On July 24, 2009 the federal minimum wage increases from $6.55 to $7.25 per hour. This is the third and final annual increase under the Fair Minimum Wage Act of 2007.
Many employers consider this increase bad timing, considering the current economic conditions. However, when the Fair Minimum Wage Act was passed in 2006, during an unprecedented bubble in the stock market and real estate market
For ten years, while the federal minimum wage sat at $5.15 an hour, members of Congress voted themselves raises that hiked their salaries by an average of $31,600 each.
That changed with the Fair Minimum Wage Act of 2007. According to the new Act, the minimum wages of American workers were to be increased by 70 cents an hour every year for three years, for a total increase of $2.10 per hour.
Each hike comes on July 24, and in 2007 on that date the hourly rate went from $5.15 an hour to $5.85. The next was from $5.85 to $6.55 an hour.
The third and final increase comes July 24, 2009, when the minimum wage rises from $6.55 to $7.25. Over the three years, the total increase per worker is $84 per week or $4,368 yearly.
The federal minimum wage law is the FLSA, or Fair Labor Standards Act. It applies only to those employers who have two or workers and who earn revenues of more than a half-million dollars a year. It also regulates the pay of employees in businesses that engage in interstate commerce. A business engages in interstate commerce when it mails to potential out-of-state customers, makes goods sold out of state, or buys its supplies from vendors who are outside their state.
Across the nation, more than half of all states nationwide have passed laws that establish a higher minimum wage than the federal rate. Employees in those states are legally entitled to the higher rate.
Paying less than the minimum wage, the U.S. Department of Labor (DOL) reminds employers, is against the law. It violates the Fair Labor Standards Act of 1938, also known as the FLSA. The DOL’s Wage and Hour Division (WHD) enforces the act, which also says that all workers must receive their wages by their regular paydays.
At $5.15 an hour, supporters of the increased federal minimum noted, a worker had less purchasing power than he or she would have had in 1968, when the minimum was $1.60 an hour. To be equal to purchasing power, they pointed out, the minimum wage would actually have to be $9.12 an hour in 2006. Although the new 2009 minimum wage is higher, it has not yet reached that level.