While the new fast-food minimum wage is among the highest in the U.S., California employers are used to paying more for their labor. Roughly three dozen California cities and counties have local minimum wages higher than the state pay floor of $16 an hour. Starting Monday, fast-food workers in California at chains with more than 60 national locations earn $20 an hour, higher than the minimum wages state’s broader minimum wage of $16 per hour. The new pay floor stems from a state law passed in September, which also establishes a nine-person council that will determine future wage hikes and suggest other guidelines for labor conditions for the industry. There are more than half a million fast-food workers in the state, Gov. Gavin Newsom said when signing the bill into law.
Way back in 1938, after decades of campaigning by labor rights activists, Congress passed the Fair Labor Standards Act and created the minimum wage rate for work in the United States. This guaranteed a basic level of income for all workers in the country, which helped keep families afloat during the Depression. The minimum wage is established by Congress and enforced by the Department of Labor. The living wage is a subjective concept calculated by policymakers and advocacy groups that works backward from actual costs of living to calculate a wage that covers the basic needs and expenses — housing, food, healthcare, transportation, etc. If the minimum wage in a particular area is less than the estimated living wage, the suggestion is that earnings from a full-time minimum-wage job are not enough to support someone without additional income or aid. The pay hike will have a bigger effect on fast-food restaurants in areas with lower costs of living, such as Fresno, according to Zhao.
Effects on Employment, Income, and Poverty
However, in states such as Alaska, California, Minnesota and Montana, employers can’t apply a tip credit and must pay the full minimum wage directly. For details about the change CBO made to its method for calculating elasticities, see the agency’s December 2023 report The Budgetary and Economic Effects of S. Combined, the effects of those changes are smaller than the effects resulting from the later implementation of the policies and the higher projected rate of wage growth. Workers whose hourly wages would be greater than the proposed minimum but less than that amount plus 50 percent of the difference between the increased federal minimum wage and their previously applicable (state or federal) minimum wage.
- Black or African American women and white women have the highest rate of employees earning at or below federal minimum wage, at 1.8% of hourly workers.
- Individual cities and municipalities may have a minimum wage that’s higher than the state level.
- The minimum wage will be adjusted annually based upon a set formula.
- A government spokesperson said the increase in the NLW and reduction in age threshold was a “historic moment which will put more money in the pockets of millions of workers”.
This means if you have remote employees across different states, you must comply with the minimum wage requirements of each specific location where your employees are working. Currently, a worker receiving the federal minimum wage and working 40 hours a week, 52 weeks a year, earns about $15,080 before taxes. In 2022, the national poverty guideline for a family of two was $18,310 a year, according to the Department of Health and Human Services. Second, the responsiveness of employment to an increase in the minimum wage is uncertain. If employment was more responsive than CBO expects, then increases in the minimum wage would lead to larger declines in employment.
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The staffing, he said, has become harder in recent years, as the state’s minimum wage has steadily increased since 2017, often rising by a dollar per year. Read on to find out what the current minimum wage is in your state, as well as where the federal minimum wage came from and arguments for and against raising it. Like previous increases in the minimum wage, the options presented here would take years to be fully implemented. The target year for full implementation is the year in which the regular minimum wage reaches its target value. 5 The minimum wage for seasonal and small employers who employ fewer than 6 people in New Jersey is $13.73 per hour.
Even when it is not mandated, restaurants usually find themselves paying more than the minimum wage to attract hourly workers. For years, the industry has struggled with a labor crunch as teens seek out internships instead of restaurant jobs and older workers decamp for other industries with better working conditions and benefits. Nearly two dozen states increased their minimum wage on Jan. 1, when measures that passed last year went into effect. (Connecticut, Florida, Nevada and Oregon are slated to bump up their base pay by September.)Below is a table with the minimum wage in all 50 states and Washington, DC, according to data from the Department of Labor and human resources company Paycor.