Overview of the Federal Minimum Wage
The Fair Labor Standards Act (FLSA), a law that guarantees employees and youth a fair minimum wage and overtime pay. It is regulated by the Wage and Hour Division (WHD) of the U.S. Department of Labor (DOL); it mandates employers to pay all nonexempt employees a federal minimum wage no less than the determine amount set by the government (U.S. DOL, 2011). Unfortunately, the federal minimum wage still sits at $7.25 per hour and has remained the same since George W. Bush signed a law to change it on July 24, 2009 (Risher, 2013; U.S. DOL, 2011). So, why did so many government officials decline the increase of the federal minimum wage and why do they fear the positive impact that the increase will have on America? This paper intends to briefly discuss six laws, all pertaining to federal minimum wage introduced to the House of Representatives within a year and highlight one member of the senate who disapproved the law for passing. In addition, this paper will briefly point out statements made about why some Senators chose to decline the bill; and finally, this paper intends to briefly explain any legal issues preventing the wage increase and implications for management.
Start of Hope: Minimum Wage Fairness United States senators and representatives have introduced numerous federal minimum wage bills to the House of Representatives in order to amend the Fair Labor Standards Act (FLSA) during their term. These bills were designed to either request better employment pay for all those who work within the past year. The titles of each bill are similar but have different amounts and standards about what the federal minimum wage should be and when the increase should take effect. The starting point - there were plenty, the first law introduced to the House of Representatives occurred during the previous year, from Democratic Senator Tom Harkin of Iowa. He requested a federal minimum wage increase via a bill on November 19, 2013; the S.1737 - Minimum Wage Fairness Act (Civic Impulse, 2014a).
In summary, this bill intended to increase minimum wage for all workers to $8.20 per hour on the first day of the sixth month. Then federal minimum wage would increase $.95 more ($9.15) per hour one year later; and finally increase $1.90 more ($10.10) two years thereafter (Congress, 2013b). Regrettably, tipped workers will only obtain $3.00 per hour until it equals no more than 70% according to the FLSA for a complete year on the first day of the sixth month the bill becomes enacted (Congress, 2013b). The result - failed cloture on April 30, 2014 (Civic Impulse, 2014b; Davis. 2013). So, as Americans of this country we still await a change to better our lives and the lives of our children, the next bill was not as lucky.
The House of Representatives received another bill with the same name on December 12, 2013 and referred to the committee on the same day, the H.R.3746 - Fair Minimum Wage Act of 2013 (Civic Impulse, 2014c). This bill was introduced by Democratic Representative John Larson of Connecticut. In summary this bill would increase minimum wage for all workers to $8.50 per hour on the third day the bill takes effect, then increase $1.50 more ($10.00) one year later; and increase $1.00 more ($11.00) after two years (Congress, 2013a). After the federal minimum wage reaches $11.00 the Secretary will determine the amount based on the consumer price index after a three year period and every year thereafter (Congress, 2013a). Furthermore, tipped employees will make the same amount as the previously mentioned bill that was introduced to the House, the S.1737 (Congress, 2013a). Sadly, this bill has not been referred to the committee to receive a vote; there is no chance this bill will ever be enacted; sorry to say that the next bill received the same outcome.
Another bill similar to those already mentioned was introduced to the House on January 28, 2014, by Democratic Representative Richard Neal of Massachusetts, the H.R.3939 - Invest in the United States Act of 2014 (Civic Impulse, 2014d). This bill will pertain to federal minimum wage and to help energize the American economy via taxes, employee skills training, trade provisions, and minimum wage; while boosting the infrastructure of the country. According to the U.S. Congress (2014a), this bill will increase federal minimum wage to $8.20 per hour on the first day of the first month one year after the day the bill takes effect, then increase $.95 more ($9.15) one year later; and increase $1.90 more ($10.10) two years later (p. 3).
Furthermore, after the federal minimum wage reaches $10.10 the Secretary will determine the amount after a three year period based on the consumer price index; while tipped employees will continue to make $3.00 per hour for a full year on the first day of the third month after the bill takes effect (Congress, 2014a). Unfortunately, this bill has not been referred to the committee to receive a vote. As we can see, several bills have reached the House floor but have never been passed to officially become a law; will change come from this next bill?
