A majority of states have minimum wages above the federal wage floor and private employers are raising their lowest wages to compete for workers, but the federal minimum wage still matters, wage and hour observers said.
July marks 13 years since the federal minimum wage last increased, to $7.25 an hour in 2009, following Congress's 2007 amendment of the Fair Labor Standards Act. Since then, states and territories have raised their own wage floors.
Thirty U.S. states and the District of Columbia, Puerto Rico, the U.S. Virgin Islands and Guam have set wage floors higher than the federal rate, some of which are on track to surpass $15 for the first time due to indexing to inflation. Employers have also raised wages to attract and retain workers.
But the federal minimum wage remains frozen. Democrats in the current Congress have been unable to advance an increase to $15 an hour through the Raise the Wage Act or by including minimum wage provisions in other bills, and history suggests that an increase would be even less likely to happen if Republicans gained control of one or both chambers.
Here, Law360 explores the debate around the significance of the federal minimum wage. …
Decreasing Power of the Federal Rate
Data suggest that the federal minimum wage means less than it used to, given that an exceedingly small percentage of hourly workers make $7.25 an hour, a trend observers attributed to the higher state wage floors and employers' higher wages. …
The declining significance of the federal minimum wage as workers are earning higher wages is a good thing, said Paul DeCamp of management-side firm Epstein Becker Green.
"The fact that the federal minimum wage has become largely inapplicable to many people because the reality is they're getting higher wages than that, some would view that as a success," DeCamp said. "That's the market working."
But "others would view that as a sign that the federal minimum wage needs to be increased because it hasn't kept pace with essentially the bottom tier of the economic spectrum," DeCamp said. "My view is that if worker wages are increasing and businesses are paying people well above the federal minimum wage, that's a good thing and ought to be celebrated."