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1 1 (August 5, 2019)

handle is hein.crs/govbaqw0001 and id is 1 raw text is: Congressional Research Service I ft r rgthcIegittiv~debate~anco 1914 0 August 5, 2019 Minimum Wages and the Raise the Wage Act (H.R. 582) Federal Minimum Wage Law Since 1938, the Fair Labor Standards Act (FLSA, 29 U.S.C. §206) has required that certain workers be paid a minimum wage. Since then, Congress has raised the minimum wage rate 22 times, from $0.25 per hour in 1938 to its last increase on July 24, 2009, to $7.25. (P.L. 110-28 increased it from $5.15 to $7.25 in three steps beginning in 2007). Currently, the FLSA covers most, but not all, enterprises and private and public sector employees. Certain employers and employees are exempt from all or parts of the FLSA minimum wage provisions, either because they do not meet individual or enterprise coverage criteria or through specific exemptions included in the act. In addition, the FLSA provides for the payment of subminimum wages (i.e., less than the statutory rate of $7.25) for certain classes of workers. State and Local Minimum Wages While the federal minimum wage is a nationally mandated wage floor, 29 states and Washington, DC, have enacted a higher state minimum wage. These state minimums range from as high as $14.00 (Washington, DC) to as low as $7.50 (New Mexico). Although any increase in the federal minimum wage requires congressional action, 18 states and Washington, DC, automatically increase their minimum wage by indexing it to an inflation measure. There are two states that have a state minimum wage below the federal minimum wage and five that have no state minimum wage. The federal minimum wage applies in states that do not have a state minimum wage or have one below the federal minimum. Additionally, several (44) localities have adopted minimum wages that are higher than their respective state minimum wages. As of 2019, 25 states prohibit localities from setting a minimum wage higher than the state level. These higher state and local minimum wages cover a large portion of the workforce. In a July 2019 report, the Congressional Budget Office (CBO) projected that 34% of all workers are subject to an applicable state minimum wage at or above $10 an hour in 2019; and by 2025 that percentage would increase to 53% of workers. Special Federal Subminimum Wages The FLSA allows the payment of subminimum wages for certain classes of workers, including the following: Tipped Workers. Under Section 203(m), a tipped employee-a worker who customarily and regularly receives more than $30 a month in tips-may have his or her cash wage from an employer reduced to $2.13 per hour, as long as the combination of tips and the cash wage from the employer equals the federal minimum wage. An employer may count against his or her liability for the required payment of the full federal minimum wage the amount an employee earns in tips; this is known as the tip credit. Under the current federal minimum wage and the current required minimum employer cash wage, the maximum tip credit is $5.12 per hour (i.e., $7.25 minus $2.13). Thus, all workers covered under the tip credit provision of the FLSA are guaranteed the federal minimum wage. * Youth. Under Section 214(c), employers may pay a minimum wage of $4.25 per hour to individuals under the age of 20 for the first 90 days of employment. * Individuals with Disabilities. Under Section 214(c), employers may apply for special certificates from the Wage and Hour Division of DOL that allow them to pay wages lower than the otherwise applicable federal minimum to persons whose earning or productive capacity is impaired by age, physical or mental deficiency, or injury. As elaborated in regulations, disabilities that may affect productive capacity include, but are not limited to, blindness, mental illness, mental retardation, cerebral palsy, alcoholism, and drug addiction. There is no statutory minimum wage required under this provision of the FLSA, but pay is to be broadly commensurate with pay to comparable non- disabled workers and related to an individual's productivity. Who Earns the Federal Minimum Wage? The most recent data available (2018) indicate that there are approximately 1.7 million workers, or 2.1% of all hourly paid workers, whose wages are at or below the federal minimum wage of $7.25 per hour. Of these 1.7 million workers, approximately 434,000 earn the federal minimum wage of $7.25 per hour, and the other 1.3 million earn below the federal minimum wage. As the Bureau of Labor Statistics (BLS) notes, the large number of individuals earning less than the statutory minimum wage does not necessarily indicate violations of the FLSA but may reflect exemptions or misreporting. (See https://www.bls.gov/opub/reports/minimum-wage/2018/ home.htm). A minimum wage earner is most likely to be female, age 20 or older, part-time, and working in a food service occupation, usually in food preparation and serving. The Raise the Wage Act (H.R. 582) H.R. 582 was reported in the House on July 11, 2019, and passed on July 18, 2019, by a vote of 231 to 199. H.R. 582 would amend the FLSA to * increase the minimum wage in seven steps until it reached $15.00 per hour in 2025, * require automatic increases by indexing the minimum wage to annual changes in the median hourly wage for all workers beginning in 2026, https: crsreports cong tess go

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