Americans are seeing the highest minimum wage increases in history. So how did we get here? Cue our nation’s state and local governments. They’ve been doing the heavy lifting for minimum wage regulations, and will probably continue in the immediate future. How will you know if an increase in the minimum wage will be on your city council calendar soon? We’ve done the legislative tracking for you. Here’s what you need to know about the impact of raising the minimum wage.
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The History of Minimum Wage in America
Franklin D. Roosevelt was the first American president to extend the nationwide minimum wage in 1938. In the Progressive Era, the standard was 25 cents per hour, allocated for inflation, which equals about $4.45 after inflation. According to CNN, “Congress has raised the minimum wage 22 times. The current level, at $7.25 an hour, was set in 2009.”
A lack of congressional effort to support adjusting wages to balance inflation is why so many cities and states have opted to set their own minimum wage requirements. If federal, state, and local governments didn’t address this issue every few years, we’d still be making pennies.
Twenty-nine states and D.C. have all raised their minimum wages above what national law requires. The last federal minimum increase was in 2009, which set the legal minimum wage for all workers to $7.25 per hour. 21 states still uphold the limits set in 2009 by the federal government, however, the minimum wage for tipped workers is still $2.13 per hour; it hasn’t been adjusted since 1991.
But why haven’t they?
Does Minimum Wage Impact Businesses?
The long-standing argument is that if city regulations require businesses to increase their minimum wages past a certain point, the economy will essentially collapse. Which sounds extreme, because it is. It’s becoming clear that increasing the federal minimum wage doesn’t actually have a drastic impact on local businesses.
One recent study followed a handful of American cities that had risen the minimum wage to or above $10 per hour. The city with the highest minimum wage in the study was in Seattle at $13 per hour. The report focused on how raising the minimum wage had impacted the foodservice industry since it is a major employer of low-wage workers.
What did they find? Those businesses remained unaffected by the change in the minimum wage. Lower turnover, higher employee productivity, and slight increases in menu prices absorbed the added costs for most companies.
There have been two more recent attempts to raise the minimum wage, one in 2013 and one in 2014 that failed. House Republicans opposed the first and in 2014 Senate Republicans killed the bill by filibuster.
Where Government Regulations Stand
In response to the inability to have wage increases mandated at a federal level, state and
local governments have taken the initiative, added to the local city council agenda, and
implemented their own laws. In 2019, the number of states that adopted minimum wage increases to $15 per hour nearly doubled. Also notable is the number of cites, towns, and counties that are currently considering $15 minimum wages.
New studies have not looked into cities that raised the minimum wage to specifically $15, but it’s not expected to make a significant impact.
Using a Government Agenda Alert
You have the power to dictate what the minimum wage is for your business and your family since most of the movement on this issue happens at a local level. But where do you even start?
One of the best ways to stay on top of what’s happening in your local government is to use the Agenda Discovery software. We make it easy to be notified if something like the minimum wage increase, will be on your next city council meeting schedule. Contact us to learn more and schedule a demo!