Workers' Rights

Passed in 1938, the Fair Labor Standards Act (FLSA-52 Stat. 1060) is the most important wage and hour law in the United States. It applies to all businesses involved in interstate commerce and establishes rules covering minimum hourly wages, overtime pay, and the work of children. Many states also have statutes that set higher standards than the FLSA. Employers must abide by the more stringent rules.

A federal minimum wage of $0.25 per hour was instituted by the FLSA in 1938 and was increased by 400% to $1.25 by the mid-1960s. It doubled again by the late 1970s to $2.65, and grew in small increments during the 1980s and early 1990s to $4.75 by October 1996. The minimum wage was increased to $5.15 per hour on September 1, 1997, and this remains the federal minimum wage as of 2006. With a few minor exceptions, the FLSA requires that workers earning an hourly wage be paid overtime pay of at least one and one-half times the regular pay rate for all hours worked in the workweek after the first forty hours. Employees who customarily and regularly receive tips totaling at least $30 per month can be paid at the lower direct wage of $2.13 if that amount plus the tips will equal at least the federal minimum wage of $5.15.

The FLSA also contains provisions that regulate the wages for which young people may work and the hours they may work. Employers may pay youth under twenty years of age a minimum wage that is lower than the national rate—$4.25 per hour during their first ninety consecutive calendar days of employment. Individuals under the age of sixteen may work only under certain conditions. Youths fourteen and fifteen years old may work outside of school hours in various nonmanufacturing, non-mining, nonhazardous jobs. They may work up to three hours on a school day or eight hours on a nonschool day for a total of eighteen hours in a school week and forty hours in a nonschool week. In addition, work must be performed between the hours of 7:00AM and 7:00PM, except from June 1 through Labor Day, when evening hours are extended to 9:00PM. Full-time students employed in retail or service stores, agriculture, or colleges and universities can be paid at 85% of the national minimum wage and are limited to working eight hours in one day or twenty hours in a week. Students at least sixteen years old who are enrolled in vocational education classes can be paid at 75% of minimum wage in jobs related to their course of study.

In "Unhappy Anniversary: Federal Minimum Wage Remains Unchanged for Eight Straight Years, Falls to Fifty-Six-Year Low Relative to the Average Wage" (Center on Budget and Policy Priorities/Economic Policy Institute, September 1, 2005), Jared Bernstein and Isaac Shapiro estimate that although the federal minimum wage remains at $5.15 per hour, the minimum wage now amounts to less than one-third of the average wages for private sector, nonsupervisory personnel (approximately $16.00 per hour). This was the lowest level of relative earnings in research published by Bernstein and Shapiro. For most of the 1950s and 1960s the minimum wage earned about half of the average wage for nonsupervisory personnel in the private sector. Using another measure, too, Bernstein and Shapiro found that the minimum wage in 2005 was far below previous levels. The purchasing power of the minimum wage in 2005 had declined by 17% from 1997 and was roughly 31% below the 1968 level of $7.44 (as measured in constant 2005 dollars).

To increase the value of the minimum wage, an initiative called the Living Wage Campaign has proposed a national minimum wage rate of $8.00 per hour, or enough to support a family of four at the local poverty level. An attempt in Congress in 2005 to increase the minimum wage to $7.25 in three stages did not pass.

At the same time that federal policymakers have been unable to agree on an increase in the federal minimum wage, some state, county, and city governments have increased wages within their own jurisdictions. According to the U.S. Department of Labor in "Minimum Wage Laws in the States—January 1, 2006' (http://www.dol.gov/esa/minwage/america.htm), Alaska, California, Connecticut, Delaware, the District of Columbia, Florida, Hawaii, Illinois, Maine, Massachusetts, Minnesota, New Jersey, New York, Oregon, Rhode Island, Vermont, Washington, and Wisconsin all have higher minimum wage rates than the federal standard. Minnesota law mandates that large employers (those operating an enterprise with annual receipts of $625,000 or more) pay $6.15 per hour, compared with $5.25 per hour for companies with annual receipts below $625,000. As of January 1, 2006, Washington at $7.63 had the highest minimum wage of any state; a local ordinance in San Francisco set the highest minimum wage standard in the nation at $8.50.