Minimum wage is the lowest hourly pay rate permitted by law.In the United States, the federal minimum wage is five dollars and fifteen cents an hour.It has not changed since nineteen ninety-seven.And it does not include all jobs.

For example, workers who receive extra money in the form of tips can be paid two dollars and thirteen cents an hour.Also, the federal rate may not cover some workers for small companies.State laws often set minimum pay in these cases.

The Department of Labor says about two million workers earn the minimum wage or less.That is about three percent of all workers paid by the hour.

Ohio and Kansas have lower minimum wages for some workers than under federal law.But sixteen of the fifty states and the District of Columbia have minimum wages higher than the federal one.

In California, Republican Governor Arnold Schwarzenegger has just proposed what he says is a much-needed raise.California's minimum wage would rise one dollar, to seven dollars and seventy-five cents an hour, over the next year and a half.

State lawmakers passed a bill last year to add a dollar to the minimum wage.But Mister Schwarzenegger vetoed it because it would have also required yearly increases for inflation.

State governments led the way in the history of the minimum wage in America.Massachusetts passed a law for women and children in nineteen twelve.But in nineteen twenty-three, the Supreme Court found wage requirements for private employers unconstitutional.It ruled that states could not interfere with pay agreements.

In nineteen thirty-eight, however, the Fair Labor Standards Act established a federal minimum wage.At that time, it was twenty-five cents.

Some economists and lawmakers argue that markets, and not the government, should set prices for labor.They say minimum wage laws reduce the number of jobs for unskilled workers and young people.

Employers might not be happy with higher labor costs.But labor activists warn that inflation has reduced the buying power of today's minimum wage.They say a minimum wage must be a "living wage."That is, it must be enough for workers and their families to live on.

This VOA Special English Economics Report was written by Mario Ritter.Read and listen to our reports online at WWW.51VOA.COM.I'm Faith Lapidus.