Minimum Wage Causing Maximum Stress

Tuesday, July 07, 2015

Whatever side of the debate you’re on, minimum wage has become a point of contention for U.S. workers and businesses alike.

“Fight for 15” protests have become the call to action to increase the minimum wage all over the country, prompting 20 states to approve a hike this year. In fact, an estimated $1.6 billion increase is expected in worker wages around the nation, according to the Economic Policy Institute in Washington, D.C.

Some economic experts say that this is only a small step in the right direction.

According to a March 2012 brief from the Center for Economic and Policy Research, if the federal minimum wage had kept pace with worker productivity over the past four decades, it would have hit $21.72 per hour. However, the federal minimum wage is still set at $7.25 per hour—even after 22 increases since 1938.

The reason for this huge gap is because these increases have not kept up with inflation and economic growth. Even after all of these increases, the overall real value of the minimum wage has drastically decreased—so much so that since 2009, the overall purchasing power of the minimum wage dropped 5.8 percent, according to the PEW Research Center.

Since its implementation in 1938, the Fair Labor Standards Act (FLSA) has been setting the standard of minimum wage for the federal government. However, a majority of states also have their own independent minimum wage laws ranging from $5.15 per hour (GA and WY) to $9.50 per hour (DC).

It gets even more specific than that with individual cities changing their minimum wage rate from that of their states. For example, in Illinois, the state minimum wage is $8.25 per hour, but within the city limits of Chicago it is set to be $13 by 2019. San Francisco and Seattle have also approved a gradual increase up to $15 per hour.

So while Congress is hard at work attempting to increase the federal minimum wage to $10.10 per hour, individual states have acted, and the increases are coming in full force.

To that point, advocates for leaving the federal minimum wage out of the equation believe that the states should have complete control over deciding how much to pay their employees based on the cost of living for their area.

For example, low cost-of-living locations like Tulsa, OK, should have a significantly lower minimum wage than cities like San Francisco or New York.

Whether it occurs at the state or federal level—or both—minimum wage is slated to be on the rise. And these changes can impact your payroll. Look for your state on the map below to check the status of your minimum wage laws. Full details on upcoming changes can be found here.

USA-map

So what are the next steps for business owners? Heartland Payroll can help you navigate the changing wage landscape—as well as meet the Department of Labor’s standards. Our solutions will allow you to make changes to your employees’ earnings quickly, and our HR services can keep you up to date on new laws and regulations.

For more information, visit heartlandpaymentsystems.com.