Who Benefits the Most from Increased Minimum Wage?

Minimum wage rates are rising around the country. Some regions are lifting it higher than the United States has ever seen ($15.37 in Los Angeles), while other regions have more…shall we say… modest plans (Georgia and Wyoming employers pay their lowest compensated workers $5.15/hr). Five US States, all located in the South, have no minimum wage requirements at all, which means they have to adopt the Federally mandated level. But national momentum is clearly in favor of a financial floor beneath which no worker can fall, and most of the United States have unified in this effort.

So why do we have a minimum wage at all? And who does a minimum wage benefit the most? These might seem like no-brainers, but the actual history and statistical analysis of minimum wage culture has a few surprises. Congress created the first national minimum wage in 1938, at a whopping 25 cents per hour. However, they have been very adamant in showing the public that they are fighting for the rights of the people who have jobs. Since then, Congress has bumped up the Federal minimum wage 22 times, most recently in 2007 and 2009, at $5.15 and $7.25, respectively. Some citizens are able to outpace the Federal minimum wage level with increase in employment compensation, through efforts like an MBA from Russell Sage Online. Others are not. Many bills have been introduced, but none have been turned into law.

Since 2009, the Federal minimum wage hasn’t budged. But in all times, states have had the right to install minimum wages that are higher than the federally mandated minimum. With Congress long overdue for another Federal increase, today 29 states have voted to increase the minimum wage standards of their lowest-paid citizens. Congress tends to boost the Federal minimum wage when the economy is improving and when there is little unemployment. With the recent stock market drop and an election on the horizon, it’s likely we won’t see increases in the Federal minimum wage in the next few months.

So it’s the States that are leading the charge. Among them, the District of Columbia, Washington, Oregon, Vermont, Connecticut, Massachusetts, Rhode Island, and California round out the top 8, all of them with a minimum wage of at least $9.00. But in some cases, individual cities support the charge, New York City and Los Angeles at the vanguard. We’ve already covered the LA situation, and Mayor DeBlasio has proposed a minimum wage of $15 for NYC. Chicago and Seattle are among the many other cities considering a higher minimum wage than demanded by state law for hired service or services.

Legislation has been batting around Congress for several years, which would raise the Federal minimum wage level to $10.10, with many opportunities for continued increase in the following years. Though it is unclear when this might become law, it’s assumed that 28 million workers would benefit from such a decision at the Federal level. That’s how many people currently work for less than $10.10 an hour, which is something that many are calling a national embarrassment. Adjusted for inflation, the minimum wage has fallen by nearly a third since 1968.

These 28 million people include many servers who frequently make between $1-3 before tips. In California, individual cities have instituted a non-docked minimum wage for these servers, meaning that they now receive the same minimum wage standard as all other workers, even before tips are counted. 88% of the workers affected would be over the age of 20, and 55% would be women. Though many pundits have speculated that a higher minimum wage would result in reduced employment, independent studies do not agree. Despite recent economic tumult, it seems that the time for an increased Federal minimum wage has come. You can bet that this will be a part of  government election discussion, and an important ramification for whomever is elected.

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