Starting from January 2014, employers in 14 states have to restructure their wage system. New minimum wages will take effect at the beginning of the new year. The bumps are rather small, but the slight increase will affect millions of workers who barely
make ends meet.
At present, under the Fair Labor Standards Act (FLSA), the federal minimum wage is $7.25 per hour. However, every state has set its own minimum wage. If that wage is higher than the federal, the employers are obligated to pay the state rate to employees working in that state.
Nineteen states, including California, have their minimum wages higher than the federal standard. Washington state has the highest current wage at $9.19, followed by Oregon at $8.95 and Vermont at $8.60.
Alabama, Mississippi, Louisiana, Tennessee and South Carolina don’t have a set state minimum wage. Four states maintain minimum wages lower than the federal: Georgia and Wyoming at $5.15; Minnesota at $6.15, and Arkansas at $6.25.
Increase by state
State minimum wage changes effective December 31, 2013
- New York: $8.00 per hour. The state minimum wage will also increase to $8.75 per hour effective December 31, 2014, and $9.00 effective December 31, 2015.
- Arizona: $7.90 per hour, increase by $0.10.
- Colorado: $8.00 per hour, increase by $0.22.
- Connecticut: $8.70 per hour, increase by $0.45. The minimum wage will change to $9.00 per hour on January 1, 2015.
- Florida: $7.93 per hour, increase by $0.14.
- Missouri: $7.50 per hour, increase by $0.15.
- Montana: $7.90 per hour, increase by $0.10.
- New Jersey: $8.25 per hour, increase by $1.00.
- Ohio: $7.95 per hour for businesses with annual gross receipts in excess of $292,000 per year.
- Oregon: $9.10 per hour, increase by $0.15.
- Rhode Island: $8.00 per hour, increase by $0.25.
- Vermont: $8.73 per hour, increase by $0.13.
- Washington: $9.32 per hour, increase by $ 0.13.
- California: $9.00 per hour, increase by $1.00. The state minimum wage will increase again to $10 per hour effective January 1, 2016.
State minimum wage changes effective January 1, 2014
State minimum wage changes effective July 1, 2014
In Massachusetts, Alaska, Idaho and South Dakota there are signature-gathering campaigns underway, aiming at placing measures on the ballot that would raise the minimum wage. Maryland, Minnesota, Hawaii, Illinois and the District of Columbia are contemplating legislative proposals going in the same direction.
Congress has been pushing to raise the federal minimum wage to $9.80 by next year, because it hasn’t been increased in seven years. Even last February, President Obama called for Congress to raise it to $9 per hour.
According to a study from Hart Research Associates, 80% of Americans, including 62% of Republican voters polled, support changing the federal minimum wage to $10.10 an hour.
Is the increase good for the economy?
It has to be noted that back in July 2012, a group of 10 highly esteemed economics professors, including a Nobel Laureate from Columbia University, wrote an open letter to President Obama. In it, they urged him and leaders of Congress to increase the minimum wage by $0.85 to $9.80 by mid-2014.
The professors argued that an increase in the minimum wage would not have a negative impact on employment. According to their research, an increase can stimulate the economy when low-wage workers spend all of their additional earnings, eventually raising demand and job growth.
If the minimum wage is increased, they said, it would instantly mean higher wages for some 20 million workers by 2014. Who would benefit the most? Primarily adults in working families, women who work at least 20 hours a week and rely on those earnings to stay afloat. “At a time when persistent high unemployment is putting enormous downward pressure on wages, such a minimum wage increase would provide a much-needed boost to the earnings of low-wage workers,” the scholars conclude in the letter.
Union wage and welfare bond
This is just another way to protect employees’ interests. Unions require this type of bond when in the process of negotiation with companies. If a union member company fails to meet its obligations set by the bond’s terms, the bond amount can be used to pay claims for salary, wages, fringe benefits and compensation for services rendered by employees represented by the union. Each union wage and welfare bond is different and is defined by the union that requires it.
This type of bond works as a legal binding contract that joins three parties together: the principal (the company-member required to purchase the bond), the obligee (the union requiring the bond), and the surety (the underwriter that issues the bond and providing financial guarantee of the principal’s ability to fulfill its duties as a union member).
Most bonding companies will write a union wage and welfare bond as an addition to some contract bonds (e.g. bid and performance bonds) they had already written for the same client. Approval for such a bond is hard to get without posting collateral worth 100% of the bond amount. Such a system makes the application process longer than for other bonds that are less risky.