Minimum Wage (2024)

FAQs

What is the answer to the minimum wage? ›

The federal minimum wage for covered nonexempt employees is $7.25 per hour. Many states also have minimum wage laws.

Pros of Raising the Minimum Wage

The primary argument advanced in favor of raising the minimum wage is that higher earnings would improve the overall standard of living for minimum wage workers by providing them with a more appropriate income level to handle the cost of living increases.

While the minimum wage has been adjusted numerous times since its implementation in 1938, it has failed to keep up with inflation and the rising cost of living. The purchasing power of minimum wage reached its peak in 1968 and steadily declined since.

Minimum wages have been justified on moral, social, and economic grounds. But the overarching objective is to boost incomes and improve the welfare of workers at the low end of the ladder, while also reducing inequality and promoting social inclusiveness.

Indexing the minimum wage to inflation means adjusting it automatically to keep pace with the rising cost of living so that workers do not lose purchasing power each year. Nineteen states plus the District of Columbia have adopted laws to index their minimum wages to rise automatically with the cost of living.

The minimum wage was designed to create a minimum standard of living to protect the health and well-being of employees.

California's $16 hourly minimum wage may be much higher than a “poverty wage” by federal standards, but high housing costs still make it difficult for low-wage workers to make ends meet in the state, according to a new report by the nonpartisan Legislative Analyst's Office.

Using data from the 1998–2016 Uniform Crime Reports and a difference-in-differences approach, we find robust evidence that minimum wage hikes increase property crime arrests among 16-to-24-year-olds, a population of less-skilled, less experienced individuals for whom minimum wages are likely to bind (Bureau of Labor ...

If you live alone in a state with a low cost of living, $18 an hour should be sufficient for you. However, if you have more dependents in the family or live in a high-cost state like California or New York, living on $18 an hour would be tough.

The higher federal minimum wage would also lift some 400,000 workers out of poverty, according to the CBO study. At the same time, the average estimate is that about 700,000 workers would lose their jobs.

Why can't we raise the minimum wage? ›

Raising the minimum wage would increase the cost of employing low-wage workers. As a result, some employers would employ fewer workers than they would have employed under a lower minimum wage. However, for certain workers or in some circ*mstances, employment could increase.

In addition, inequality could rise. Some people would, possibly for a limited time, make low wages. That being said, the current rate of $7.25 is still below the federal poverty level, so it wouldn't change much (ASPE, 2021). Instead, the unemployment effect would transform thousands of lives for the better.

A $15 minimum wage would begin to reverse decades of growing pay inequality between the lowest-paid workers and the middle class. For example, failure to adequately increase the minimum wage accounts for 48 percent of the increase in inequality between women at the middle and bottom of the wage distribution since 1979.

Many believe cost-push inflation is due to elevated input prices. However, there is sufficient historical data to demonstrate that a minimum wage has a minimal impact on how goods are priced.

MYTH ONE: “The minimum wage was never meant to be a living wage. It's primarily for young people starting out.” FALSE. The minimum wage was established to ensure that jobs pay enough to support families. For many years it was set at about half the wage paid to a typical (median) worker.

Thus, since California's current law requires a higher minimum wage rate than does the federal law, all employers in California who are subject to both laws must pay the state minimum wage rate unless their employees are exempt under California law.

In general, increasing the federal minimum wage would raise the earnings and family income of most low-wage workers and thus lift some families out of poverty—but doing so would cause other low-wage workers to become jobless, and their family income would fall.

Which States Have a $15 per Hour Minimum Wage? California, Connecticut, Massachusetts, and Washington are the states with a minimum wage of $15 per hour or above. While not a state, Washington, D.C. also falls into this category with its minimum wage of $17 per hour.