The Minimum Wage Debate
June 28, 2016
In an exclusive article for Boss Magazine, NCPA Senior Fellow Pam Villarreal writes:
For several years now, stagnant wage growth and a sputtering economy have encouraged a movement by labor rights groups and others to raise the minimum wage. Politicians on the left and some on the right have called for an increase in the minimum wage to as high as $15 an hour. Supporters claim that a minimum wage that is more than double the current $7.25 an hour will reduce poverty and inequality with little impact on employment, citing empirical studies that show no adverse effect. Opponents, however, are skeptical. They also cite findings showing that an increase in the minimum wage would increase inequality and do little to alleviate poverty.
The first minimum wage, 25 cents an hour, was established under the Fair Labor Standards Act of 1938 and applied only to employees engaging in interstate commerce. By 1961, a new amendment covered additional employees in certain industries. By this time, the minimum wage was $1 an hour.
Then in 1978 all employees who were designated as non-exempt (non-salaried) were covered at $2.65 an hour. Since then, the minimum wage has increased 10 times under various presidential administrations.
The current rate of $7.25 an hour took effect in 2009. While many argue that the current time span is the longest that the minimum wage has not increased, the record actually goes back to a time span of 1997 when the minimum wage stood at $5.15 an hour for 10 years until 2007.
Thirty states, Washington, D.C., and a handful of cities have minimum wages that are significantly higher. In 2001, Washington became the first state to enact minimum wage increases tied to the cost of living; its minimum wage now stands at $9.47.
But other states have or will soon surpass Washington in terms of statutory rates. Washington, D.C.'s wage is $10.50 an hour and due to an increase to $11.50 in July of this year. Massachusetts' current rate of $10 an hour will increase to $11 at the beginning of next year. New York and California will bump their wages to $15 an hour in 2018 and 2022, respectively.
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