The next bill introduced to the House came from Democratic Senator Tom Harkin of Iowa on April 8, 2014. This bill the S.2223 - Minimum Wage Fairness Act and two other bills the H.R. 1010 and the previously mentioned S.1737 are all the same bills (Civic Impulse, 2014b). The only difference is the length of time workers will receive a minimum wage increase. The logistics of this bill Senator Harkin requested a federal minimum wage increase for all workers to $8.20 per hour on the first day of the sixth month (Congress, 2014c). Then federal minimum wage would increase $.95 more to $9.15 per hour one year later; and finally increase $1.90 more to $10.10 two years thereafter (Congress, 2014c). In addition, after the federal minimum wage reaches $10.10 the Secretary will determine the amount based on the consumer price index after the third year of the bill enactment and every year thereafter. Sadly, tipped employees will make only $3.00 per hour for a full year on the first day of the sixth month after the bill takes effect (Congress, 2014c). According to the U.S. Congress (2013), voting for this bill did not occur until two weeks later; the outcome: 54 Democratic Senators approved the bill for passing; while 42 Republican Senators disapproved the bill for passing. In this case, one senator declined the bill, Republican Bob Corker who represents Tennessee; four senators were absent and did not cast a vote (Civic Impulse, 2014b). For the time being, this bill died due to a cloture vote that failed which caused a filibuster on April 30, 2014 (Civic Impulse, 2014b; Davis, 2013); instead of enacting this bill, it appeared on the House of Representative’s calendar again two months later.
On June 11, 2014 Democratic Representative, Al Green from Texas introduced the same bill with a different name and it was referred to the committee on the same day, the H.R.4839 - Original Living Wage Act of 2014. According to the U.S. Congress (2014b), the federal minimum wage should be adjusted every four years to earn at least 15% higher income every year passed the federal poverty level for those with a family more than three (p. 5). In addition, the bill will permit the government to change the federal amount higher to allow households of two working individuals to earn an income above the national housing wage; and permit the local or state governments to establish a federal minimum wage amount higher than the act as the economy change (Civic Impulse, 2014e). It appears this law was assigned to a congressional committee on the same day it was introduced before it will be sent to the house or senate.
Each of these laws intend to amend the FLSA or either boost the economy through various other options that will help increase the federal minimum wage for all workers. The good news is On January 28, President Barack Obama changed all the back and forth of the yeas and nays in the House by signing Executive Order 13658 - Establishing a Minimum Wage for Contractors.
Beginning of the American Dream
On January 28, 2014 President Barack Obama made a pledge during his State of the Union address to increase the federal minimum wage for government workers from $7.25 to $10.10 an hour. On February 12, 2014 he signed a bill as promised to commence January 1, 2015; the Executive Order 13658 - Establishing a Minimum Wage for Contractors. The logistics of this bill mandates that all federal government workers (contractors and subcontractors) receive an increase for every 40 hours worked (OFR, 2014, p. 9851). Therefore, the Executive Order signed by the president increases the pay of contract and subcontract workers who make little to no pay to benefit their household of more than three. President Obama states that increasing the pay rate of federal workers increases morale, productivity and work quality (OFR, 2014, p. 1). In addition, an increased pay rate benefits the organization by decreasing turnover, accompanying and supervisory costs to improve the economy and efficiency in Government procurement (OFR, 2014, p. 1).
Moreover, Executive Order 13658 mandates organization to increase the pay until it reaches no more than 70 percent of the wage in 2016; which equals to a $.95 increase for all federal workers (OFR, 2014, p. 3) After a two year period of the $.95 increase, federal workers will receive an additional $.05 increase in subsequent years after 2016(OFR, 2014, p. 7) Later this year, he tried to do the same for the middle and lower class; unfortunately, it created a huge mess at the White House and around the United States. Unfortunately, the law only covers federal workers and the truth is that no one who goes to work full time should have to live in poverty; but whatever happed to the middle and lower class in America?
Reasons Increase Failed
From the moment President Obama stated he wanted to raise the federal minimum wage; every GOP member had different ideas of the minimum wage. Advocates consider that a higher minimum wage makes the poor better off and at that time (Risher, 2013), current members of the GOP assumed that it was the best approach to stand up for the rights of all workers (Risher, 2014a). On the contrary, those who opposed the higher minimum wage hike thought it would increase unemployment and increase teenage high school dropout rates (Lorsch, & Khurana, 2010). In addition, they also believed that the increase in minimum wage will cause skilled and talented individuals to become useless (Owen, 2009). Although the minimum wage regulations are set by the Department of Labor Wage and Hour Division; there is no guarantee that the law will change for middle and lower class citizens in the near future to guarantee all unemployed citizens obtain a job that pays a fair minimum wage.
