Have you ever stopped to think about how the minimum wage works in the US? It's common to believe that compensation in American companies is based on hours worked, but that's not always the case. At least, not for everyone.
That's why Xplore Group has gathered some valuable information that can help you better understand the salary aspect in the United States. If you have a desire to live and work in America, the content below is for you.
WHAT IS THE MINIMUM WAGE IN THE US?
Currently, the federal minimum wage in the US is $7.25 per hour. In other words, in no place in the country - with rare exceptions - can a worker earn less than that.
Some states have their own minimum wage, which is almost always equal to or higher than what the federal law establishes. The exceptions are the states of Georgia and Wyoming, where the minimum wage is $5.15. However, it only applies to certain categories, and the vast majority of workers in these locations receive the federal minimum of $7.25 per hour.
The federal law also provides special rules for those who work with tips, disabled professionals, and full-time students, for example.
US STATES WITH THE HIGHEST MINIMUM WAGES
Washington, D.C. is not legally a state, but it is the American federal district with the highest minimum wage in the US. It's where the White House, Congress, the Supreme Court, and federal agencies are located. Consequently, the cost of living is also quite high.
Here's a list of the top 10 US states with the highest minimum wages:
Washington, D.C. - $16.10/hour
Washington - $14.49/hour
Massachusetts - $14.25/hour
California - $14.00/hour
New York - $13.20/hour
Connecticut - $14.00/hour
New Jersey - $13.00/hour
Arizona - $12.80/hour
Maine - $12.75/hour
Oregon - $13.50/hour
US STATES WITH THE LOWEST MINIMUM WAGES
As mentioned before, Georgia and Wyoming have the lowest minimum wage in the entire country.
Here's a list of the top 10 US states with the lowest minimum wages:
Georgia - $5.15/hour
Wyoming - $5.15/hour
Alabama - $7.25/hour
Idaho - $7.25/hour
Indiana - $7.25/hour
Iowa - $7.25/hour
Kansas - $7.25/hour
Kentucky - $7.25/hour
Louisiana - $7.25/hour
Mississippi - $7.25/hour
HOW DOES SALARY WORK IN THE US?
In general, workers in the US are compensated through an annual salary or an hourly wage.
The annual salary is very common, for example, in corporate areas. If you work in an office or have some kind of higher academic degree, you usually negotiate your compensation in annual terms - even though payment is made monthly or biweekly.
On the other hand, in more technical professions or certain business models, such as carpenters, drivers, construction workers, salespeople, waitresses, and some lawyers, compensation is usually based on an hourly wage.
WHEN DO I RECEIVE MY SALARY IN THE US?
If you have an annual salary, it's common for you to receive payment once a week, every two weeks, or monthly. It depends on your location and the company you work for.
In the case of hourly wages, weekly payment is the most common, but it can vary. Another difference is that in hourly work, when you exceed the 40-hour limit per week, each additional hour becomes worth 1.5 times the minimum wage.
This allows these professionals to earn more if they work multiple shifts or overtime hours. In annual salary, on the other hand, you won't receive more for overtime since you have already negotiated your annual compensation at the beginning of the employment contract.
Ultimately, the value of the salary set in annual terms depends on factors such as the company's benefits policy, level of experience, industry standards, state laws, and the geographical location of the company.
HOW OFTEN DOES THE MINIMUM WAGE INCREASE IN THE US?
Unlike Brazil, the minimum wage in the US is not automatically adjusted every year based on inflation. On the contrary, for an increase to happen, the US Congress needs to approve a bill stipulating a new value.
AND WHEN WILL THE NEXT INCREASE IN THE AMERICAN MINIMUM WAGE BE?
The minimum wage in the US has been $7.25 per hour since 2009.
However, politicians have been discussing raising the value to at least $15 per hour for years. According to a Pew Research survey from April 2021, 62% of Americans are in favor of this increase.
While Congress has not decided whether to raise the minimum wage, President Joe Biden issued an executive order in 2021 requiring companies contracted by the federal administration to pay their employees a minimum wage of $15 per hour. The measure went into effect on January 30, 2022, but only for these cases.
WHAT IS THE MINIMUM WAGE IN THE US FOR THOSE RECEIVING TIPS?
We know that tipping is part of American culture. Waiters, for example, rely on tips for almost their entire salary.
Other occupations that heavily rely on tips include hairstylists, bartenders, casino employees, manicurists, and food delivery drivers.
According to the US Department of Labor, a tipped worker is someone who receives more than $30 per month through this type of gratuity.
Therefore, the minimum wage law in the US is different for these professionals. In these cases, the minimum wage is only $2.13 per hour. Now you can understand those movie scenes where the waiter or waitress gets upset when the customer doesn't leave a tip!
However, there are some observations. This minimum wage can only be paid if the amount of $2.13 per hour, plus what the employee received in tips, does not amount to less than $7.25 per hour when combined. Otherwise, the employer must pay the difference.
On the other hand, some states have their own minimum wage laws for tipped workers. When a worker is subject to both federal and state laws, they can benefit from whichever is more advantageous to them.
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