Minimum Wage in the United States and Japan

History of Minimum Wage

United States

• First created in 1933 with the National Industrial Recovery Act - set at $.25/hour

• Deemed unconstitutional by the Supreme Court from 1935 until 1938, with the Fair Labor Standards Act

• Increased gradually by the government until its current level at $5.15/hour

• President Clinton created the ability of states to increase their own minimum wages above the federal one - more than a third of the states have taken advantage of this opportunity

• Variance on the set minimum wage can go down to the level of even county or city ex. Sante Fe, Mexico - $9.50 vs. $5.15

Japan

• First introduced a minimum wage law in 1947, but it was not codified until 1959

• Employers are required to enter their employees for eligibility in such programs as "health insurance, employee pension insurance, employment insurance, and workers' accident compensation insurance" - www.photius.com

• The levels are set specific to area and specialty by groups with representatives from the government, employees, and employers

Minimum Wage Definition and Examples

---United States---

Minimum Wage

• the minimum hourly, daily or monthly wage that must be paid to employees or workers. Each country sets its own minimum wage laws and regulations, and more than 90% of all countries have some kind of minimum wage legislation. (according to wikipedia)

the federal minimum wage

• $5.15 per hour since 1997

minimum wage of each state

http://www.dol.gov/esa/minwage/america.gif

• (green-States with minimum wage rates higher than the Federal, blue-States with minimum wage rates the same as the Federal, yellow-States with no minimum wage law, red-States with minimum wage rates lower than the Federal)

The District of Colombia ($7.00)

Virginia, Ohio, Texas ($5.15)

Kansas ($2.65)

1. PA minimum wage ($5.15 )

• this will increase to $6.25 on January 1, 2007 and to $7.15 on July 1, 2007
• According to the Pennsylvania Dept of Labor and Industry, 257,000 or 7.9 % of the Pennsylvania’s hourly workforce would benefit from a one dollar per hour increase in the state’s minimum wage. 528,000 Pennsylvanians or 16.3 % of the state’s workforce would benefit from a two dollar per hour increase in the state’s minimum wage

"Increase in other states other than PA"

• Arizona (no state minimum wage to $6.75 on January 1, 2007)
• California ($6.75 to $7.50 in 2007 and to $8.00 on January 1, 2008)
• Colorado ($5.15 to $6.85 on January 1, 2007)

http://www.epinet.org/issuebriefs/228/table1.jpg

Hawaii($6.75 to $7.25)

[Exceptions]

Waitress/Waiter

• $2.13 an hour in direct wages
• $2.83 an hour in PA

For workers under age 20

• may be paid $4.25 an hour for their first 90 days consecutive calendar days of employment with an employer. After 90 consecutive days of employment or the employee reaches 20 years of age, whichever comes first, the employee must receive a minimum wage of $5.15 per hour.

---Japan---

http://www-cgi.cnn.com/WORLD/maps/japan.tokyo.jpg

• Minimum wages in Japan are determined by the Minister of Labor or the Chief of the Prefectural Labor Standards Office in 1959, and adjusted taking into consideration changes in economic and other affairs, as recommended by the Minimum Wage Council. Those systems vary with each region in Japan. It changes each year.

2 minimum wage systems

1)Regional

• applies to all workers
• 5.1~5.9 dollars/ hour (120yen/dollar)
• minimum wage in big cities

2)Industry

• applies to all workers in a specific industry throughout Japan, and the minimum wages vary

with the quality of jobs

• it is set when the specific industry needs to be higher than regional minimum wage for the fairness of labor
• 5.1~6.7 dollars/ hour
• the category of Industry

--the steel industry, Publishing, Auto (car) industry, Mechanical industry

Minimum Wage Differences

United States

Whom does minimum wage apply? http://www.nolo.com/article.cfm/pg/2/objectId/244AD836-D9F5-49AE-813B0478FF97298B/catId/A6167778-4246-4156-A6277BB2DF1CE4C4/111/259/232/ART/

Japan

Whom does minimum wage apply?

Region

• applies to all workers in each region
• including part-time job

Industry

• applies to all workers of a specific industry in each region
• does not apply to workers below 18 years old and above 65 years old

United States and Japan Enforcement Laws

United States

Who regulates?

• Department of Labor's Wage and Hour Division

What is regulated?

• Minimum Wage
• Overtime
• Child Labor Standards
• Record Keeping

How are regulations maintained?

• Submitting of Records

Consequences

• Fines not exceeding $10,000 per violation

Japan

Who regulates?

• Ministry of Labour (Korosho)

What is regulated?

• Same as United States

How are regulations maintained?

• Inspections in December and Springtime
• Submitting Records

Consequences

• Fine not exceeding 10,000 yen = 83 dollars(120 yen/dollar)

United States's vs Japan's Minimum Wage

United State's/Japan's Advantages

United States(1)

• Benefits for working families

• Benefits for disadvantaged workers

• Help reserve the trend of declining real wages for workers

• Strategy to end poverty

• Low public and social costs

• Decreases chance of abuse of employees

• Increases consumption with the placement of an higher income in the lower class, which most or all of their income

• Creates a higher standard for workers because employers require better work in turn for the increased money

United State's/Japan's Disadvantages

United States

• Reduce of labor hours and/or employment

• Reduce profits

• Raise prices

• Attracts immigrants from low wage countries - (seen as an advantage?)

• Reduces ability of poorer workers to better themselves with education

• Raises monetary burden on government because of an increased amount of people without jobs

• Nation loses ability to compete in global market because of increased costs in other areas of production