A lot has changed in the United States since 1938, when President Franklin Roosevelt signed the Fair Labor Standards Act, which established a minimum wage of 25 cents an hour. Today, the federal minimum wage law requires that most workers are paid at minimum $7.25 per hour, a national standard that hasn’t been adjusted since 2009. However, 29 states (and the District of Columbia) have enacted higher minimum wages. Though the minimum wage has increased substantially over the past 77 years, its value has been eroded due to inflation. Returning the value of the minimum wage to that which it held in 1968, for example, would require an increase to nearly $10 per hour.
In President Obama’s 2013 State of the Union address, he called for an increase of the minimum wage to $9.00 per hour. After adjusting for inflation, a $9.00 minimum wage would put the value of the minimum hourly wage back at its early 1980s level approximately. This would also boost the wages of some 15 million people nationwide, according to administration estimates.
On January 1, 2016, Alaska, Arkansas, California, Connecticut, Hawaii, Massachusetts, Michigan, Nebraska, Rhode Island and Vermont will all increase their respective state minimum wages. The highest minimum hourly wages of any states will be in California and Massachusetts. Both will set minimum wage at $10.00 per hour, making them the first of the states to reach a double-digit minimum wage.
The District of Columbia, which is often compared to other areas erroneously as a state, was one of the first jurisdictions to cross the $10 an hour threshold. Minimum wage earning workers in Washington D.C. have been earning $10.50 per hour since July 1, 2015 and will enjoy another increase to $11.50 per hour on July 1, 2016. D.C. is automatically set at $1 over the Federal minimum wage. Should the Federal minimum wage increase over time to $15 per hour, this would effectively raise the minimum wage in the District of Columbia to $16 per hour.
While the state of Massachusetts will raise the state minimum wage to $10.00 per hour on July 1, 2016, it is also automatically adjusted to increase to 10 cents above the rate set in the Fair Labor Standards Act if the Federal minimum wage equals or becomes higher than the State minimum wage. California will cross into the $10.00 per hour territory statewide on January 1, 2016. However, many major cities and jurisdictions within the State of California have already instituted minimum wages higher than $10.00, including the cities of Oakland ($12.25; passed in 2014), San Jose ($10.30; passed in 2012) and San Francisco ($12.25; passed in 2003).
A growing number of major cities have passed into law proposals to increase the minimum wage in those cities and jurisdictions to as much as $15.00 per hour over the next few years. The ability for localities to set minimum wages independent of the State and Federal minimum wages allows higher-cost cities to set minimum wage rates that better correspond to higher local living costs. They allow localities in states where the legislature is slow to raise the minimum wage to address the “living wage versus minimum wage” problem on their own. Additionally, they provide avenues for demonstrating the feasibility of substantially higher minimum wages, and pursuing key reforms such as annual inflation indexing and higher tipped minimum wages, which are less commonly adopted at the state level.
Localities that passed new minimum wage laws in 2014 include:
In 2015 two California cities have already passed new minimum wage increases:
Other proposed minimum wage increases to $15.00 per hour exist in Tacoma, WA; Olympia, WA; Davis, CA and Sacramento, CA. While Local Minimum wage ordinances in favor of $15.00 per hour exist in St. Louis, MO; Washington, D.C.; New York, NY and Portland, ME.