01/17/2007

Minimum wage increase on horizon
By Tom Range, Sr.

Among the issues to which the incoming Congress has promised to give its immediate attention is the increase in the minimum wage rate that is currently at $5.15 per hour, unchanged since September 1, 1997.  The House of Representatives has recently announced a proposed increase to $7.25 per hour in three stages over six months.

Among the legislative acts of the New Deal of the 1930s is the Fair Labor Standard Act (FLSA) passed by Congress in 1938.  FLSA prescribes standards for the basic minimum wage and overtime pay that affects most private and public employment.  It requires employers to pay covered employees at least the federal minimum wage and time-and-a- half pay for overtime. 

The minimum wage rate that was established by the FLSA for the continental states, territories and Caribbean and Pacific island possessions was in general 40 cents per hour, though not all classes of employees were protected under the legislation.  Agricultural workers have special status and Supreme Court cases have extended and modified existing coverage.  Early in the administration of the FLSA, it became apparent that application of the statutory minimum wage was likely to produce undesirable effects upon the economies of Puerto Rico and the Virgin Islands if applied to all of their covered industries.  Consequently on June 6, 1940, an amendment was enacted prescribing the establishment of special industry committees to determine, and issue through wage orders, the minimum wage levels applicable in Puerto Rico and the Virgin Islands.  The rates established by industry committees could be less that the statutory rates applicable elsewhere in the United States.

Subsequent amendments of the FLSA have extended the law's coverage to additional employees and raised the level of the minimum wage. 

In 1949, the minimum wage was raised from 40 cents to 75 cents.  A 1955 amendment increased the minimum wage to $1 an hour.  The 1961 amendments greatly expanded the FLSA's scope in the retail trade sector and increased the minimum for covered workers to $1.15 an hour effective September 1961 and to $1.25 in September 1963.  A new consideration was introduced in 1961, the concept of enterprise coverage.  The amendment extended coverage to employees of retail trade enterprises with sales exceeding $1 million annually, although individual establishments within these covered enterprises were exempt if their annual sales fell below $250,000.  These amendments extended coverage in the retail trade industry from an established 250,000 workers to 2.2 million.

Over the years, the minimum wage has increased as follows: a 1955 amendment increased the minimum wage to $1 per hour.  It was not until 1974 that the hourly rate was set at $2 per hour.  By 1980, it had increased to $3.10.  In April 1991, it had crossed the $4 threshold, having been set at $4.25.  As of October 1996, it was raised to $4.75.  A year later it was set at the current $5.15.

In the 69-year existence of FLSA there have been amendments to the Act addressing the sizes and types of enterprises subject to compliance with minimum wage legislation.  For example, the restaurant industry is currently allowed to pay qualifying "tipped" employees no less than $2.13 per hour if they receive the remainder of the statutory minimum wages in tips.

In addition to the federal safeguards against exploiting workers, all but five states have enacted minimum wage legislation that require enterprises within their jurisdictions to pay wages in most cases equal to or higher than the $5.15 federal requirement.  Of the states making up the Delmarva Peninsula, Delaware requires $6.65 per hour to increase to $7.15 in 2008; Maryland at $6.15 and Virginia at the $5.15 federal rate.  The lowest state-imposed rate is that of Kansas at $2.65, the highest are the states of Washington-$7.93; Oregon-$7.80; Connecticut-$7.65, and California-$7.50 to be raised to $8.00 per hour on January 1, 2008.  The five states that have no minimum wage laws are Alabama, Louisiana, Mississippi, South Carolina and Tennessee.

While the U.S. House of Representatives has reported out the amendment increasing the minimum wage, the Senate must concur, or through conference meetings, come to agreement with the House on another rate.  The president then must sign the amendment before it becomes law.  As with other increases, organized labor backs the bill as badly needed assistance for the working poor.  Business groups say it could lead to higher prices for goods and services, force small companies to lay off existing workers or hire fewer new ones, and crimp profits.


Send an Email Letter to Courier Editor - be sure to include your telephone number.