Reflecting on the U.S. population at large, it is an exceptionally diverse workforce in terms of gender, age, race and country of origin. Hours are long, holidays are short and people often work for many years beyond the traditional retirement age of other countries.
Local economies, labor markets and the availability of skilled labor significantly vary around the United States, and conditions can change unevenly because of the diversity and dynamics of regional economies and markets. Any company considering a new venture should investigate the labor market as a part of its site selection process.
Employment regulation in the United States is far less comprehensive than in most other highly developed countries. The same is true regarding social protection. In fact, relations between employers and employees traditionally have been viewed as a private matter, subject to the agreement reached between the parties. In the United States there is no broad legal code of employment law.
Federal regulations apply throughout the United States. However, the regulations of a given state apply only within the borders of the state, and there are often tremendous differences in the level of protection, and their associated costs, from one state to another. The following is a description of key federal labor statutes, items typically covered by state law, and common labor practices that may be found throughout the United States:
Federal laws and regulations
- Fair Labor Standards Act. The federal Fair Labor Standards Act regulates minimum wage, overtime pay and child labor, and prohibits salary discrimination on the basis of gender. The federal minimum wage as of July 24, 2009, is $7.25 per hour. Individual states may require higher minimum standards.
The federal minimum standards for wages, hours and working conditions are enforced by the U.S. Department of Labor, which is also responsible for enforcing federal laws regarding labor organizations, the negotiation of labor disputes and industry harmony in general. In addition, the Department of Labor’s Bureau of Labor Statistics publishes extensive statistics on employment and wages.
- Workplace safety. The federal Occupational Safety and Health Administration (OSHA) of the U.S. Department of Labor inspects job sites and enforces health and safety standards through the citation of violations and issuance of abatement orders.
- Social Security. Unlike the social security programs of most countries, the U.S. Social Security system is primarily a retirement income program serving the elderly. The system does not provide health or income security for the general population.
The Social Security system provides supplementary income for retired people and their survivors and the disabled. Under Social Security, a system of health care insurance called Medicare provides hospital and medical insurance to the disabled and to persons age 65 and older. The Social Security system is administered by the Social Security Administration.
- Workplace discrimination. Laws adopted by the U.S. Congress and most states make it illegal to discriminate on the basis of race, sex, religion, national origin, age, disability or genetic information in the hiring, treatment and promotion of employees.
Many observers from abroad have noted that these anti-discrimination laws are more comprehensive and more actively enforced in the United States than in most other countries, so familiarity and strict compliance with the laws are essential. Individual states are increasingly active in protecting individuals from discrimination based on sexual orientation.
- Privacy and harassment. Federal and state laws protect employees from intrusive invasion into their personal lives and provide very strong protection against sexual harassment.
The standards applied in the United States are much stricter than in most other countries and the penalties for violation of protective rules are very severe. Prohibited conduct includes oral and written communications that are sexually offensive to persons exposed to them.
- Unions. As in most industrialized countries, labor unions play an important role in the United States, especially in government, manufacturing, health care and transportation. Union membership in 2018 accounted for about 10.5% of the labor force. This was down 0.2% from the prior year.
Union membership is far higher in the public sector. Some 33.9% of public employees are union members, while only 6.4% of private employees belong to unions. Union membership in the private sector has declined substantially in recent years, but unions still exercise considerable political influence.
The right of labor to organize and the rules applying to labor unions are governed by the federal Fair Labor Relations Act and are overseen by the federal Fair Labor Relations Board. In general, union-management relations in the United States in recent years have been marked by moderation and cooperation.
Want to learn more?
Our ability to anticipate and answer how the U.S. business, cultural and regulatory environments work, coupled with our international experience, foreign-language skills and deep knowledge of technical accounting and tax matters are highly valuable to foreign investors entering the U.S. market. Our professionals are here to help you transform your ideas into practical strategies for cross-border success.