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Minimum Wage: Highs and Lows

April 14, 2016
Plain English Version
Photographer: Daniel Acker/Bloomberg via Getty Images

Photographer: Daniel Acker/Bloomberg via Getty Images

The federal minimum hourly wage is $7.25 an hour. It is the same as it was in 2009. The minimum wage is higher in 29 states and Washington, D.C.

Tipped workers have a lower minimum hourly wage. If they have to, employers must add to their tips. Their hourly pay must reach the minimum wage in the state where they work.

Raising the minimum hourly wage sounds like a good idea.

There is a drive across the nation to raise the minimum hourly wage to $15 an hour. President Obama wants the minimum hourly wage to rise from $7.25 to $10.10 an hour. His recommendation will go nowhere in this Republican Congress.

California is raising the minimum hourly wage to $15 over the next six years. New York’s governor is close to doing the same.

Many experts say the minimum hourly wage should be 50 percent of a state’s median hourly wage. A state with a median hourly wage of $20 should have a minimum wage of $10.

What is the best information to know in this debate?  California’s minimum hourly wage will reach $15. It will be 69 percent of the state’s median hourly rate. Economists just do not know what will happen. No state has ever raised their minimum wage to that percentage.

Republicans say raising the minimum hourly wage will mean lost jobs. Some economists agree that big increases, like to $15, may result in some job loss. Some business owners may cut workers to lower labor costs. Experts say moderate increases in the hourly wage should not cost workers their jobs.

There are the questions. Will a much higher minimum hourly wage result in job losses for the lowest paid workers? Is this experiment worth trying?

Politicians and advocates for the lower-income say yes. Some economists are not as sure. They worry about a loss of jobs for people who may need the money the most.

Source: The Washington Post March 30, 2016

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