Minimum wage increases will affect numerous states across the country this week. Under the Fair Labor Standards Act (FLSA), the previous federal minimum wage is $7.25 per hour and has not increased since 2009.

The state of California’s minimum wage increases to $14 an hour.

This increase will move California one step closer to its goal of $15 per hour minimum wage.

The State of California Department of Industrial Relations states that although there are some exceptions, almost all employees in California must be paid the minimum wage as required by state law.

Minimum wage has been increasing $1 per year from January 2017 and will increase for employers employing 25 or more employees until January 2022, where it will peak at $15 per hour.

The effect of this multiple coverage by different government sources is that when there are conflicting requirements in the laws, the employer must follow the stricter standard; that is, the one that is most beneficial to the employee.

Thus, since California’s current law requires a higher minimum wage rate than does the federal law, all employers in California who are subject to both laws must pay the state minimum wage rate unless their employees are exempt under California law.

Similarly, if a local entity (city or county) has adopted a higher minimum wage, employees must be paid the local wage where it is higher than the state or federal minimum wage rates.

While California is known for its high wage rates, other jurisdictions across the United States will implement increased minimum wage at the start of 2021 as well.

Economist at the Economic Policy Institute (EPI) in Washington, D.C. Ben Zipperer said, “Minimum wage workers and low-wage workers generally, are mostly adults and are also disproportionately women and people of color. Workers in every region of the country will soon need $15 per hour to maintain a modest but adequate standard of living.”

Zipperer continued with, “Raising the national minimum wage is well overdue.

“Workers today who are paid the federal minimum wage of $7.25 an hour are, after adjusting for inflation, paid 20 percent less than their counterparts 50 years ago.

“This is despite the fact that the economy’s capacity to deliver higher wages has doubled in the last 50 years, as measured by labor productivity or the amount of output produced by workers.

“Had the minimum wage kept pace with labor productivity growth as it had from 1950 through 1968, this year it would be more than $20 per hour.

“Today, however, a single parent earning the current federal minimum wage does not earn enough through full-time work to bring his or her family above the federal poverty line.”

“Increasing the national minimum wage to $15 by 2024, as proposed in the Raise the Wage Act of 2019 (J.R. 582), is an important corrective to the failure to raise the minimum wage. This would ensure that a portion of the country’s labor productivity gains are translated into higher living standards for low-wage workers.

“The proposal does not raise the minimum wage to $15 immediately, but instead gradually phases in the increase over a period of time so that employers can adjust to the new standard,” Zipperer said.

Most employers in California are subject to both the federal and state minimum wage laws.

Also, local entities (cities and counties) are allowed to enact minimum wage rates and several cities have recently adopted ordinances, which establish a higher minimum wage rate for employees working within their local jurisdiction. Several California municipalities maintain their own minimum wage, which is higher, according to the University of California, Berkeley Labor Center.

There is no distinction made between adults and minors when it comes to payment of the minimum wage, therefore minimum wage is the same for both adult and minor employees, states the Department of Industrial Relations.

Interestingly enough one recent study showed that $14 an hour is not enough to secure affordable housing in most states in the United States for a single wage earner.

Nationally, someone would need to make $17.90 an hour to rent a one-bedroom apartment or $22.10 an hour to cover a two-bedroom home or be a two-income household, according to analysis from the National Low Income Housing Coalition.

The Committee on Education states raising minimum wage stimulates consumer spending, helps businesses’ bottom lines and grows the economy.

The committee also states a modest increase improves worker productivity and reduces employee turnover and absenteeism.

Toggletrack notes that it could also cause employers with tight budgets to lay off employees.

Companies may pass on the cost of increased wages to consumers in the form of price increases, which would raise the cost of living and create a need for further minimum wage increases.

Zipperer concluded with, “By 2024, in areas all across the United States, even a single adult with no children will need to be earning more than $15 per hour on a full-time, full-year basis in order to achieve a modest but adequate standard of living. My colleagues at EPI have developed the Family Budget Calculator to delineate how much a family will need to earn every year in order to pay for housing, food, transportation, child care, health care, taxes and other necessities. As an economist, it is striking to me that we, as a country, tolerate a federal minimum wage as low as $7.25 per hour, given the needs documented in EPI’s Family Budget Calculator. The Fair Labor Standards Act was enacted in 1938 ‘to protect this nation from the evils and dangers resulting from wages too low to buy the bare necessities of life.’

“By raising the federal minimum wage to $15 by 2024, we will finally deliver a much-needed boost in wage income and increase the value of the minimum wage to a level that ensures the lowest wages we pay workers are not poverty wages. In addition, by automatically indexing future minimum wage increases to median wage growth, low-wage workers will share a common trajectory of wage growth with the broader labor market. Finally, gradually phasing out the separate lower wage for tipped workers will help to eliminate disparities in labor protections between tipped workers and the rest of the labor force.”

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