The USA invented the minimum wage. A Federal Minumum Wage was introduced in 1938 at the equivalent in 2009 Dollars at $3.77 an hour. Today the Federal minimum wage is $7.00, although as recently as 2007, it was still $5.15.
States can add to the rate, and the highest is in Los Angeles where the rate is near to $10 an hour. Some jobs are exempted from the minimum wage. And some territories.
As of July 24, 2009, the federal minimum wage in the United States is $7.25 per hour. Some states and municipalities have set minimum wages higher than the federal level (see List of U.S. minimum wages), while some U.S. territories (such as American Samoa) are exempt. Some types of labor are also exempt, and Tipped labor must be paid a minimum of $2.13 per hour, as long as the hourly wage plus tipped income result in a minimum of $7.25 per hour.
In the USA, productivity per hour worked is around 50% higher than that of the UK. So why, you might ask, is the minimum wage in Britain set at just under GBP 6 an hour, which is currently $9.50. To be competitive Britain’s minimum wage should be one third less than that in the USA at about GBP 3 an hour. At the very least, why should the minimum wage in Britain be any higher than it is in the USA?
No wonder Britain has 6 million people stuck at home without work and unable to find jobs. If employers could pay a rate of GBP 3.50 an hour, or kids could work in restaurants for GBP 1.50 an hour and get tips, many of these millions would get back to work. Most would prefer to do something, and get a start.
If these rates of pay were lifted out of tax, both Income Tax and Nat Insurance, as proposed by the Lib Dems, then there would be an incentive to earn GBP 140 a week tax free for a forty hour week, a handy contribution to most households.
This would also make the IDS task of blending the tax and benefits systems much simpler.
Why is halving the minimum wage not on the agenda. It will have to come. Or the recession will kill off millions of jobs where GBP 6 an hour can no longer be afforded. The minimum wage should be $5 an hour as it was three years ago in the USA. The government cannot afford the coming tsunami of unemployment. It should act now to save jobs, businesses and its own finances.
Guardian on IDS Conference Speech –
The next shoe to drop will be the fact that the Minimum Wage is another key factor that keeps people in idleness. IDS will hopefully be addressing this issue as well, once he has got the first part of his new programme in place.