The Minimum Wage Battle Wages On

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minimum_wage_seattleWith the federal minimum wage remaining at $7.25 since 2009, twenty-two states and the District of Columbia have raised their minimum wages to amounts higher than the federal rate. According to the National Conference of State Legislatures, so far this year, seven states and the District of Columbia have enacted legislation providing for increases in the minimum wage.  On June 9, 2014, Vermont Governor Peter Shumlin signed a law that will increase the state’s minimum wage to $10.50 by 2018, higher than any other state in the country.  Vermont will raise its minimum wage over time — first to $9.60 in 2016, to $10 in 2017, and finally to $10.50 in 2018.  Today, Vermont’s minimum wage is $8.60.  Washington currently has the highest state minimum wage at $9.32 per hour.

States are not the only localities increasing their minimum wages.  Several cities have taken action to increase their minimum wages. On June 2, 2014, Seattle’s city council unanimously adopted a citywide minimum wage of $15 per hour.  Seattle’s new minimum wage is now the highest in the country. While the $15 per hour may seem extravagant, it translates to about $31,200 annually for a full-time employee. As for the federal minimum wage, it translates to approximately $15,080 annually for a full-time employee.  This is a little more than $4,000 above the poverty line set by the U.S. Department of Health and Human Services for 2014.

Many businesses worry that a minimum wage hike will result in job losses as a consequence of increased operating costs.  The Congressional Budget Office released a report in February of this year estimating that total employment could be reduced by about 500,000 workers (or 0.3%) if the minimum wage is increased to $10.10 per hour.  Alternatively, the cost of an increased minimum wage could be passed to consumers through higher prices.

There is an argument, however, that paying employees more will have a positive impact on a company’s bottom line.  Poorly paid employees often have lower job satisfaction and are more likely to quit.  Job turnover can be costly because it requires companies to hire and train new employees.  There is also the issue of productivity.  Individuals who feel that they are being underpaid may put forth much less effort than employees who feel they are fairly compensated.  Companies that have an “if you don’t like it, then leave” approach to employee compensation may not engender the same loyalty as employers who show that they value their employees.

While the debate wages on (pun intended), one thing is for sure – employers and employees alike will be paying close attention!

 

Topics:  Employee Rights, Minimum Wage, Wage and Hour, Wages

Published In: Labor & Employment Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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