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[IWS] CRS: THE FEDERAL MINIMUM WAGE: IN BRIEF [13 January 2015]

IWS Documented News Service

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Institute for Workplace Studies-----------------Professor Samuel B. Bacharach

School of Industrial & Labor Relations-------- Director, Institute for Workplace Studies

Cornell University

16 East 34th Street, 4th floor--------------------Stuart Basefsky

New York, NY 10016 -------------------------------Director, IWS News Bureau

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This service is supported, in part, by donations. Please consider making a donation by following the instructions at http://www.ilr.cornell.edu/iws/news-bureau/support.html

 

 

Congressional Research Service (CRS)

 

The Federal Minimum Wage: In Brief

David H. Bradley, Specialist in Labor Economics

January 13, 2015

http://www.fas.org/sgp/crs/misc/R43089.pdf

[full-text, 11 pages]

 

Summary

The Fair Labor Standards Act (FLSA), enacted in 1938, is the federal legislation that establishes

the minimum hourly wage that must be paid to all covered workers. The minimum wage

provisions of the FLSA have been amended numerous times since 1938, typically for the purpose

of expanding coverage or raising the wage rate. Since its establishment, the minimum wage rate

has been raised 22 separate times. The most recent change was enacted in 2007 (P.L. 110-28),

which increased the minimum wage to its current level of $7.25 per hour.

 

In addition to setting the federal minimum wage rate, the FLSA provides for several exemptions

and subminimum wage categories for certain classes of workers and types of work. Even with

these exemptions, the FLSA minimum wage provisions still cover the vast majority of the

workforce. Despite this broad coverage, however, the minimum wage directly affects a relatively

small portion of the workforce. Currently, there are approximately 3.3 million workers, or 4.3%

of all hourly paid workers, whose wages are at or below the federal minimum wage of $7.25 per

hour. Approximately three-quarters of minimum wage workers are age 20 or older and nearly

two-thirds work part time.

 

Proponents of increasing the federal minimum wage argue that it may increase earnings for lower

income workers, lead to reduced turnover, and increase aggregate demand by providing greater

purchasing power for workers receiving a pay increase. Opponents of increasing the federal

minimum wage argue that it may result in reduced employment or reduced hours, lead to a

general price increase, and reduce profits of firms paying a higher minimum wage.

 

Contents

The Federal Minimum Wage ........................................................................................................... 1

FLSA Minimum Wage Coverage ..................................................................................................... 1

Enterprise Coverage .................................................................................................................. 1

Individual Coverage .................................................................................................................. 2

Exemptions and Subminimum Wages ....................................................................................... 2

Excluded from FLSA Minimum Wage Coverage ............................................................... 2

Subminimum Wages ............................................................................................................ 3

Characteristics of Minimum Wage Workers .................................................................................... 4

State Minimum Wages ..................................................................................................................... 5

Arguments For and Against Raising the Minimum Wage ............................................................... 5

Arguments For Increasing the Minimum Wage......................................................................... 6

Increases Earnings ............................................................................................................... 6

Increases Aggregate Demand .............................................................................................. 6

Reduces Inequality .............................................................................................................. 6

Reduces Employee Turnover .............................................................................................. 7

Arguments Against Increasing the Minimum Wage .................................................................. 7

Reduces Employment .......................................................................................................... 7

Does Not Reduce Poverty ................................................................................................... 7

Increases Prices ................................................................................................................... 7

Reduces Profits .................................................................................................................... 7

Contacts

Author Contact Information............................................................................................................. 8

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This information is provided to subscribers, friends, faculty, students and alumni of the School of Industrial & Labor Relations (ILR). It is a service of the Institute for Workplace Studies (IWS) in New York City. Stuart Basefsky is responsible for the selection of the contents which is intended to keep researchers, companies, workers, and governments aware of the latest information related to ILR disciplines as it becomes available for the purposes of research, understanding and debate. The content does not reflect the opinions or positions of Cornell University, the School of Industrial & Labor Relations, or that of Mr. Basefsky and should not be construed as such. The service is unique in that it provides the original source documentation, via links, behind the news and research of the day. Use of the information provided is unrestricted. However, it is requested that users acknowledge that the information was found via the IWS Documented News Service.

 

 

 

 

 

 

 

 

 




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