PAYDAY Workforce Solutions Blog

The Minimum Wage Debt

On May 30, 2014

President Obama signed an executive order to raise the minimum wage for employees in federal contract jobs including food service, sewing military uniforms, and truck driving. One Democrat, California Representative Barbara Lee agrees, and wants to see the minimum wage in California go to $26, almost double what Seattle Mayor Ed Murray wants for his city’s minimum wage. She thinks it would create a more productive workforce, more diversity, and economic parity. And she doesn’t believe it would hurt small business.

How Does $26 Compare to Other States Minimum Wages?

That’s a pretty extreme number compared to minimum wages in other states. Iowa, Kansas, and Kentucky are at $7.25. Arkansas is at $6.25. Georgia and Wyoming are both at $5.15. Louisiana and Alabama have no minimum at all. Oregon is at $9.10 per hour, Vermont is at $8.73, and Washington is at $9.32. These are the rates as of January 2014 according to the United States Department of Labor, and they’re nowhere close to the $26 per hour Representative Lee is talking about.

Subway's CEO's Solution

Fred DeLuca, Subway’s co-founder and CEO, has his own ideas about the minimum wage debate. He’s not worried about the effect that raising the minimum wage would have on business, his or his competitors’. He says it’s happened all along and impacts business evenly across the board, so it doesn’t affect competition. He would index the minimum wage to inflation for a more sensible and fair solution.

As to the claims that Subway is one of the biggest wage violation offenders, he says that impression is due to the large number of Subway stores. He feels the violations are at the first-time business owner level, and are due to inexperience, not deliberate. He believes people deserve to be paid properly and that’s why Subway started working with the Department of Labor several years ago to help educate Subway owners about wage issues and practices.

Federal Minimum Wage Rate and State Debates

The federal minimum wage rate began at 25 cents per hour in 1938, the year the Fair Labor Standards Act became law. Over the years, it has risen almost every five years, every year in some periods, but has remained at $7.25 since 2009.

Many states are looking at their minimum wage rates due to the controversies. Illinois has put it on an advisory referendum for November 2014. California cities San Diego and Seattle are considering raising their minimum wages to $10 to $15 per hour in spite of the lobbying against the proposed federal minimum wage increase. Oakland, Berkeley, and Richmond are following suit.

The House of Representatives plans to continue to fight the federal increase, as Speaker John Boehner claims. 2015 may very well see the state minimum wage increase in specific areas across the country, but an increase in the federal minimum wage will be more difficult to achieve.

Contact PAYDAY for assistance in regards to the minimum wage debt.

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