The minimum-wage debate has resurfaced with a vengeance in recent months in the United States, resulting in strikes and protests by service workers at popular fast-food restaurants like McDonald's, KFC and Taco Bell. But what is the minimum wage and how does it apply to American workers?
The minimum wage is the amount that employers must legally pay workers per hour of labor. Federal minimum wage provisions were first established in the United States in 1938 under the Fair Labor Standards Act (FLSA). The federal minimum wage is currently $7.25 per hour, however, most states have their own laws affecting the minimum wage.
If the state in which a person works establishes a minimum wage that is higher than the federal minimum wage, then that person is entitled to the higher of the two wages. Currently, 19 states and the District of Columbia have minimum wages set higher than the federal minimum. The state of Washington has the highest minimum wage at $9.19 per hour.
There are 10 states in which the minimum wage is linked to a consumer-price index. This means that the minimum wage in those states generally increases every year to account for inflation.
Since the implementation of the FLSA, the federal minimum wage has increased multiple times, reflecting rising inflation and changes in the standard cost of living. However, advocates of a higher minimum wage argue that the current rate of $7.25, which translates to an annual salary of around $15,000 for full-time employees, is not high enough, and President Barack Obama has proposed raising it to $9 per hour.
Striking service workers are currently demanding $15 per hour — more than double the current minimum wage. These employees believe that such a pay rate reflects a "living wage," or the wage at which they can afford to pay for basic necessities, such as housing, clothing and food.