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The Current Federal Minimum Wage

History of Minimum Wage Law The first form of minimum wage law was introduced in 1896, but instead of requiring employers to pay at least a guaranteed minimum wage amount, the law in its infancy only set up arbitration boards to prevent labor strikes. Australia, New Zealand, the United Kingdom and the colony of Victoria, Austria were the first to establish laws creating arbitration boards of this nature. The first of these laws were created in New Zealand in 1896 under the Industrial Conciliation and Arbitration Act. 1899 is when Victoria, Austria came on board with arbitration counsels. In 1907, Australia set a “living wage” for a family of four.

The Trade Boards Act established arbitration boards in 1909 for the United Kingdom. In 1912, Massachusetts and the United States were the first to set minimum wages for women and children in an attempt to control the proliferation of sweat shops and manufacturing industries. It was not until the Fair Labor Standards Act of 1938 was passed in the U.S. that a national minimum wage standard was set for most workers in the public and private sector. The law for minimum wage in the US is mandated by FLSA guidelines and the current minimum wage standard is $7.25/ hour. Some states have yet to set a minimum wage law.

These states include Alabama, Louisiana, Mississippi, South Carolina, and Tennessee. Other states require employers to pay even more than the $7.25/ hour while other state standards are less than national standards. In cases where an employee is subject to both state and federal laws, the employee is entitled to the higher of the two. These laws were just the beginning. New employment and labor laws now include overtime laws, as well as mandatory overtime and employment law group exemption rules. State overtime laws vary widely. If you think you’re employer owes you overtime pay that was unfairly withheld, fill out our Case Evaluation Form to consult with a reliable overtime lawyer about the merits of your case.

This entry was posted in FLSA Overtime Blog and tagged fair labor standards act, flsa overtime law, minimum wage.

As United States citizens, our way of legally providing for others and ourselves is through a vocation. We work each week for an agreed upon wage. The median earning in 2007 for men who worked full time was $45,113. For women, the median earning for the year was $35,102 (U.S. Census Bureau). That would mean men earn $21.69 per hour, and $16.88 per hour for women. Now imagine living off almost half of that. Can it be done?

According to the U.S. Department of Labor, the federal minimum wage is $6.55 per hour. A single man or woman who works full time, who takes no vacations or sick days, will accumulate a pre-tax total of $13,624 for the year. That sum is roughly $21,000 less than what an average woman makes and $32,000 less than what the average man makes. After the IRS, Medicare, and Social Security take their total share of $1,510, one is left with only $12,114 net pay to be used for expenses and such for the year.

Essential expenses will come out of the net pay first, which includes shelter, food, clothing, and household items like soap, toothbrushes, and toothpaste. I recently saw a rental place charging $475 per month including utilities, so I will be using that amount as rent for this example. As for food, fresh produce and meats are out of the question due to their particularly high prices. The next best thing would be to purchase a box of pasta (macaroni and cheese or spaghetti) and peanut butter, which could replace the unobtainable fresh meats due to the fact that peanut butter is high in nutritional fat and protein. Though not extremely tasty, both would satisfy hunger needs, are high in calories and can be purchased for less than $5 per day. In other words, a minimum wage earner can feed them self for $1,825 a year. Clothing can easily be purchased at a thrift or discount store for $50 a month, and household necessities can be purchased for around $50 per month as well. This makes clothing and household necessities totaling to $1,200 per year. Collectively rent, food, clothing, and household items will cost a single, minimum wage earner $8,725 per year, leaving a net total of only a measly $3,389 per year.

Next would come secondary expenditures such as emergency funds, entertainment, and other miscellaneous expenses. At least $1,000 per month should be set aside for emergency purposes, and though that may not seem like a lot, with such a tight budget it will have to do. Another $1,000 could be set aside for miscellaneous expenses such as taking the bus or purchasing a bike because affording a car or gas for the car would be nearly impossible on such a small income. Entertainment in a predicament like this would be limited to buying a CD or going to see the matinee at a local movie theater. One could set aside $25 per month or $300 per year for such purposes. Also keep in mind the possibility of free entertainment like the use of public parks will help aid in ones search for low-cost entertainment. These particular expenses total $2,300, leaving us with a net total of merely $1,089 for the year. So once again these expenditures take an immense amount out of a minute net total.

As one can see, there is a thinning fine line between whether one can live off minimum wage or not. A yearly net total of just $1,089 does not leave room for fluctuation in how one spends their money. Even in the best-case scenario outlined in this example, it would be difficult for a minimum wage earner to take any time off of work. One day off for any circumstance will make it inevitably harder to live on minimum wage. If the wage earner is unable to locate and secure inexpensive housing and absolutely does not need a car, these expenses will indisputably make it near impossible to live with one minimum wage job. Also left out of this example were costly habits such as smoking, and the assumption that the earner did not accumulate debt, which both can be extremely costly. Sometimes so costly that it would reach a point where there would be no way of being able to live off current federal minimum wage. Minimum wage at this moment in time apparently does mean minimum living.