Obama's $9 Minimum Wage Idea: 9 Things to Consider
The State of the Union address always gets people talking, and President Obama's call to raise the minimum wage to $9 an hour certainly did the trick.
Currently, the federal minimum wage is $7.25. It's been that way since 2009. That rate applies to federal employees and to anyone protected by the Fair Labor Standards Act. But many states and some cities also set their own minimum-wage levels that are higher than the federal baseline.
As business, economic, and legal experts debate the pros and cons of a $9-an-hour federal minimum wage, here are nine issues you'll want to keep in mind:
- It's a serious increase. The proposed increase would give minimum wage workers $1.75 more per hour. Full-time minimum-wage workers would see their pay get bumped from $14,500 a year to $18,000 a year.
- It used to be higher, if you adjust for inflation. The actual dollar amount of the federal minimum wage has only gone up. But when adjusted for inflation, the minimum wage was actually $8.54 an hour in 1968, according to the Economic Policy Institute.
- Tipped workers may also see higher wages. If you're a tipped employee, like a restaurant worker, federal law sets a different wage, currently $2.13 per hour. But in most cases, a tipped worker's combined tips-plus-wages must still add up to at least the federal minimum wage. A new minimum wage law may specify a new baseline for tipped workers.
- Some employees are exempt. This can get tricky and depends on the circumstances, but employees who aren't entitled to the minimum wage can include full-time college students, farm and fishing workers, and outside sales employees, among others.
- It's not a reality yet. Like any bill, this proposal will have to be approved by both houses of Congress.
- It may be passed as a "rider," not as its own separate bill. Unpopular but necessary legislation is sometimes tacked on to a "can't fail" bill that Congress can't afford not to pass. In fact, that's how the last minimum wage increase was passed.
- The practical effect on states. Currently 49 states and Washington, D.C., have a minimum wage that's less than $9 an hour. Only Washington state's is higher, at $9.19 per hour. If federal and state laws are different, the higher standard applies, according to the Department of Labor.
- Effect on local minimum wage laws. Similar to states, many localities have also set their own minimum wage laws. In San Francisco, for example, it's $10.55 an hour; that would not be affected by a proposed federal minimum-wage hike.
- It's already been suggested. Last August, a bill was proposed to raise the minimum wage to $9.80 per hour. That bill is in committee, so a minimum wage increase could potentially happen sooner than you think.