The Shift Of Minimum Wage

📆This Week’s Topic

This week we will be talking about minimum wage in the US. But, before we before we begin, I would like to announce that Friday Finance will be sending our articles every other week, a more detailed description of what is happening is in the Thank You and Important Information segment. With a lot of rising costs in the last few months minimum wages are on the rise in some states. For some background, the federal minimum wage is $7.25 per hour. That means that non-tipped workers have to at least be paid $7.25 per hour, although, a lot of states have a higher state minimum wage in addition the federal one. The federal minimum wage was last increased in 2009 from $6.55 per hour to $7.25 per hour..

💳 The Problem With The Federal Minimum Wage

As I just mentioned the last federal minimum wage was increased last in 2009 is almost 17 full years since it was increased. Especially with the amount of inflation and economic activity in the last 17 years there have been multiple protests to increase the federal minimum wage to $12 per hour or even to as high as $15 per hour. For inflation, $7.25 per hour then is equal to $11.25 per hour in 2025 which means that minimum wage should increase on a federal level.

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📊 States’ Responses

Even though the federal minimum wage is so incredibly low, a staggering 19 states and 45 cities & counties are increasing their local minimum wage to $15 per hour. This means that most states are now up to the $15 per hour threshold despite the federal minimum being almost 8 dollars lower. Some argue that these states are helping workers as the old minimum wage was not enough to cover the bare needs and expenses. Other argue that increasing the minimum wage that much is hurting the economy because that means there will be less workers overall or rising prices. These increased add up to 8.3 million workers having an added pay bonus of $5 billion.

💸 Subminimum Wages

As I said before the federal minimum wage is $7.25 per hour but some workers get paid even below that. The subminimum wage is a lower wage then the federal minimum wage and is used mostly when a worker has another source of income like tips, or a commission. Although, the threshold of tips required to be eligible for the subminimum wage is so incredibly low. If you make $30 or more in tips per week you are considered eligible for the subminimum wage, which means for tipped workers their base pay can be as low as $2.15 per hour more than 5 dollars less than the already low regular minimum wage. This means for the supporters of the $15 per hour minimum wage, equal attention should be focused on the subminimum wage as raising that is just as important if not more. There are over 6 million Americans who rely on tips as part of their income and 14% of them get paid the subminimum wage because they make money through tips, even if those tips are less than the $7.25 in total per hour.

⏳ Final Summary

In summary, the federal minimum wage is still the same after 17 years, but states are raising their own rates to compensate. Just accounting for inflation the minimum wage should at least be $11.84 per hour considering the same place it was in 2009. Now more states have a minimum wage that is $15 or above then states that still have that $7.25 federal wage. In addition, the wage that tipped workers receive is more than 5 dollars lower than the already low federal wage. So as raising the base wage is important it is almost more important to increase the subminimum wage.

🙏Thank You & Important Information

Anyway, thank you so much for reading this edition of Friday Finance. From now on to ensure more quality of the articles and more time to work on them Friday Finance will now be sending our articles once every two weeks in order to ensure better quality. Anyway, have a great week and I will see you in two weeks.

Best,

Jacob Gans

Friday Finance