Some Effects of Minimum Wage

The federal minimum was originated in the Fair Labor Standards act signed by President Franklin Roosevelt on June 25, 1938. The law established a minimum was of . 25 cents per hour for all employees who produced goods that were shipped in the interstate commerce. The wage is equal to $4. 04 in today’s market. The Fair Labor Standards Act covered about thirty eight percent of the labor force, mostly in the manufacturing, mining and transportation industries. Congress expanded the coverage and increased the minimum wage rate. The air transport industry was added in 1947, followed by retail trade in 1961. The construction industry, public schools, farms, laundries and nursing homes were added in 1966 and coverage was extended to state and local government employees in 1974. The Fair Labor Standards Act covers about 85 percent of the labor force. Since 1938 the federal minimum wage has been raised twenty two times. From 1949 to 1968 the value of minimum was (2011 in real dollars) rose fast from $3. 78 to $10. 34. At $7. 25 per hour the minimum wage today in real dollars is eighty five percent greater than the original benchmark and just below its average for the past sixty years of $7. 59. The Fair Labor Standards Act requires employers to comply with the state minimum wage laws that may set a state minimum wage rate above the federal rate. As of 2011, 45 states and the District of Columbia have their own minimum wages, of which eighteen are higher than the current federal minimum of $7. 25 per hour. Only five states do not have their own minimum wage laws and they depend on the Fair Labor Standards Act. Currently the highest paying minimum wage state is Washington at ($9. 04), followed by Oregon ($8. 80) and Vermont ($8. 46). States with relatively high state minimum wages may have lower job growth and lower economic growth that would otherwise be the case. States with lower wage levels, such as those in the Southern region, have greater than average share of workers in the range that would be affected by an increase in the minimum wage rate. Relatively large shares of workers that would benefit from the increase are found in Louisiana, West Virginia, Arkansas, and Mississippi. Some Western states such as Montana ,Wyoming and New Mexico, have similarly large shares of their work forces in the wage range. Who is paid the minimum wage? Supporters might believe that these laws mainly help to boost the incomers of full-time adult workers in low-income families, some of who are supporting children. Most workers earning minimum wage are young workers, part-time workers. According to the Bureau of Labor Statistics, 1. 8 million hourly paid employees were paid the federal minimum wage of $7. 25 in 2010. Roughly half are teenagers or young adults aged 24 or under. The majority of this group live in families with incomes two or more times the poverty level. The other half are aged 25 and up. More of these workers live in the poor families or near the poverty level.