Since the last decade, the criticism has been the same in regards to the federal minimum wage increase; top-paid executives and senate members are paid too much, and the fact that none of them want to take a pay cut for others to obtain a brighter future. In addition, there has been some discussions about company pay systems are inconsistent because of the link between management pay and the company’s performance and the biggest problem it has caused - dysfunctional behaviors (Lorsch, & Khurana, 2010). However, the truth about what drives the federal minimum wage to remain the same; there still leaves the chance whether legal issues prevent the minimum wage from increasing for Americans to have a better life.
Legal Issues
In the beginning, the federal minimum wage laws were called the Wages and Hours Bill; it was set up sometime during or after the Great Depression at an hourly rate of $.25. Since then it has been raised by a federal amendment law at least 22 times; unfortunately, it has not been enough to raise the lower or middle class citizens out of the federal poverty level (DOL, 2011). Now that mortgage, gasoline, and other prices have increase; the government will not allow the current president to increase this wage to benefit the country or the American people. Studies have been conducted that briefly highlight numerous issues of the reasons why the federal minimum wage will not increase (Wihbey, 2014, para. 2); but none point to legal issues. For example, the Congressional Budget Office (CBO) issued their 2014 report, “The Effects of a Minimum-Wage Increase on Employment and Family Income,” which point toward two distinct circumstances that will occur if the minimum wage was increased.
Scenario one states that increasing the minimum wage from $7.25 to $9 would have different trade-offs but increasing the wage to or above $10 will cause numerous workers to lose their jobs, nearly 500,000 across the market. Scenario two, points out that low income employee’s will notice some substantial gains every week (almost 16.5 million) (Wihbey, 2014, para. 3). This report also states that any minimum wage below $9 will cause less than 100,000 individuals to lose their jobs and an estimated 7.6 million low-paying employees will notice their weekly income increase (Wihbey, 2014, para. 2). These results seem to appear the plus side and negative side of increasing the federal minimum wage; however, they do not tell the real truth according to the U.S. Bureau of Labor Statistics.
According to the BLS (2014), federal minimum wage workers are likely to be young; and workers under age 26 represented only about one-fifth of hourly-paid employees which mean thy only make up half of the total working population in the U.S. (Wihbey, 2014, para. 4). In addition, BLS (2014) stated that out of all the workers in the U.S. 23% of the teens paid by the hour earn the full amount or less than the federal minimum wage compared to nearly 3% of employees over the age of 25 (para. 4). With all of this information at hand, we know there is no legal issue or issues preventing the federal minimum wage increase; so what is preventing the increase in order for working individuals to take care of their family? In the next paragraph I briefly explain several state benefits and some implications for managers and provide a conclusion to this research paper.
Implications for Mangers
After researching for this assignment, it is easy to notice that there is a long trail of doubtfulness regarding how big an impact increasing the federal minimum wage will cause on the economy, especially before the end of this year or by the beginning of 2016. With that in mind, CBO researched two scenarios but none point toward a significant issue or cause for not increasing this wage. With that in mind, there is a simple solution; managers can start by lowering their income in order to guarantee their employees have a great paying job with benefits. This is only if their finances allow them to help their employees rise above the poverty line. In addition, minimum wage is the cornerstone of federal policies and they provide the foundation for economic security and stability for all employed individuals. According to a Harris poll currently 83% of Human Resource Professionals and hiring managers compared to 59% believe that the federal minimum wage should be increased (Sherman, 2014). That is a little over 2,000 full-time managers who state this increase will improve the current living standards of not just their employees but all workers in the U.S.
In addition, according to the poll, most mangers believe that the higher the wage the better it will be to lower their turnover rate within the company. So, it is better for management to work with the federal government to increase the federal minimum wage. One way to do this is to start a petition with over 100,000 signatures of some of the top industries in the country to prove some of the benefits of increasing the wage. If this does not work, management should all gather on the White House steps (strike) until the laws are passed to increase the federal wage.
Conclusion
Numerous federal minimum wage bills have been sent to Congress within the last year; but only one was signed by the president, the Executive Order 13658. Although this wage increase will improve the economy as it relates to poverty there are several opinions about why the wage should not be increased. On the other hand, there is one simple truth - it provides some debating time with numerous advantages and disadvantages from the senate. In this country, employers are mandated to follow the guidelines of the Federal Legislation Standard Act; but there is no law that has been able to mandate the country to improve the lives of the millions of citizens in this country to alleviate poverty. So what is the real reason why federal minimum wage will not be increased - only time will tell. References
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