Increasing the Minimum Wage: What Has Happened So Far and What to Expect in 2015

Increasing the Minimum Wage: What Has Happened So Far and What to Expect in 2015

Let’s go back to the very beginning of last year. The minimum wage debate was not headlining the front-page of the Wall Street Journal. It was a topic more likely to be tucked away in the back of the Journal’s Business Section. Now fast-forward to the end of January 2014, when the President had just given his State of the Union Address. All of a sudden, raising the minimum wage had become the topic of conversation because of what President Obama said during his speech. He “challenged” Congress to act on raising the minimum wage set forth under the Fair Labor Standards Act (“FLSA”) to $10.00 per hour. The federal minimum wage has remained unchanged since 2009, when Congress last increased it to $7.25 per hour. Even though Congress opted to put the issue on hold for 2014, minimum wage increases did occur in various states across the country, and more still loom on the horizon for 2015.

Shortly after his speech, the President used his presidential powers to sign Executive Order 13658, which effectively raised the minimum wage to $10.10 for all new federal service contractors as of January 1, 2015. The Order only impacts certain employees working in the public sector, but minimum wage increases still managed to happen in the private sector, and were mostly due to initiatives by states and local municipalities.

Fourteen states—Arizona, California, Connecticut, Colorado, Florida, Missouri, Montana, New Jersey, New York, Ohio, Oregon, Rhode Island, Vermont, and Washington—all raised their state minimum wage rates last year. By the end of 2014, the District of Columbia and 23 other states required employers to pay a minimum wage above what’s required under the FLSA. Further complicating compliance, local municipalities also took matters into their own hands. Numerous cities—Albuquerque (NM), Berkley (CA), San Francisco (CA), San Jose (CA), Santa Fe (CA), and Seattle (WA)—elected to establish a minimum wage rate set higher than what is required at the federal and state level.

With the start of the New Year, six additional states entered into the minimum wage arena—Arkansas, Hawaii, Maryland, Nebraska, South Dakota, and West Virginia—now also entitle employees to be compensated at wage rates set higher than what’s mandated under federal law. As of January 1, 2015, the District of Columbia and 29 other states now mandate employers to compensate employees with hourly wages set higher than what is required under federal law. During 2015, expect states and local municipalities to continue taking matters into their own hands. The District of Columbia and a number of other states—Alaska, Delaware, and Minnesota—have new wage rate increases that are scheduled to take effect later this year.

The minimum wage topic won’t be fizzling out in 2015, but conversely do not expect Congress to raise the FLSA’s minimum wage rate anytime this year—in all likelihood, any increase will not happen until 2016 at the very earliest. The start of this year marked the first time in recent history that more states set a higher minimum wage, when compared to those states that simply follow what’s mandated by the federal government. As states continue setting higher minimum wage rates, Congress is ultimately going to be forced to act on the matter. But exactly when this will occur is presently the million dollar question that nobody can answer.

Jon Burns
ABOUT THE AUTHOR
Jon Burns
Jon is a Product Manager at Replicon who leads the Global Compliance Team. Replicon is an industry leader in global compliance and has a dedicated team which pro-actively monitors international labor regulations for ensuring proper adherence with specific country rule requirements.
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