Back in September 2013, Fried & Bonder wrote about President Obama’s introduction of the Fair Minimum Wage Act of 2013. The Act seeks to amend the Fair Labor Standards Act of 1938 (FLSA) by increasing the federal minimum wage for employees in three increments, over two years, to $10.10 an hour. The Act also intends to keep the minimum wage rising, with increases to beset by the Secretary of Labor (based on increases in the Consumer Price Index) after three years, and annually thereafter.
Following the introduction of the Act, California voluntarily took action. Late last year, the California State Legislature announced it would raise the state’s minimum wage to $10.00 an hour. Now, Gap, Inc.has followed suit. Gap recently announced that it would raise the minimum wage of its employees to $9.00/hour this year and up to $10.00/hour in 2015. Gap joins companies like COSTCO, Whole Foods and In-and-Out Burger, all of which independently decided to raise the minimum wage of their employees above the current $7.25/hour mandated federal minimum. For Gap, the increase raises pay for about 65,000 employees.
Republicans and Democrats are on opposite sides of the debate over whether such an increase is appropriate. In opposition, Republicans point to a recent Congressional Budget Office report on the proposal to raise the federal minimum wage which predicted that the increase would cause the loss of approximately 50,000 jobs. Democrats, however, point to the same report in support of the move, which despite the prediction of job loss, is also predicted to boost the earnings of approximately 16.5 million workers and raise approximately 900,000 workers above the poverty line.
Fried & Bonder will continue to monitor the Act and keep you informed with updates.