When someone asks how much is the minimum wage, the answer should be straightforward. The real answer is that, it depends. Minimum wage is affected by a myriad of factors, including the economy and cost of living. Let’s take a moment and look back in history to how the minimum wage came about.

U.S History of the Minimum Wage

In 1938, Congress passed the Fair Labor Standards Act that was put in place to minimise the exploitation of workers. The idea behind the minimum wage was for workers to be compensated based on the amount of time they spend working. When the minimum wage started out, it was US$0.25 per hour, and over time, it has been increased a total of 22 times to the rate it is today.

The Minimum Wage Today

The minimum wage will vary from state to state, although it should not fall below the federal mandated minimum wage. As of 1^st January 2020, the minimum wage was US$ 7.25 per hour. The states that currently have the highest minimum wage rates are the District of Columbia and Washington state. The rates in these states are US$14 and US$13.5 per hour respectively.

There are some employers that can legally pay below the minimum working wage to their employees. For example, those who employ in the service industry most commonly in retail sales, or in food service. The rate drops to a subminimum of $2.31 per hour, if there is evidence that they can match the federal minimum wage rate from additional tips. For young people or teenagers who have just started working, or are on an internship, the employer can pay them less than minimum wage for their first 90 working days.  As of end of 2018, there were 1,276,000 who were working and earning below the minimum wage. Paying employees below minimum wage in these industries is likely to increase, though the result would be that individuals would have to work several of these positions to make enough money to survive.

In the year 2020, the state minimum wage rates are going to be adjusted in at least 24 states across the country. The federal minimum wage rate will remain the same. Before an employee moves to a certain state because of the minimum wage, it is worth noting that in some states, there is no federal minimum wage. Instead, there are some employers that are not subject to the Fair Labor Standards Act and these may be found in Georgia or Wyoming.

A review of U.S. minimum wage history, and where it is today, reveals that the increases are minimal. They do not necessarily match the cost of living, therefore, individuals still find that they cannot meet all their costs with a minimum wage job. Therefore, some people will move to states which offer higher minimum wages. This is because employers are required to pay the higher minimum wage rate, thus enabling employees maintain a better quality of life.