Federal Minimum Wage

In 2007, Congress finally raised the federal minimum wage for the first time in a decade, legislating three increases from 2007-2009. Despite this modest increase, workers who earn the minimum wage continue to struggle to make ends meet, especially given skyrocketing food and energy prices. In fact, the real purchasing power of the federal minimum wage has eroded by nearly a third over the past 40 years.

Worse, some workers cannot even count on this minimal protection. Federal law allows employers to pay tipped workers - including restaurant servers, car wash workers, and nail salon technicians among others - a lower minimum wage that has been frozen at just $2.13 for over 19 years (since 1991). Other workers are excluded entirely from federal minimum wage protections, including some farm workers and workers who provide home-based companionship care to the elderly and infirm.

NELP is a leader in the national movement to restore the federal minimum wage and ensure that it applies to all workers. By supporting numerous successful state minimum wage campaigns, NELP helped build momentum for the last federal minimum wage increase, which was an important first step for working families. NELP continues to work with networks of community organizations, worker centers, labor unions, and policy allies to strengthen the national wage floor.

Specifically, NELP advocates for federal minimum wage reform featuring four key elements:

  • Restoring the Historic Value of the Federal Minimum Wage:  The federal minimum should be restored to its historic purchasing power. As a benchmark, the minimum wage from 1968 would be worth over $10 per hour in today's dollars.

  • Providing Annual Cost-of-Living Increases:  To protect its real value from eroding in the future, the minimum wage should automatically increase each year to keep up with the rising cost of living. Ten states have already adopted this key reform.

  • Raising the Minimum Wage for Tipped Workers: The minimum wage for tipped workers should be restored to at least its historic level, which was 60% of the full minimum wage. Nearly half of all states have already raised their minimum wages for tipped workers substantially above the federal level.

  • Closing Archaic Loopholes:  Workers in low-wage industries should not be exempt from minimum wage and overtime protections due to archaic loopholes, many of which disproportionately impact women, immigrant workers, and people of color. States are increasingly taking action to close loopholes and protect these workers, many of whom are performing physically and emotionally exhausting jobs, for example, companion care workers.

Economic Impact

The long-standing decline of the minimum wage has contributed to the growth of income inequality over the past three decades. In 2006, a group of 650 economists (including five Nobel laureates) released a letter making a case for minimum wage increases, explaining that the falling value of the minimum wage "is causing hardship for low-wage workers and their families." In addition, over the past decade, empirical economic research has found that increases in the minimum wage have not resulted in discernible job losses. As the President's Council of Economic Advisors found in 1999, "[T]he weight of the evidence suggests that modest increases in the minimum wage have had very little or no effect on employment." Higher wages also create incentives for employers to invest in job training and promote a more stable workforce.

For more information on our work in this area, please contact Paul Sonn, psonn@nelp.org.

Other key resources: 

AFL-CIO

Economic Policy Institute: Minimum Wage Issue Guide

Let Justice Roll

Minimum Wage: Information, Opinion, Research

Restaurant Opportunities Centers United