans oppose having a minimum wage altogether, while a few, conversely, have supported minimum wage increases or indexing the minimum wage to inflation.

What Is the US Federal Minimum Wage?

However, these increases have not occurred widely, with most states in the South having not raised their wages above the federally mandated $7.25 minimum. In 2021, more than half of all workers who earned at or below the federal minimum wage lived in the South, a region that is disproportionately African American, resulting in wide racial inequities. Furthermore, eight states—which include California, Nevada, Oregon, Washington, Minnesota, Montana, Alaska, and Hawaii—have abolished subminimum wages. Meanwhile 16 states, disproportionately in the South, use the federal tipped minimum wage of $2.13 per hour, adding to unequal wages across states. According to a 2020 study, a 10% minimum wage increase for grocery store workers translates into 0.36% higher grocery prices which is consistent with full cost pass-through.

• If the majority of voters approve a ballot measure, it typically becomes an amendment to the state constitution.
• Adjusting the minimum wage may affect current and future levels of employment, prices of goods and services, economic growth, income inequality, and poverty.
• Some smaller government entities, such as counties and cities, observe minimum wages that are higher than the state as a whole.
• Thus, some workers in CBO’s analysis are out of work for nearly an entire year, whereas others are jobless for shorter—sometimes much shorter—periods.
• For more information, check our glossary term entry on minimum wage.

Five additional states raised their minimum wages later in the year. Nine states automatically increased their rates based on cost of living. Seventeen states raised wages due to previously approved legislation or ballot initiatives. Senate debated the minimum wage on the federal level by way of the Minimum Wage Fairness Act. https://www.bookstime.com/ The bill would have amended the Fair Labor Standards Act of to increase the federal minimum wage for employees to $10.10 per hour over the course of a two-year period. The bill was strongly supported by President Barack Obama and many of the Democratic Senators, but strongly opposed by Republicans in the Senate and House.

The Economic Policy Institute

As a small business owner, you can safely assume you must pay all your employees the minimum wage. These exemptions are somewhat rare; examples include farmworkers on small farms, homeworkers making wreaths and seamen on non-American vessels. The U.S. Department of Labor maintains an exhaustive list of minimum wage exceptions.

] agreed that minimum wage laws increase unemployment among unskilled and young workers, while 26.5% disagreed with the statement. Among hourly-paid workers in 2016, 701,000 earned the federal minimum wage and about 1.5 million earned wages below the minimum.

Walmart will still maintain its $11 minimum wage, putting it behind some other big chains. Rather, a tight labor market and state-by-state minimum wage hikes have combined to push up wage growth for the poorest workers. The sluggishness of overall wage growth is concealing the fact that the labor market has done wonderful things for wages at the low end. In addition, some counties and cities within states minimum wage usa may implement a higher minimum wage than the rest of their state. Sometimes this higher wage applies only to businesses that contract with the local government, while in other cases the higher minimum applies to all work. The Pew Center reported in January 2014 that 73% of Americans supported raising the minimum wage from $7.25 to $10. By party, 53% of Republicans and 90% of Democrats favored this action.

7The Massachusetts minimum wage rate automatically increases to 10 cents above the rate set in the Fair Labor Standards Act if the Federal minimum wage equals or becomes higher than the State minimum. The table below reflects current state minimum wages in effect as of Jan. 1, 2021, as well as future enacted increases. On March 23, Governor Kenneth Mapp of the Virgin Islands signed Act 7856, establishing an $8.35 minimum wage with scheduled annual increases on June 1, 2017, and 2018 until the rate reaches $10.50. Massachusetts enacted a measure to increase the state minimum wage to $15 over five years. The tipped wage would rise to $6.75 from $3.75 over the same time period. Delaware enacted SB 15 in July, which will gradually increase the minimum wage rate to $15 by 2025. Walmart, America’s largest private employer, said it will raise wages for 425,000 US workers — more than a fourth of its workforce — to at least $13 an hour.

As such, depending on a company’s size, it might pay higher minimum wages in Washington state than in California. The Washington minimum wage is $13.69 per hour for all employers. This figure is, of course, greater than California’s minimum wage for companies with 25 or fewer employees. Also of note is that the minimum wage in Massachusetts is $13.50 per hour, with Connecticut not far behind at $13 per hour. The federal minimum wage was introduced in 1938 during the Great Depression under President Franklin Delano Roosevelt. It was initially set at $0.25 per hour and has been increased by Congress 22 times, most recently in 2009 when it went from $6.55 to $7.25 an hour.

Additional exemptions to the minimum wage include many seasonal employees, student employees, and certain disabled employees as specified by the FLSA. However, paying workers with disabilities less than the minimum wage was outlawed in New Hampshire in 2015, in Maryland in 2016, in Alaska in 2018, and in Hawaii in 2021. In 1910, in conjunction with advocacy work led by Florence Kelley of the National Consumer League, the Women’s Trade Union League of Massachusetts under the leadership of Elizabeth Evans took up the cause of minimum wage legislation in Massachusetts. Over the next two years, a coalition of social reform groups and labor advocates in Boston pushed for minimum wage legislation in the state. On June 4, 1912, Massachusetts passed the first minimum wage legislation in the United States, which established a state commission for recommending non-compulsory minimum wages for women and children. The passage of the bill was significantly assisted by the Lawrence textile strike which had raged for ten weeks at the beginning of 1912. The strike brought national attention to the plight of the low wage textile workers, and pushed the state legislatures, who feared the magnitude of the strike, to enact progressive labor legislation.