State and Federal Minimum Wages
By Jeanne Mejeur | Vol . 22, No. 6 / February 2014
Did you know?
- During the 2013 session, 23 states and the District of Columbia considered bills to raise their minimum wages.
- California, Connecticut, New York and Rhode Island passed state minimum wage increases in 2013.
- Increases passed in Maine, New Mexico and New Jersey were vetoed but New Jersey voters later approved an increase through a state ballot measure.
The U.S. Congress last amended the Fair Labor Standards Act (FLSA) in 2007, passing a three-step increase that raised the federal minimum wage to $7.25, where it has remained since 2009.
The FLSA establishes standards for hourly minimum wages, overtime pay, recordkeeping and child labor. In 2012, more than 75 million workers were paid on an hourly basis and of those, 3.6 million were minimum wage workers.
More than half of minimum wage workers are under the age of 25. Six percent of women are paid the minimum wage or less, as compared to 3 percent of men. The leisure and hospitality sector has the highest proportion of minimum wage workers, where about half of all employees are paid at or below the federal minimum wage, under tip credit provisions.
According to the Bureau of Labor Statistics, Idaho, Louisiana, Oklahoma and Texas have the highest percentage of minimum wage workers, who account for between 7 and 8 percent of each state’s hourly workforce. The states with the lowest percentage of minimum wage workers are Alaska, California, Montana, Oregon and Washington.
All but five states have adopted state minimum wages. Alabama, Louisiana, Mississippi, South Carolina and Tennessee have no state minimum wage, relying solely on the federal minimum wage for workers who are covered by the FLSA. In addition, New Hampshire repealed its state minimum wage in 2011, but still refers to the federal minimum wage.
Nineteen states have set their state minimum wage to match the federal wage of $7.25, as have Guam, Puerto Rico and the U.S. Virgin Islands.
Four states have state minimum wages below the federal minimum, but in those states, the higher federal minimum wage applies. Minimum wages in American Samoa vary by industry and are set by Congress, with increases scheduled over several years to eventually match the federal minimum wage.
Twenty-one states and the District of Columbia have established state minimum wages that are above the federal minimum wage and, in those states, the higher state wage applies. Washington’s minimum wage, $9.32, is the highest, but California’s two-step increase will surpass that in January 2016, when the state minimum wage is set to increase to $10 per hour.
At the state level, minimum wage legislation tends to be cyclical. States typically consider minimum wage bills when several years have lapsed since the last federal increase.
During the 2013 legislative session, 23 states and Washington, D.C. introduced legislation to increase their state minimum wage, and bills were passed in seven states. Four states–California, Connecticut, New York and Rhode Island–enacted minimum wage hikes that were signed into law. California and Connecticut passed two-step increases, while New York enacted a three-step increase. Rhode Island passed a single-step increase.
Bills were passed by the legislatures in three more states but vetoed by the governors in Maine, New Mexico and New Jersey. Voters in New Jersey had the final say on the issue, as they approved a constitutional amendment in the 2013 November election that raised the minimum wage to $8.25 in January 2014 and tied future increases to the cost of living.
Legislators in Kansas, New Mexico, North Carolina, North Dakota, Pennsylvania and Texas introduced bills that didn’t raise the current minimum wage but would tie future minimum wage increases to the cost of living, with annual adjustments based on the Consumer Price Index. None of the bills passed, but it marks the first time that state legislatures considered bills solely to index future minimum wage increases to the cost of living.
Including the newly passed ballot measure in New Jersey, 11 states now index future increases in their state minimum wage to the cost of living. In states that index increases, an annual adjustment is calculated each fall to take effect the next January.
In 2013, the U.S. Congress considered seven bills to increase the minimum wage, tipped wages or subminimum wages, but none passed. Two additional bills addressed minimum wages in the territories and one passed–S 256–that delayed future increases in the minimum wage in the Northern Mariana Islands.
Characteristics of Minimum Wage Workers: 2012. Washington, D.C.: Bureau of Labor Statistics, 2012.
Changes in Basic Minimum Wages In State Law: 1968 to 2013. Washington, D.C.: U.S. Department of Labor, Wage and Hour Division, 2013.
Bradley, David H. The Federal Minimum Wage: In Brief. Washington, D.C.: Congressional Research Service, 2013.