The Fair Labor Standards Act (FLSA), enacted in 1938, is the federal legislation that establishes the general minimum wage that must be paid to all covered workers. A full discussion of the coverage of the minimum wage is beyond the scope of this report, which provides only a broad overview of the topic. In general, th e FLSA mandates broad general minimum wage coverage. It also specifies certain categories of workers who are not covered by FLSA wage standards, such as workers with disabilities or certain youth workers. The act was enacted because its provisions were meant to both protect workers and stimulate the economy. The FLSA also created the Wage and Hour Division (WHD), within the Department of Labor (DOL), to administer and enforce the act. In 1938, the FLSA established a minimum wage of $0.25 per hour. The minimum wage provisions of the FLSA have been amended numerous times since then, typically for the purpose of expanding coverage or raising the wage rate. Since its establishment, the minimum wage rate has been raised 22 separate times. The most recent change was enacted in 2007 ( P.L. 110-28 ), which increased the minimum wage from $5.15 per hour to its current rate of $7.25 per hour in three steps. For employees working in states with a minimum wage different from that of the federal minimum wage, the employee is entitled to the higher wage of the two. The FLSA extends minimum wage coverage to individuals under two types of coverage—"enterprise coverage" and "individual coverage." An individual is covered if they meet the criteria for either category. Around 130 million workers, or 84% of the labor force, are covered by the FLSA. The first category of coverage is at the business or enterprise level. To be covered, an enterprise must have at least two employees and must have annual sales or "business done" of at least $500,000. Annual sales or business done includes all business activities that can be measured in dollars. Thus, for example, retailers are covered by the FLSA if their annual sales are at least $500,000. In non-sales cases, such as enterprises engaged in leasing property, gross amounts paid by tenants for property rental will be considered "business done" for purposes of determining enterprise coverage. In addition, regardless of the dollar volume of business, the FLSA applies to hospitals or other institutions primarily providing medical or nursing care for residents; schools (preschool through institutions of higher education); and federal, state, and local governments. The second category of coverage is at the individual level. Although an enterprise may not be subject to minimum wage requirements if it has less than $500,000 in annual sales or business done, employees of the enterprise may be covered if they are individually engaged in interstate commerce or in the production of goods for interstate commerce. The definition of interstate commerce is fairly broad. To be engaged in "interstate commerce," employees must produce goods (or have indirect input to the production of those goods) that will be shipped out of the state of production, travel to other states for work, make phone calls or send emails to persons in other states, handle records that are involved in interstate transactions, or provide services to buildings (e.g., janitorial work) in which goods are produced for shipment outside of the state. The FLSA covers most, but not all, private and public sector employees. Certain employers and employees are exempt from all or parts of the FLSA minimum wage provisions, either through the individual or enterprise coverage or through specific exemptions included in the act. In addition, the FLSA provides for the payment of subminimum wages (i.e., less than the statutory rate of $7.25 per hour) for certain classes of workers. The FLSA statutorily exempts various workers from FLSA minimum wage coverage. Some of the exemptions are for a class of workers (e.g., executive, administrative, and professional employees), while others are more narrowly targeted to workers performing specific tasks (e.g., workers employed on a casual basis to provide babysitting services). The list below is not exhaustive but is intended to provide examples of workers who are not covered by the minimum wage requirements of the FLSA: bona fide executive, administrative, and professional employees; individuals employed by certain establishments operating only part of the year (e.g., seasonal amusement parks, organized summer camps); individuals who are elected to state or local government offices and members of their staffs, policymaking appointees of elected officeholders of state or local governments, and employees of legislative bodies of state or local governments; employees who are immediate family members of an employer engaged in agriculture; individuals who volunteer their services to a private, nonprofit food bank and who receive groceries from the food bank; agricultural workers meeting certain hours and job duties requirements; individuals employed in