Twenty-one states had minimum wage increases go into effect yesterday--and Delaware had one go into effect in October. Overall, an estimated 6.8 million people will see their paychecks increase anywhere from $0.10 an hour (Florida) to $1.50 an hour (New Mexico and Washington).
The federal minimum wage stays put at $7.25, but states are free to create their own minimum wage--whichever is higher (federal or state) is the legal lower limit for salaries. Twenty-one states use the federal minimum wage, but the rest have higher minimum wages.
Several states regularly adjust the minimum wage to account for inflation. Others are in the middle of a plan to reach a higher rate--usually $15 an hour.
What does minimum wage mean?
For jobs that are subject to the Fair Labor Standards Act (FLSA), you have to pay workers at least the minimum wage and time and half for working more than 40 hours in a week (or eight hours in a day in California). Most people, of course, earn more than the minimum wage. In 2018 only 0.05 percent of hourly workers earned the federal minimum wage.
If an employee receives tips, employers can receive a "tip credit." You'll often hear that this means your server is paid only $2.13 an hour. This is true in that the restaurant only has to pay that much, but if the tipped person doesn't earn at least $5.12 an hour in tips, the restaurant must make it up. In other words, the minimum wage really is the minimum. (This is not to say that there are not dishonest businesses out there--of course, there are.)
Of course, the law is not this easy, and there are all sorts of rules around what constitutes tipped work and state laws come into play.
But, if you receive less than $7.25 per hour (or your state minimum wage), file a complaint with the Department of Labor.
What should the minimum wage be?
Fight for $15 is a popular movement that says $15 an hour should be the new minimum wage everywhere. It makes little sense as the United States is vast and varied in the cost of living. The true minimum wage is always zero--if it's too expensive to hire someone, you won't.
Big businesses often argue for increased minimum wages--not because they are noble but because they know they can absorb the rate. It's a tactic meant to cripple their competitors. Nothing stops them from raising their wages. (Just like Bill Gates argues for higher taxes--nothing prevents him from donating billions to the government.)
If you are going to have a minimum wage, it should be tied to inflation and not the whims of whatever initiative gains momentum. But, raise the minimum wage too fast or too high, and you lose jobs.
What if you are earning minimum wage and don't see an increase in your paycheck?
If you're in one of the 22 states with increases and your check doesn't go up, first assume that it was an honest mistake. As your payroll person or HR or your manager, if they are aware that wages increased January 1. If they ignore you, you can file a complaint with the Department of Labor. Keep in mind, for many people, their first paycheck in 2020 will be for hours worked in 2019, before the raise went into effect.