Since 2009, The U.S. Federal Minimum Wage Has Been US$7.25 Per Hour
Average Annual Inflation From 2009 Through 2020 Is 2.05%; Total Since 2009 Is 19.5%
Adjusted For Inflation, U.S. Federal Minimum Wage Would Be US$8.66
The Living Wage Is US$16.78 Per Hour
Should Federal And Living Wages Be Merged?
Phase-In Beginning 1 January 2021?
Can U.S. Congress Deliver “Clean” Legislation To President Trump?

2007 amendments to the Fair Labor Standards Act increased the federal minimum wage from US$5.15 per hour to US$5.85 per hour effective July 24, 2007- representing an increase of 13.6%; from US$5.85 per hour to US$6.55 per hour effective July 24, 2008- representing an increase of 11.9%; and from US$6.55 per hour to US$7.25 per hour effective July 24, 2009- representing an increase of 10.6%. 

Since the last increase of the federal minimum wage in 2009, the average annual inflation rate is 2.05%, representing a total 2009 to 2020 increase of approximately 19.5%.  Thus, the annual inflation adjusted federal minimum wage for 2020 would be U$8.66. 

The highest local minimum wages are US$16.39 in Seattle, Washington; US$15.59 in San Francisco, California; US$15.25 in San Jose, California; US$15.00 in New York, New York; US$14.00 in Washington, D.C.; US$12.75 in Boston, Massachusetts; and US$11.00 in Baltimore, Maryland.  Washington state has the highest state minimum at US$13.50. 

The United States “Living Wage” was estimated as US$15.84 in 2016 and US$16.07 in 2017.  Using the same percentage increase, the Living Wage was US$16.30 in 2018, US$16.54 in 2019, and US$16.78 in 2020 representing annual increases of 1.45%.  

Increasing the federal minimum wage to US$10.00 per hour would represent an increase of 37.9% from the current US$7.25 per hour established in 2009; an increase of the current federal minimum wage of US$7.25 to the “Living Wage” in 2020 of US$16.78 per hour would represent an increase of 131.4%. 

There is rationale for increasing the federal minimum wage as it does not reflect the cost-of-living realities for those workers relying upon earnings from hourly wages.  Few companies are paying their workers US$7.25 per hour; many are paying at least US$10.00.   

A compromise could be a base of US$14.50 per hour, representing a 100% increase from the US$7.25 established in 2009.  The increase from US$7.25 to US$14.50 would be implemented during three years- to US$9.64 on 1 January 2021, to US$12.82 on 1 January 2022, and US$14.50 on 1 January 2023.  

The unknown is whether the United States Congress could craft and present to the Trump Administration a “clean” bill, absent of “killer amendments.” 

“Fair Labor Standards Act, also called Wages and Hours Act, the first act in the United States prescribing nationwide compulsory federal regulation of wages and hours, sponsored by Sen. Robert F. Wagner of New York and signed on June 14, 1938, effective October 24. The law, applying to all industries engaged in interstate commerce, established a minimum wage of 25 cents per hour for the first year, to be increased to 40 cents within seven years. No worker was obliged to work, without compensation at overtime rates, more than 44 hours a week during the first year, 42 the second year, and 40 thereafter.” 

From the United States Department of Labor: 

The Fair Labor Standards Act (FLSA) establishes minimum wage, overtime pay, recordkeeping, and youth employment standards affecting employees in the private sector and in Federal, State, and local governments. Covered nonexempt workers are entitled to a minimum wage of not less than $7.25 per hour effective July 24, 2009. Overtime pay at a rate not less than one and one-half times the regular rate of pay is required after 40 hours of work in a workweek. 

FLSA Minimum Wage: The federal minimum wage is $7.25 per hour effective July 24, 2009. Many states also have minimum wage laws. In cases where an employee is subject to both state and federal minimum wage laws, the employee is entitled to the higher minimum wage. 

FLSA Overtime: Covered nonexempt employees must receive overtime pay for hours worked over 40 per workweek (any fixed and regularly recurring period of 168 hours – seven consecutive 24-hour periods) at a rate not less than one and one-half times the regular rate of pay. There is no limit on the number of hours employees 16 years or older may work in any workweek. The FLSA does not require overtime pay for work on weekends, holidays, or regular days of rest, unless overtime is worked on such days. 

Hours Worked (PDF): Hours worked ordinarily include all the time during which an employee is required to be on the employer’s premises, on duty, or at a prescribed workplace. 

Recordkeeping (PDF): Employers must display an official poster outlining the requirements of the FLSA. Employers must also keep employee time and pay records. 

Child Labor: These provisions are designed to protect the educational opportunities of minors and prohibit their employment in jobs and under conditions detrimental to their health or well-being. 

History of Changes to the Minimum Wage Law 

Adapted from Minimum Wage and Maximum Hours Standards Under the Fair Labor Standards Act, 1988 Report to the Congress under Section 4(d)(1) of the FLSA. 

Early in the administration of the FLSA, it became apparent that application of the statutory minimum wage was likely to produce undesirable effects upon the economies of Puerto Rico and the Virgin Islands if applied to all of their covered industries. Consequently on June 26, 1940, an amendment was enacted prescribing the establishment of special industry committees to determine, and issue through wage orders, the minimum wage levels applicable in Puerto Rico and the Virgin Islands. The rates established by industry committees could be less than the statutory rates applicable elsewhere in the United States. 

On May 14, 1947, the FLSA was amended by the Portal-to-Portal Act. This legislation was significant because it resolved some issues as to what constitutes compensable hours worked under FLSA. Matters involving underground travel in coal mines and make-ready practices in factories had been decided earlier in a number of U.S. Supreme Court decisions. 

