The push for a higher minimum wage continues. The state governors of both California and New York signed legislation which increased the figure to $15 per hour. As the 2016 presidential race draws closer, more hopeful candidates are turning their focus to address the minimum wage argument happening across the country.
Currently, the federal minimum wage is $7.25. California's previous pay raise went into effect on Jan. 1, increasing the rate from $9 to $11 per hour, according to the State of California's Department of Industrial Relations. Meanwhile, the minimum wage in New York is $9 per hour, except for industry-specific wage orders. For example, fast food workers must make $10.50 an hour in New York City and $9.75 statewide, New York State's Department of Labor noted.
It's important for companies and their human resources teams to be aware of these changes to ensure their employees are being paid accurately.
Businesses will receive a grace period
As with previous minimum wage increases, the changes in California and New York will be implemented in phases.
In California, the $15 minimum wage will be reached by 2022. Starting Jan. 1, 2017, the rate will rise to $10.50 for businesses with 26 employees or more. Smaller companies will have until the 2022 deadline to comply. According to USA Today, the hike will boost the income of about 43 percent of the state's workforce, or 6.5 million residents.
The $15 minimum wage will be introduced in New York City before it goes statewide. Businesses with at least 11 employees will be required to pay employees $11 at the end of 2016. The minimum wage will then increase $2 each of the next two years. Smaller organizations will have to pay workers $10.50 by the end of the year and will be subject to a $1.50 increase for the next three years.
"The current federal minimum wage is $7.25."
State vs. federal minimum wage
The U.S. government sets its own minimum wage. The figure now holds at $7.25 per hour, a rate that went into effect in 2009. The U.S. Department of Labor stated the minimum wage does not increase automatically. Instead, Congress has to pass a bill which the President then must sign into law.
States also set their own minimum wage laws. When employees are subject to both regulations, they are entitled to the figure that is higher. Often, this means they will receive the state-mandated rate instead of the federal minimum wage.
Fodder for presidential candidates and employers alike
Since both California and New York both have a large number of residents, it's not a shock that they would lead the way to make $15 the standard minimum wage. Other states are taking similar steps, opening up a topic of discussion for employers. Since these changes are occurring during an election year, the issue is also important for presidential candidates to comment on.
The National Federation of Independent Business claims the increase will be detrimental to small companies that are already having difficulty with previous wage hikes. The organization cites negative consequences such as job loss, increased costs to job creators and senior citizens as two of their reasons for opposing the minimum wage hikes. Republican presidential candidates tend to agree and have mentioned repealing executive orders if the federal rate increases.
Democratic hopefuls, on the other hand, believe raising the figure will be beneficial for employees struggling to make ends meet. While Bernie Sanders has made the $15 minimum wage a cornerstone of his campaign, Hillary Clinton favored a $12 federal baseline. Clinton did endorse the increase in New York, however, according to The Los Angeles Times.
It's important for businesses and their HR leaders to stay on top of any minimum wage law changes that occur in the future. It's crucial for employers to pay their workers appropriately and legally to avoid trouble in the future. Companies should plan a course of action before these alterations take effect to lessen their stress during the actual implementation.
