The federal minimum wage was established more than 70 years ago by Franklin D. Roosevelt. Any guesses on what the minimum wage was when it began in 1938? Just 25 cents an hour! Adjusted for inflation,that's about $4.15 today.
With a current federal minimum wage of $7.25, a lot has changed in the last 78 years and there is a continued push to increase wages.
One movement that is getting attention is the effort to raise the minimum wage to $15 per hour. There are several groups and grassroots movements such as Fight for 15, 15 Now, and NELP (National Employment Law Project) leading this effort and they are making headway by supporting legislation that has now been passed by an increasing number of states and cities.
Following the minimum wage increase regulation changes in a handful of California cities, the State of California has passed into law that $15 per hour will be in effect by 2022. And in New York, Governor Cuomo signed legislation in April raising the wage to $15 by 2021 in various stages. Seattle is raising the wage to $15 by 2017 and in Washington D.C., the mayor signed legislation just last week that will raise the wage to $15 by 2020.
With so many cities increasing the wage, it seems natural to ask, “Is the federal government next?” On a federal level, there was a bill introduced in the Senate last year (S.1150 – Raise the Wage Act) to increase the wage to $12 by 2020– not quite to the $15 level, but certainly a substantial increase from the current rate of $7.25 an hour. After the bill was introduced, it was referred to Committee, so it would appear no immediate action will be taken.
Another newer development in minimum wage is the frequency of the increases. Since the federal wage was last raised in 2009, it has lost about 8.1% of its purchasing power to inflation. Many states and localities have started to index the minimum wage to increase automatically with the cost of living. This is not entirely new, however, more and more states and localities are adopting this approach.
Unless you operate in one of the five states with no minimum wage, there are likely changes happening that will impact your business. So far, 2016 has seen many wage changes. Some of those changes are listed below. Please note that this list does not encompass every state and locality.
State minimum wage changes effective January 1, 2016
- Alaska: $9.75 per hour.
- Arkansas: $8.00 per hour. The minimum wage is also scheduled to increase to $8.50 per hour on January 1, 2017.
- California: $10.00 per hour; $15 per hour by 2022.
- Colorado: $8.31 per hour.
- Connecticut: $9.60 per hour. The minimum wage is also scheduled to increase to $10.10 per hour on January 1, 2017.
- Massachusetts: $10.00 per hour. The minimum wage is also scheduled to increase to $11.00 per hour on January 1, 2017.
- Michigan: $8.50 per hour. The minimum wage is also scheduled to increase to $8.90 per hour on January 1, 2017, and $9.25 on January 1, 2018.
- Nebraska: $9.00 per hour.
- Rhode Island: $9.60 per hour.
- South Dakota: $8.55 per hour.
- Vermont: $9.60 per hour. The minimum wage is also scheduled to increase to $10.00 per hour on January 1, 2017, and $10.50 on January 1, 2018.
State minimum wage changes effective July 1, 2016
- Washington D.C: $11.50 per hour on July 1, 2016.
- Maryland: $8.75 per hour on July 1, 2016; $9.25 on July 1, 2017; $10.10 on July 1, 2018.
State minimum wage changes effective August 1, 2016
- Minnesota: $9.50 per hour for large employers on August 1, 2016; $7.75 per hour for small employers.
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