FLSA FAQ: The “Starter” Minimum Wage Already Exists, But Isn’t Very Useful

Two topics that we have heard quite a bit about during all of the GOP debates so far are immigration and the minimum wage–two of my favorites.  We’ll leave the immigration debate aside for now, but I want to highlight a provision of the Fair Labor Standards Act (FLSA) that gets overlooked: the youth minimum wage or “starter” minimum wage.

If you have been following the GOP debates, you know that retired neurosurgeon Ben Carson has repeatedly mentioned that he wants to “create” a “starter” minimum wage for younger workers. In the September GOP debate on CNN, he said,“I think we also have to have two minimum wages, a starter, and a sustaining, because how are young people ever going to get a job if you have such a high minimum wage that it makes it impractical to hire them?”  Many people–including Dr. Carson–may not realize it, but Congress already thought of this idea, and so did many states.  In fact, the FLSA has more than one starter wage for teenage workers; it has three!  The problem isn’t the lack of a starter minimum wage, but its lack of utility.

The Starter Minimum Wage for Teenage Workers

Dr. Carson would not have to do anything to create the starter minimum wage he has supported.  When Congress by amended the Fair Labor Standards Act by passing the the Small Business Job Protection Act of 1996 (PL 104-188), it raised the minimum wage to $5.15 per hour, but it also created a “starter” minimum wage for teenage workers of $4.25 that employers could use.  That law is still on the books, as the Department of Labor explains:

A minimum wage of $4.25 per hour applies to young workers under the age of 20 during their first 90 consecutive calendar days of employment with an employer, as long as their work does not displace other workers. 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 $7.25 per hour effective July 24, 2009.

And that’s not all.  Dr. Carson might be pleased to know that the FLSA has other “starter” minimum wages, too.

The Starter Minimum Wage for Full-Time Students

For employers that operate retail or service stores, agricultural businesses, as well as colleges and universities themselves, there is another “starter” minimum wage available for full time students. Similar to the USCIS’s CPT and OPT programs for F-1 visa holders, the DOL’s Full-time Student Program allows full time students to work up to 8 hours per day at a “starter” minimum wage as long as they are enrolled full time.  An employer that hires full-time students can obtain a certificate from the Department of Labor that allows the student to be paid not less than 85% of the federal minimum wage ($6.17).  The certificate also limits the hours that the student may work to no more than 20 hours a week when school is in session and 40 hours a week when school is out. Once students graduate or leave school, employers must pay them at least the full minimum wage.

The Starter Minimum Wage for High School Student-Learners

The third, and narrowest, of the “starter” minimum wages is the student-learner starter minimum wage.  This program is available only to high school students who are at least 16 years old and who are enrolled in vocational education course (shop class). An employer that hires the high school student can obtain a certificate from the Department of Labor that allows the student to be paid not less than 75% of the minimum wage ($5.44) for as long as the student is enrolled in the vocational education program.

Upshot for Employers: The Starter Minimum Wage is Not Very Useful

According to the Bureau of Labor Statistics, just 21 percent of workers who make at or below the federal minimum wage are under 20 and thus eligible for the broadest starter minimum wage program. More importantly, though, states have largely trumped the FLSA’s starter minimum wage by passing their own, higher standards.  Currently, just seven states either have no minimum wage law (Alabama, Louisiana, Mississippi, South Carolina, and Tennessee) or set a minimum wage lower than the federal rate (Georgia, Wyoming).  In the other 43 states, you must look to state law (or, increasingly, county or city ordinance) to determine whether a “starter” minimum wage exists and how to apply it.  For example, Maryland’s minimum wage law sets that state’s minimum wage to $8.25/hour and permits employers to pay workers under 20 years old 85% of the state rate ($7.02) for the first six months of employment.  However, paying $7.02 would violate the FLSA, meaning that Maryland has effectively eliminated the starter minimum wage, even for those few who qualify.  On the other end of the spectrum, the state of Washington does not permit “starter” wages for youth workers at all, opting instead to set the minimum wage for all employees to $9.47/hour (and $9.67/hour starting in 2016).  Vermont limits youth minimum wage eligibility to full-time high-school students.  In all, twenty-three states plus the District of Columbia have a youth wage at or above the federal minimum wage of $7.25 an hour.

Setting aside high school shop students (who are a bit of a special case) and the potential lack of demand for jobs paying $4.25/hour, the FLSA’s starter minimum wages are not particularly useful or even available for employers.  Creating a new federal starter minimum wage at a higher rate, as Dr. Carson has advocated, would likely have little impact, either.