What is the Minimum Wage?

During his State of the Union speech on Tuesday night, President Obama addressed the issue of minimum wage:

"We know our economy is stronger when we reward an honest day's work with honest wages. But today, a full-time worker making the minimum wage earns $14,500 a year. Even with the tax relief we've put in place, a family with two kids that earns the minimum wage still lives below the poverty line. That's wrong. That's why, since the last time this Congress raised the minimum wage, nineteen states have chosen to bump theirs even higher.

"Tonight, let's declare that in the wealthiest nation on Earth, no one who works full-time should have to live in poverty, and raise the federal minimum wage to $9.00 an hour."

These remarks were met with cheers from Democrats and stern looks of disapproval from Republicans.

The current federal minimum wage (for non-tipped employees) is $7.25 per hour. This means that every employee in the United States must make at least that amount per hour. This is in accordance with the Fair Minimum Wage Act of 2007, which modified the Fair Labor Standards Act of 1938 to raise the minimum wage. For tipped workers, the rate  is $2.13 per hour. 

However, states may also set their own minimum wage laws, but those rates cannot be lower than the federal level. The state of Washington, which raised its minimum wage in 2013 has the highest in the country at $9.19 per hour. In total ten states raised their minimum wages in 2013:

Arizona – Minimum wage will increase from $7.65 to $7.80 per hour. Tipped employee minimum increases from $4.65 to $4.80.

Colorado – Minimum wage will increase from $7.64 to $7.78 per hour. Tipped employee hourly minimum increases from $4.62 to $4.76

Florida – Minimum wage will increase from $7.67 to $7.79 per hour.  Tipped employee minimum hourly wage increases from $4.65 to $4.77 an hour.

Missouri – Standard minimum wage increases from $7.25 to $7.35 an hour. Minimum wage for tipped employees increases from $3.63 to $3.68.

Montana – Standard minimum wage increases from $7.65 to $7.80 an hour. No tip credit is permitted by state law.

Ohio – Minimum wage will increase from $7.70 to $7.85 per hour.   Tipped employee minimum hourly wage increases from $3.85 to $3.93.

Oregon - Minimum wage increases from $8.80 to $8.95 per hour. No tip credit is permitted by state law.

Rhode Island – Minimum wage will increases from $7.40 to $7.75 per hour under special legislation enacted in 2012 unrelated to the CPI.  Tipped employee hourly minimum of $2.89 per hour is unchanged.

Vermont – Minimum wage will increases from $8.46 to $8.60 per hour.  Tipped employee hourly minimum wage increases from $4.10 to $4.17.

Washington – Minimum wage will increase from $9.04 to $9.19 per hour. No tip credit is permitted by state law.

Full breakdown of minimum wage by state.

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