Minimum wage in the United States
[2] The first federal minimum wage was instituted in the National Industrial Recovery Act of 1933, signed into law by President Franklin D. Roosevelt, but later found to be unconstitutional.
[12][13][14][a] An Ipsos survey in August 2020 found that support for a rise in the federal minimum wage had grown substantially during the ongoing COVID-19 pandemic, with 72% of Americans in favor, including 62% of Republicans and 87% of Democrats.
[25] The first federal minimum wage law, which exempted large parts of the workforce, was enacted in 1938 and set rates that became obsolete during World War II.
The recognized result of a minimum wage, a contraction in a firm's labor force and societal elimination of the "wrong" sort of people, was the specific stated outcome, with a view to applying it across the entirety of the American body politic.
The Supreme Court upheld the Fair Labor Standards Act in United States v. Darby Lumber Co. (1941), holding that Congress had the power under the Commerce Clause to regulate employment conditions.
Persons under the age of 20 may be paid $4.25 an hour for the first 90 calendar days of employment (sometimes known as a youth, teen, or training wage) unless a higher state minimum exists.
[44] At the end of the 20th century, a movement to end sheltered workshops and ban sub-minimum wages gained traction, with supporters stating that the jobs pay low wages, lack advancement training and opportunities, (permanently trapping disabled people in those jobs while reducing their independence), and are discriminatory because they segregate disabled workers into separate work environments.
[52] This ordinance followed the referendum in SeaTac, Washington, in November 2013, which raised on a more limited scale the local minimum wage to $15.00 for transportation and hospitality workers.
[74] In 2016, the Council of the District of Columbia enacted a minimum wage ordinance that included a union waiver, but Mayor Vincent Gray vetoed it.
[update][5] The owner, the employees, and the buying public are all one and the same, and unless an industry can so manage itself as to keep wages high and prices low it destroys itself, for otherwise it limits the number of its customers.
Adjusting the minimum wage may affect current and future levels of employment, prices of goods and services, economic growth, income inequality, and poverty.
The interconnection of price levels, central bank policy, wage agreements, and total aggregate demand creates a situation in which conclusions drawn from macroeconomic analysis are highly influenced by the underlying assumptions of the interpreter.
Neumark's review further found that, when looking at only the most credible research, 85% of studies showed a positive correlation between minimum wage hikes and increased unemployment.
[93] In 2008 Hristos Doucouliagos and Tom Stanley conducted a similar meta-analysis of 64 U.S. studies on disemployment effects and concluded that Card and Krueger's initial claim of publication bias was correct.
"[94] A 2012 study led by Joseph Sabia estimated that the 2004–6 New York State minimum wage increase (from $5.15 to $6.75) resulted in a 20.2% to 21.8% reduction in employment for less-skilled, less-educated workers.
Marginal producers (those who are barely profitable enough to survive) may be forced out of business if they cannot raise their prices sufficiently to offset the higher cost of labor.
[116] Researchers found in 2019 that, "Between 1990 and 2015, raising the minimum wage by $1 in each state might have saved more than 27,000 lives, according to a report published this week in the Journal of Epidemiology & Community Health.
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.
[110] The CBO reported in February 2014 that income (GDP) overall would be marginally higher after raising the minimum wage, indicating a small net positive increase in growth.
[90] In contrast, research conducted by David Neumark and colleagues in 2004 found that minimum wages are associated with reductions in the hours and employment of low-wage workers.
[128] Similarly, a 2002 study led by Richard Vedder, professor of economics at Ohio University, concluded that "The empirical evidence is strong that minimum wages have had little or no effect on poverty in the U.S.
[151] In January 2014, seven Nobel economists—Kenneth Arrow, Peter Diamond, Eric Maskin, Thomas Schelling, Robert Solow, Michael Spence, and Joseph Stiglitz—and 600 other economists wrote a letter to the US Congress and the US President urging that, by 2016, the US government should raise the minimum wage to $10.10.
[161] In 2014 and 2015, several cities, including San Francisco, Seattle, Los Angeles, and Washington D.C. passed ordinances that gradually increase the minimum wage to $15.00 per hour.
The bill would have amended the Fair Labor Standards Act of 1938 (FLSA) to increase the federal minimum wage for employees to $10.10 per hour over the course of a two-year period.
If the job is not subject to the federal Fair Labor Standards Act, then state, city, or other local laws may determine the minimum wage.
[186] Some American corporations pay their disabled employees subminimum wages as low as $1 per hour, with these laborers rarely moving on to higher-paying jobs.
[197] In the state of Alaska, California, Minnesota, Montana, Nevada, Oregon, Washington, same minimum wage are applied for both tipped and non-tipped employees.
During the same legislative session, the State Legislature passed 2023 SB 525 (Durazo) which increases minimum wages for healthcare workers to $25.00 per hour by June 1, 2028.
[249][250] The "Grand Bargain" passed in 2018 raised wages on an annual schedule, phasing out time-and-a-half while prohibiting employers from requiring work on Sundays and holidays against employee wishes.
[333] Some large employers in the traditionally low-paying retail sector have declared an internal minimum wage often to make them more competitive in the labor market.
