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Federal Minimum Wage Increase 2009

Posted by Tamara

The federal minimum wage increases from $6.55 to $7.25 on July 24, 2009, the last of the increases that started in 2007 with a hike from $5.15 to $5.85 per hour. The next was from $5.85 to $6.55 in 2008.

With the third and final increase in the minimum wage as set by the Fair Minimum Wage Act of 2007, employers should realize that failure to pay the minimum wage is a violation of the law.

The enforcing agency is the Wage and Hour Division of the U.S. Department of Labor, and the applicable law is the Fair Labor Standards Act (FLSA) of 1938.

Some employers are exempt from the law. They include those with fewer than 50 employees or whose revenues are less than $500,000 annually. Those who do not engage in interstate commerce are also exempt. According to the law “interstate commerce” occurs when a business regularly mails goods to out-of-state customers, buys supplies out of state, or makes items that will be sold out of state.

The increases were the first in more than 10 years. During that period, the minimum wage remained at $5.15 per hour, below the purchasing power of the $1.60 an hour minimum wage of 1968, according to proponents of the increase. In order to match the 1968 purchasing power, in fact, the current minimum wage would have to be $9.12 an hour.

Critics of the increases have made the argument that the minimum wages as established in the 2007 Act would have the effect of curtailing employment opportunities for workers who are either entry-level or unskilled.

During the ten years when the minimum wage remained at $5.15 an hour, members of Congress voted themselves pay raises that on average amounted to a total of $31,600 each. By comparison, the total minimum wage increases under the 2007 Act amount to $4,368 per worker or $84 per week.

On July 24, 2009, some states’ minimum wage rates will also increase. Some states mirror the federal minimum, and some have passed laws setting their minimum wages above the federal level. In those cases, the higher wage applies.


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