Los Angeles Employment Lawyer Perry Smith

The Federal Minimum Wage

Though the idea of minimum wage is second nature to most Americans, federal minimum wage regulations did not get off to an easy start. In fact, the first national minimum wage standard, set in 1933 by the National Industrial Recovery Act, was declared unconstitutional by the US Supreme court just 2 years later. It was reinstated in 1938 by the Fair Labor Standards Act at a whopping 25 cents per hour.

Over the years, the dollar amount of the federal minimum wage has generally increased – from $1.60 in the late 1960s to $5.15 in the late 90s. This was followed by a long, stagnant period from 1997 to 2007, when the minimum wage did not change at all. Legislation signed by President Bush in 2007, however, provides for the minimum wage to increase to $6.55 in 2008 and $7.25 in 2009.

Unfortunately, an increase in face value does not always mean an increase in actual purchasing power, due to the effects of inflation. Most people are familiar with this phenomenon – a dollar today is worth far less (in terms of what it can buy) than a dollar 50 years ago. As a result, though the minimum wage standard has risen from a numerical standpoint, its total purchasing power has actually decreased. To address this problem, several state governments have linked their state minimum wage values to the Consumer Price Index (CPI), a measure of inflation. When inflation increases, so does their minimum wage, thus keeping purchasing power relatively constant.

Inflation concerns are just one of the factors which have led to wide disparities in minimum wage between states. After President Clinton signed legislation allowing states to set minimum wages above the national standard, the majority of states have chosen to do so. The state of Washington currently leads the pack with an $8.07 minimum wage. The highest minimum wage in the country, however, is $9.50 an hour in Santa Fe, NM.

For more information about employment law, contact Los Angeles employment lawyer Perry Smith by calling 888-356-2529.