the publication of small circulation newspapers; domestic service workers employed on a casual basis to provide babysitting; individuals employed to deliver newspapers; and certain employees in computer-related occupations. The FLSA also allows the payment of subminimum wages for certain classes of workers, including the following: Youth. Employers may pay a minimum wage of $4.25 per hour to individuals under the age of 20 for the first 90 days of employment. Learners. Employers may apply for special certificates from the Wage and Hour Division of DOL that allow them to pay students who are receiving instruction in an accredited school and are employed part-time as part of a vocational training program a wage at least 75% of the federal minimum wage ($5.44 at the current minimum wage). Full-Time Students. Employers may apply for special certificates from the Wage and Hour Division of DOL that allow them to pay full-time students who are employed in retail or service establishments, an agricultural occupation, or an institution of higher education a wage at least 85% of the federal minimum wage ($6.16 at the current minimum wage). Individuals with Disabilities. Employers may apply for special certificates from the Wage and Hour Division of DOL that allow them to pay wages lower than the otherwise applicable federal minimum to persons "whose earning or productive capacity is impaired by age, physical or mental deficiency, or injury." As elaborated in regulations, disabilities that may affect productive capacity include, but are not limited to, blindness, mental illness, mental retardation, cerebral palsy, alcoholism, and drug addiction. There is no statutory minimum wage required under this provision of the FLSA, but pay is to be broadly commensurate with pay to comparable non-disabled workers and related to the individual's productivity. Tipped Workers. Under Section 203(m) of the FLSA, a "tipped employee"—a worker who "customarily and regularly receives more than $30 a month in tips"—may have his or her cash wage from an employer reduced to $2.13 per hour, as long as the combination of tips and cash wage from the employer equals the federal minimum wage. An employer may count against his or her liability for the required payment of the full federal minimum wage the amount an employee earns in tips. The value of tips that an employer may count against their payment of the full minimum wage is known as the "tip credit." Under the current federal minimum wage and the current required minimum employer cash wage, the maximum tip credit is $5.12 per hour (i.e., $7.25 minus $2.13). Thus, all workers covered under the tip credit provision of the FLSA are guaranteed the federal minimum wage. The most recent data available (2016) indicate that there are approximately 2.2 million workers, or 2.7% of all hourly paid workers, whose wages are at or below the federal minimum wage of $7.25 per hour. Of these 2.2 million workers, approximately 700,000 earn the federal minimum wage of $7.25 per hour, and the other 1.5 million earn below the federal minimum wage. As the Bureau of Labor Statistics (BLS) notes, the large number of individuals earning less than the statutory minimum wage does not necessarily indicate violations of the FLSA but may reflect exemptions or misreporting. The "typical" minimum wage earner tends to be female, age 20 or older, part-time, and working in a food service occupation. The data in Table 1 below show selected characteristics of the workers earning at or below the federal minimum wage. The data are based on the universe of the estimated 2.2 million workers who earn $7.25 per hour or less. States may also choose to set labor standards that are different from federal statutes. The FLSA establishes that if states enact minimum wage, overtime, or child labor laws more protective of employees than those provided in the FLSA, the state law applies. In the case of minimum wages, this means that if an individual is covered by the FLSA in a state with a higher state minimum wage, the individual is entitled to receive the higher state minimum wage. On the other hand, some states have set minimum wages lower than the FLSA minimum. In those cases, an FLSA-covered worker would receive the FLSA minimum wage and not the lower state minimum wage. As of January 1, 2017, 29 states and the District of Columbia have minimum wage rates above the federal rate of $7.25 per hour. These rates range from $7.50 per hour in New Mexico to $11.00 in Massachusetts and Washington State and $12.50 in Washington, DC. Two states have minimum wage rates below the federal rate and five have no minimum wage requirement. The remaining 14 states have minimum wage rates equal to the federal rate. In the states with no minimum wage requirements or wages lower than the federal minimum wage, only individuals who are not covered by the FLSA are subject to those lower rates. The literature on the effects of the minimum wage is vast and represents one of the more well-studied issues in labor economics.