Has there been any mention of how federally required minimum wage applies to people with no guaranteed income.
I’m talking about freelancers, and owners of small business.
I have been both a freelancer and a small business owner, I remember many a times I took home well below the minimum wage.
I’m not advocating for this, just wondering, has anything ever been proposed for people who fall into this category?
How would this even work? Who would make up the difference?
The Federal law that requires a minimum wage is the Fair Labor Standards Act. It generally covers employers who have $500k or more in annual sales or employees who work in interstate commerce. I would assume it did not cover you in the situations you mention.
Note that if it did cover you, you might have had to borrow to pay yourself and take a loss on schedule C the business – a loss made even bigger by the fact you’d then have had to pay FICA, both parts, on your pay as well.
Were you thinking, that some federal agency would step in and make up the difference?
“Freelancer” may or may not qualify for minimum wage depending on exactly what he’s doing; if he’s expected to show up at a job site for X hours, then he probably has to get paid at least minimum wage for those hours. If he doesn’t have a job then there is no employer to pay him minimum wage, so no one is breaking minimum wage laws. Note that minimum wage is a per hour amount, not a per week or per month or per year, so someone who only works 4 hours a month as a freelancer wouldn’t really benefit from minimum wage. Small business owners are exempt from having to pay themselves minimum wage because they are the ones running a business; the concept of minimum wage is to protect workers from being exploited by low wages, so it doesn’t make sense to apply it to the business owner. There’s no reason to propose it because it would either hurt or make no difference to small business owners (so the ‘right wing’ types don’t want it) and would do nothing for ordinary workers (so the ‘left wing’ has no reason to propose it). All it would mean is that an owner would sometimes be forced to take more out of the business into his own pocket, which doesn’t accomplish anything.
If you’re thinking of some kind of guaranteed minimum income, that’s completely different and generally would apply to everyone. Various proposals have been floated in the US since the 1970s but none have really gained traction.
Perhaps they could be eligible for unemployment benefits if they don’t meet a certain level of income.
Of course this is yet another argument for basic income…
Well, sure, the minimum guaranteed income is an old idea. In the US, the idea is usually called the Universal Basic Income, although I can’t tell you why they chose to name it after the entire universe instead of just the country.
I’ve been self-employed since 1985 and went through some rough times financially. But things always worked out and no, the taxpayers never helped me nor would I want them to. The way to survive is to simply live below your means.
Haha, “guaranteed income.” We’re 3/4 socialist now and the taxpayers are already paying way too many people to not work.
I’m glad I don’t have that many years left to see the coming mess, when there are more people in the wagon than there are people pulling it.
There’s a difference. Guaranteed income means if someone doesn’t make a certain amount, the government will pay them the difference.
Basic income means everyone gets a certain amount from the government regardless of whether they have an income or not. Though of course, if you are above a certain income level, you’ll be paying more taxes than you receive in basic income. Still, it provide more incentive to work, because it avoids the “the more you earn, the less you receive from the government” issue.
Moderator Note
Hurk, political commentary of this kind is out of place in GQ and does not contributing to answering the OP. No warning issued, but don’t do this again.
Colibri
General Questions Moderator
Maybe something like the Earned Income Tax Credit is what you mean. Some of that depends on having children, but it’s a form of subsidy.
Regards,
Shodan
Yeah, minimum wage has to do with what employers are required to pay, not (directly) with what workers are required to earn.
Keep in mind that 29 states have MW laws that set that wage above the federal rate, so it’s not just the feds. Not that I disagree with anything you said, but it’s more than just the Feds for most people in the US.
FWIW, there’s a difference between being self-employed as a Sole Proprietor and being self-employed as an S-corp. As a Sole Prop, your business can make a profit of $120 in a 40-hour work week so you only get $3 per hour and that’s legal. But as an S-corp, you are required by law to pay yourself, not just minimum wage, but a “reasonable” wage which is more than just the minimum, even if the company has to borrow money to do it. Then the corporation declares a loss, which is passed on to your personal 1040. If you own 100% of the shares of your own S-corp, it’s hard to see this as a positive thing. When you weigh the pros and cons of incorporation, the requirement to pay yourself MORE than minimum wage (even when the business is losing money) goes into the “con” column.