Why is there a minimum wage law?

Great Answer

Professionally Researched. (What's this?)

Minimum wage in the United States was set to provide a fair rate for workers. This law prohibits employers from paying their employees unsatisfactory wages for the work performed.

Fun Fact

Minimum wage was first signed into law in 1938 as part of the Fair Labor Standards Act. The initial wage was 40 cents an hour.

How are Minimum Wages Increased?

Minimum wage rates are increase by an act of Congress and signed into law by the president.

Considerations

This law is applied to many businesses including those whose revenue exceeds $500,000, transports goods across state lines, and companies that are in communications or have workers who use different mediums such as mail and telephone lines to communicate over interstate lines.

Misconceptions

Although several states don't have minimum wage laws or have lower rates than the federal standard, employees of a company that comply with federal regulations are entitled to the higher rate. Some states such as Washington and California have state minimum wages that exceed the federal rate.

Warning

In 2007, according to the Economic Policy Institute, even though the federal minimum wage can bring in $10,712 ($5.15 x 40 x 52) per year for a full-time worker, that amount is almost 40 percent below the poverty line ($17,170) for a family of three. Minimum wage continues to rise and as of 2010, it stands at $7.25.

Source:

encyclopedia.com: Minimum Wage Law

Economic Policy Institute: Minimum Wage Increasingly Lags Poverty Line

Oregon State University: Minimum Wage History

More Information:

U.S. Department of Labor: Questions and Answers About the Minimum Wage

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