New Federal Minimum Wage And The Federal Work-Study Program

On May 25, President Bush signed into law an amended section of the Fair Labor Standards increasing the Federal minimum wage in three steps. The current $5.15 minimum wage will be increased to $5.85 effective July 24, 2007, to $6.55 an hour effective July 24, 2008, and to $7.25 an hour effective July 24, 2009. Since that time various administrations have signed into law increases in the minimum wage paid to employees. Some states now have minimum wages that are as high as $91.9 in Washington while most are currently in the $8 to $9 range. President Obama is trying to have legislation passed that would take the wage paid to employees to at least $10 an hour by 2015.  This legislation is currently before congress and being debated.

The HEA specifically states that an institution may not pay any wage to students employed under the FWS Program that is less than the current Federal minimum wage. Therefore, effective July 24, an institution must pay FWS Program students at least $5.85 an hour. Students should check with their local state and federal agencies to confirm the minimum wage that they are eligible for to ensure that they receive the current rate.

Since this post was originally written there have been some small increases in the minimum wage laws in various states. For example Florida is supposed to implement an increase to their minimum wage level bringing the wage up to $7.79 an hour. Any increase is appreciated, but how do you begin to live on this low wage in today’s environment. It is extremely difficult and most people end up working as many hours as they can and both partners work to make ends meet. At these levels there is no room for fancy vacations or splurges on clothing etc.

Every country is different and even each state or province is different when it comes to minimum wage laws. For example in Ontario, Canada the minimum wage law is $10.25 for general workers and for liquor servers it is $8.90, but then they can make much more money on tips alone.  In the US, Nevada minimum wage law is $8.25 with no benefits, however if benefits are included the minimum wage can be dropped to $7.25.

Arkansas was very low at $6.25 an hour with no benefits and these numbers are current for 2013. Most states seem to fall in the range of $7 to $8.00, however in the state of Montana if you work for a company that has gross annual sales of less than $110,000 they can get away with paying $4.00 an hour. Georgia’s laws require employers to pay $5.15 an hour with no benefits provided.

These hourly rates are just a sampling of what is on the books as of 2013. Whether it is $4 an hour or $10 an hour, people just cannot live on these low rates and have any real quality of life. Aside from the fact that these jobs do not pay very much, the kinds of jobs that you can get which pay these levels are not jobs most people would want. Unless you are receiving tips from working in a restaurant while making the minimum wage, these hourly rates are not sustainable for a person with a family.

Tips Can Add to the Hourly Rate

Most people do not give it a second thought when they pay their bill at a restaurant. We have seen so many people not leave a tip for their service and yet these people worked hard to deliver great service. They are receiving the minimum wage and can only survive on making extra money from tips. We have also found that people who work in the service industry are providing great service and are generally friendly to their customers. They are making minimum wages and they know that if they provide excellent service, most customers will leave a reasonable tip when they leave. Many students are working to make enough money to pay for education and to further themselves through apprentice programs. They rely on the tips as well as the minimum wage to help them pay expenses while going to school.

Not Everyone Makes Money From Tips

But not everyone who makes minimum wages is in a position to receive tips for their services. The service industry has been notorious for paying minimum wages and this is where customers are really expected to leave a tip. These are the people who really should have their wages increased to allow them to have a decent living and be able to enjoy life a bit, instead of having to work the extra hours needed to just get by. Minimum wages will continue to rise, however for most it will never come quickly enough.

We are seeing more situations where people who did not traditionally receive tips are now collecting tips by placing tip jars near the cash register. Barista’s for example who traditionally never received a tip for serving a coffee, now have tip jars beside the cash to help augment their minimum wage jobs. Tip jars are appearing more often in places that you would not traditionally have expected to tip people. This is their way of trying to make some added money in addition to the minimum wage they are being paid.

While not everyone tips in these situations, many people will throw in their loose change into these jars rather than put it in their pocket. Over a day, these small amounts can add up and significantly increase the barista’s income for the day.

Minimum Wages and Health Care

Many people who work for a minimum wage must also work for a set number of hours per week before they qualify for health care benefits from their employer. Many employers have taken to limiting the number of hours that they give to their employees in order to avoid providing health care benefits. Not only are these employees paid a minimum wage which is difficult to live on, they also are not covered in any form for health care should they get sick or need an operation.

We talked to several people in the service industry who fall into this situation where their employer decided to reduce their hours to avoid health care benefits. Now this employee is not only being paid for less hours they also have less hours to collect tips as well. In this persons case she indicated that she would have to find another job to make up the time she is losing because of this cut back. There are many people who are working two jobs at minimum wage levels, working more than 40 hours per week and not receiving any medical or health benefits because they work less than the federally stated number of hours per week to qualify. Employers are trimming their costs and it is very unfortunate for people in these kinds of situations.

 

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