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TheStreet Open House

States With the Best, Worst Minimum Wages

NEW YORK ( MainStreet) -- Let's face it: We don't have a free labor market in this country. But neither do 90% of the other countries in the world that enforce minimum wages on businesses to help keep food on the table of even the most unskilled of workers, according to the International Labor Organization.

In times of high unemployment, the question of whether the minimum wage helps or hurts the job situation inevitably finds its way into the public debate. And just as Americans are divided over the issue, so too are the states, which to an extent are given the freedom to set their own minimum wages.

In times of high unemployment, the question of whether the minimum wage helps or hurts the job situation inevitably finds its way into the public debate.

The federal minimum wage, set at $7.25 per hour, overrides any state that sets the bar lower, but only for workers in certain industries or companies with at least $500,000 in annual volume.

Most states are in line with the federal government in determining the least amount of money a worker should get paid for an hour of work. Five states (Alabama, Mississippi, South Carolina, Tennessee and Louisiana) defer to the feds by not setting their own minimum wages at all, but the rest cover a wide spectrum of hourly rates, from just more than $5 for the lowest to more than $9 for the highest.

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Here we take a look at the four states that set minimum wages below the federal rate, and the six that pay the highest minimum hourly wages in the country:

Fourth-lowest minimum wage: Arkansas
With a minimum wage of $6.25 per hour, applicable only to businesses that employ four or more workers, Arkansas did not start out with the rare distinction of setting its wage floor lower than the federal government's level. In fact, when it raised its rate to $6.25 in 2007 from $5.15, the move put its wage higher than the federal level for the next two years.

While the rate has remained unchanged since, rising federal levels have overridden Arkansas' perceived miserliness for at least a portion of the state's workforce. And though a low unemployment rate of 7.7% in December beat the national average of 8.5% at the time, the state's 18.7% poverty rate in 2010 was 3.4 percentage points higher than the national average.

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