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The minimum wage, also known as the living wage, is defined as the minimum remuneration that an employer has to pay its employees under federal law. The hourly rate mandated by the government is the lowest monetary compensation that every company has to pay, and it cannot be reduced through negotiations or collective agreements.
Countries like Australia and New Zealand were the first to introduce minimum wage laws. These laws aimed to improve the income levels of unskilled laborers and prevent exploitation. Today, most countries in the world have some form of a legal mandate that guarantees a fixed minimum wage for working-class people. The only exceptions to this are nations like Singapore, Sweden, and Norway.
The minimum wage in the USA currently stands at $7.25 per hour or $15,080 per year. The base hourly rate has been the same since 2009. Unfortunately, minimum wages have not kept pace with the cost of living since the 1960s.
While steady inflation has made everything expensive over the years, from rents to the cost of food items, wages have not increased to match the soaring prices. Most working-class people, who live on minimum wage, struggle to make ends meet.
There are two minimum wage structures in the United States of America- federal and state. Most states’ quota is usually the same or higher than the federal hourly rate. However, states like Alabama, South Carolina, Tennessee, Mississippi, and Louisiana do not have state minimum wage. Meanwhile, Wyoming and Georgia have lower state minimum wages than the federal mandate.
Employers that have to abide by federal and state minimum wage must pay the higher amount of the two. The state minimum wage reflects the average cost of living in the territory. Tipped employees like restaurant and retail workers have their separate minimum wage requirements, with the federal minimum being $2.13 per hour. This stipulation applies to employees who earn more than $30 in tips every month.
Another exemption is for workers with a mental or physical disability. As per the Fair Labor Standard Act (FLSA), such employees may be paid less than minimum wage as their disability impairs their overall productivity. Workers with blindness, mental illness, cerebral palsy, alcohol, and drug addiction, and developmental disabilities can be paid less by their employers under the act.
The Biden Administration presented the American Rescue Plan in 2020 to increase the hourly rate from $7.50 to $15 nationwide. President Joe Biden signed the new legislation into law on March 11, 2021.
California and New York have already raised the minimum wage to $15 per hour. Another nine states plan to increase the base salary in the next four years. This includes Connecticut, New Jersey, Delaware, Illinois, Maryland, Florida, New Jersey, Rhode Island, Massachusetts, and Virginia.
As of 2022, 21 states and 35 cities have implemented the new federal minimum wage. This is the most significant nationwide increase in wage policy in American history. Experts predict that by 2026 approximately 40% of the American workforce will be under the purview of the new minimum wage.
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