When will the Minimum Wage be raised?

The Federal Minimum Wage was last raised to $7.25 per hour in 2009 from the previus minimum wage rate of $6.55. The Minimum Wage is raised by an act of Congress, and has no set schedule, but is generally raised every 3-7 years in response to rising inflation and cost-of-living.

It's possible that the federal minimum will not be raised again for several years for several reasons. Firstly, it's common for the minimum wage to remain the same for as long as 7-8 years before it is raised again. The Minimum Wage has only been $7.25 since 2009. Second, raising the Minimum Wage is a controvertial subject for politicians because it hurts businesses.

Businesses want to be able to hire cheap labor as inexpensively as possible, and raising the minimum wage pinches their bottom line as they are forced to pay their low-tier employees more. Because of this, businesses and fiscal conservatives are often strongly opposed to raising the minimum wage. The additional costs to businesses deters Congress from raising the minimum wage in times of economic distress, despite bad economic conditions making survival even harder for minimum wage employees.

Because of the additional labor cost to businesses, raising the minimum wage can in fact lead to companies simply terminating many of their minimum wage workers to avoid giving them a raise, and many companies may hire fewer teens or unskilled laborers. Department of Labor statistics indicate that a 10% raise in the Minimum Wage leads to 4.6% to 9.0% fewer workers from low-income demographics getting jobs.

As the cost of living rises, however, many politicians have pushed strongly for minimum wage raise. President Obama, a supporter of raising the federal minimum wage, has called for an increase to $9.50 per hour (higher then any state minimum wage in effect today) by the end of 2011. Whether his initiative will succeed in the current political climate remains to be seen.