Subsequent amendments to the FLSA have extended the law's coverage to additional employees and raised the level of the minimum wage. In 1949, the minimum wage was raised from 40 cents an hour to 75 cents an hour for all workers and minimum wage coverage was expanded to include workers in the air transport industry. The 1949 amendments also eliminated industry committees except in Puerto Rico and the Virgin Islands. A specific section was added granting the Wage and Hour Administrator in the U.S. Department of Labor authorization to control the incidence of exploitative industrial homework. A 1955 amendment increased the minimum wage to $1.00 an hour with no changes in coverage. 

The 1961 amendments greatly expanded the FLSA's scope in the retail trade sector and increased the minimum for previously covered workers to $1.15 an hour effective September 1961 and to $1.25 an hour in September 1963. The minimum for workers newly subject to the Act was set at $1.00 an hour effective September 1961, $1.15 an hour in September 1964, and $1.25 an hour in September 1965. Retail and service establishments were allowed to employ fulltime students at wages of no more than 15 percent below the minimum with proper certification from the Department of Labor. The amendments extended coverage to employees of retail trade enterprises with sales exceeding $1 million annually, although individual establishments within those covered enterprises were exempt if their annual sales fell below $250,000. The concept of enterprise coverage was introduced by the 1961 amendments. Those amendments extended coverage in the retail trade industry from an established 250,000 workers to 2.2 million. 

Congress further broadened coverage with amendments in 1966 by lowering the enterprise sales volume test to $500,000, effective February 1967, with a further cut to $250,000 effective February 1969. The 1966 amendments also extended coverage to public schools, nursing homes, laundries, and the entire construction industry. Farms were subject to coverage for the first time if their employment reached 500 or more man days of labor in the previous year's peak quarter. The minimum wage went to $1.00 an hour effective February 1967 for newly covered nonfarm workers, $1.15 in February 1968, $1.30 in February 1969, $1.45 in February 1970, and $1.60 in February 1971. Increases for newly subject farm workers stopped at $1.30. The 1966 amendments extended the fulltime student certification program to covered agricultural employers and to institutions of higher learning. 

In 1974, Congress included under the FLSA all no supervisory employees of Federal, State, and local governments and many domestic workers. (Subsequently, in 1976, in National League of Cities v. Usery, the Supreme Court held that the minimum wage and overtime provisions of the FLSA could not constitutionally apply to State and local government employees engaged in traditional government functions.) The minimum wage increased to $2.00 an hour in 1974, $2.10 in 1975, and $2.30 in 1976 for all except farm workers, whose minimum initially rose to $1.60. Parity with nonfarm workers was reached at $2.30 with the 1977 amendments. 

The 1977 amendments, by eliminating the separate lower minimum for large agricultural employers (although retaining the overtime exemption), set a new uniform wage schedule for all covered workers. The minimum went to $2.65 an hour in January 1978, $2.90 in January 1979, $3.10 in January 1980, and $3.35 in January 1981. The amendments eased the provisions for establishments permitted to employ students at the lower wage rate and allowed special waivers for children 10to11 years old to work in agriculture. The overtime exemption for employees in hotels, motels, and restaurants was eliminated. To allow for the effects of inflation, the $250,000 dollar volume of sales coverage test for retail trade and service enterprises was increased in stages to $362,500 after December 31, 1981. 

As a result of the Supreme Court's 1985 decision in Garcia v. San Antonio Metropolitan Transit Authority et.al., Congress passed amendments changing the application of FLSA to public sector employees. Specifically, these amendments permit State and local governments to compensate their employees for overtime hours worked with compensatory time off in lieu of overtime pay, at a rate of 1 1/2 hours for each hour of overtime worked. 

The 1989 amendments established a single annual dollar volume test of $500,000 for enterprise coverage of both retail and no retail businesses. At the same time, the amendments eliminated the minimum wage and overtime pay exemption for small retail firms. Thus, employees of small retail businesses became subject to minimum wage and overtime pay in any workweek in which they engage in commerce or the production of goods for commerce. The minimum wage was raised to $3.80 an hour beginning April 1, 1990, and to $4.25 an hour beginning April 1, 1991. The amendments also established a training wage provision (at 85% of the minimum wage, but not less than $3.35 an hour) for employees under the age of twenty, a provision that expired in 1993. Finally, the amendments established an overtime exception for time spent by employees in remedial education and civil money penalties for willful or repeated violations of the minimum wage or overtime pay requirements of the law. 

In 1990, Congress enacted legislation requiring regulations to be issued providing a special overtime exemption for certain highly skilled professionals in the computer field who receive not less than 6 and one-half times the applicable minimum wage. 

The 1996 amendments increased the minimum wage to $4.75 an hour on October 1, 1996, and to $5.15 an hour on September 1, 1997. The amendments also established a youth sub minimum wage of $4.25 an hour for newly hired employees under age 20 during their first 90 consecutive calendar days after being hired by their employer; revised the tip credit provisions to allow employers to pay qualifying tipped employees no less than $2.13 per hour if they received the remainder of the statutory minimum wage in tips; set the hourly compensation test for qualifying computer related professional employees at $27.63 an hour; and amended the Portal-to-Portal Act to allow employers and employees to agree on the use of employer provided vehicles for commuting to and from work, at the beginning and end of the work day, without counting the commuting time as compensable working time if certain conditions are met. 

The 2007 amendments increased the minimum wage to $5.85 per hour effective July 24, 2007; $6.55 per hour effective July 24, 2008; and $7.25 per hour effective July 24, 2009. A separate provision of the bill brings about phased increases to the minimum wages in the Commonwealth of Northern Mariana Islands and in American Samoa, with the goal of bringing the minimum wages in those locations up to the general federal minimum wage over a number of years.