The recent midterm elections not only brought about a change in the balance of power in Congress it also continued a trend that has been developing. This is the trend of increasing minimum wages in state laws. Five states had voters that voted to increase their state minimum wage. Additionally two cities, both in California, also increased their minimum wage. Apparently all the demonstrating this past year for an increase in the minimum wage has had an effect on the opinions of voters.
The federal minimum wage has been around since the Fair Labor Standards Act was passed in 1938. Even then it was controversial, with the original proposal being $0.40 per hour, but ending up at $0.25 per hour. The last time it was raised was July of 2009 when it was reset to the current level of $7.25.
The law allowed states to have a separate minimum wage and many have established a minimum wage that is higher than is dictated by the FLSA. Some states have an established wage lower than the federal level and some have no stated minimum wage. In those cases the federal level is observed.
By my count 23 states now have minimum wages that are higher than the federal $7.25 and in this past election three states voted to also increase beyond that level. One other state voted to increase their already higher minimum wage even higher. Here is the information.
- Arkansas is one state that had a stated minimum wage lower than the federal level. On January 1, 2015 they will raise their state level to $7.50. On January 1, 2016 it will go to $8.00 and then in 2017 to $8.50.
- Nebraska will take their minimum wage to $8.00 on January 1, 2015 and to $9.00 on January 1, 2016.
- South Dakota will increase to $8.50 as of January 1, 2015 and they have also indexed it to the Consumer Price Index to increase with inflation. They also changed the wage paid to tipped employees to $4.25 per hour from the federal level of $2.13 per hour.
One state, Alaska, also voted to increase their already higher $7.75 to $8.75 on January 1, 2015 and to $9.75 an hour in 2016. At that point the minimum wage becomes indexed to the CPI or will stay at least $1 higher than the federal level.
As I mentioned above, two cities voters also elected to raise the required minimum wage. In Oakland, California the minimum wage will go to $12.25 on March 2, 2015 and will then be indexed to the CPI.
San Francisco, with already a minimum wage of $10.74 has raised it to $15 per hour by 2018, with the first increase on January 1, 2015 raising it to $11.05. With the cost of living in San Francisco I wonder what the “effective” rate of pay is compared to other places?
The other states that already have high minimum wages that are indexed to the CPI will also be increasing wages as of January 1, such as Missouri going from $7.50 to $7.65. Pay attention to your state labor board to make sure you are in compliance.
We have all seen the protests on television news about raising the minimum wage of fast food workers to $15 per hour. That is unlikely to happen, but it is making people much more aware of the idea of raising the minimum wage. The President, by Executive Order, raised the minimum wage paid to workers on federal contracts to $10.10 per hour, as I wrote about in Heads up! The minimum wage is now $10.10 per hour.
There is also legislation in Congress, the Minimum Wage Fairness Act (S. 1737; 113th Congress), that proposes to change the federal level under the FLSA to $10.10. It has not met with much success to date, and may not now with the shift of power in Congress due to the midterm elections. But….
I feel that if any legislation will be passed in the next two years it is likely to be an increase in the minimum wage. The trend is moving in that direction. Many Republican legislators come from states that already have higher minimum wages, so I feel the resistance to a higher federal wage may be already reduced. We will have to wait and see. One thing is sure however, is that you will not see a mandated $15 per hour for fast food workers, despite the best efforts of unions.