Introducing the Standards for Minimum Wage Rates in the US

Subject: Law
Pages: 3
Words: 839
Reading time:
4 min
Study level: College

Introduction

The process of introducing the standards for minimum wage rates in the US was neither rapid nor easy to implement. It began in the late 1930s with the introduction of the Fair Labor Standards Act (FLSA) and has undergone major changes since then. Minimum wage rates and reforms related to them are still a controversial topic among many researchers and policymakers. While many people support increases in minimum wage, there are still individuals and parties that expect such changes to pose serious risks and difficulties for employers and smaller companies in particular. Arguments for and against raising minimum wage will be presented in this essay, and the rates in Connecticut as opposed to other states will be discussed.

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Main body

The first attempt to set a standard of minimum wage at the national level was made under the presidency of Franklin D, Roosevelt. In 1938, with the Fair Labor Standards Act, the Congress established the minimum statutory rate per hour, which amounted to $0.25 (U.S. Department of Labor, n.d.). However, the FLSA only established standards for the citizens employed in the fields related to interstate trade. In 1961, the amendments to the Act were introduced, which established minimum wage for the employees who worked in retail commerce and service institutions as well. In 1966, the Act was amended again, extending the standards to cover construction industry workers, public education and nursing homes employees, and a number of other important areas of work (U.S. Department of Labor, n.d.). The federal minimum wage increased over time, and new amendments extended the coverage of the Act, as well as categories of individuals who could be employed at a lower rate.

While the minimum wage established by the federal government is currently $7.25, the majority of states set their own standards. The rates tend to differ for employees based on the type of their occupation, business, skills, abilities, and conditions of work. States with the highest minimum wages are currently California, Washington, and Massachusetts, with the rates of $14, $13.69, and $13.50, respectively. As of January 1, 2021, the states with the lowest minimum wage rates are Georgia and Wyoming: both have an established $5,15 minimum wage (Employment Policies Institute). Only the employers who fall under the jurisdiction of the Fair Labor Standards Act are obliged to pay the minimum wage established by the federal government.

Connecticut, in turn, is among the states with the highest rates: minimum wage of the employees in Connecticut is currently $13.00. Along with California, Massachusetts, Delaware, Florida, Illinois, Maryland, New Jersey, Rhode Island, and a number of other states, Connecticut has passed legislation to increase minimum wage to $15.00. Public Act 19-4 was signed in 2019 by Governor Lamont and contained plans to gradually increase minimum wage in the state during the following five years. Since then, the wage rate has already been increased three times. It is expected to be increased to $14.00 on July 1, 2022, and reach $15.00 on June 1, 2023 (The Office of Governor Ned Lamont). Until now, the Act has already allowed to lessen pay disparities between different categories of individuals.

While many experts argue that increasing minimum wage will contribute significantly to the development of both national and state economies, there are also concerns that it may negatively affect employers and companies. The state of Connecticut can be used as an example to discuss economic growth due to the raise in minimum wage rates. First of all, the increase has already been demonstrated to help in combating income inequalities (The Office of Governor Ned Lamont). In addition, it is expected that with higher wages, there will be less people requiring public assistance, which will also strengthen the economy (Simonovits, et al.). Another important advantage of the increased minimum wage standards is the overall morale of the employees. Employees are more motivated and involved in the work processes when they are satisfied with their wages and can handle the rising cost of living while feeling financially secure.

Nevertheless, there are also opponents to increased wage rates who argue that these regulations can hinder economic development. They believe that imposing a high pay threshold for employers can lead to inflation, because businesses will be likely to increase prices as well (Simonovits, et al.). Moreover, higher wages can result in the increased rates of unemployment: since many employers will not be able to pay a minimum wage, they will have to cut jobs.

Conclusion

It can be concluded that increasing minimum wage is a more complicated issue than it may seem. While there are many supporters of these regulations, there are also opponents who believe that raised wages can result in a number of negative consequences. Past experiences in the states like Connecticut have shown that higher minimum wage can lead to the reduction in inequality between middle class and low-income employees. However, the issue might need further consideration to ensure successful introduction of the strategies that will allow increasing minimum wage rates across the country and preventing negative outcomes discussed above.

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Works Cited

Employment Policies Institute. “Minimum Wage.” MinimumWage.com, Web.

Simonovits, Gabor, et al. “Responsiveness without Representation: Evidence from Minimum Wage Laws in U.S. States.American Journal of Political Science, vol. 63, no. 2, 2018, pp. 401-410, Web.

The Office of Governor Ned Lamont. “Governor Lamont Reminds Residents That Connecticut’s Minimum Wage Is Scheduled to Increase on Sunday.” CT.gov – Connecticut’s Official State Website, 2021, Web.

U.S. Department of Labor. “History of changes to the minimum wage law.” Web.