Although the federal minimum wage is $7.25 an hour, the minimum an employer must pay depends on the state in which the employee resides. Many states have mandated minimum wages that are different from the federal minimum
What is the federal minimum wage?
The federal minimum wage is $7.25 per hour for employees who are covered and nonexempt (more on those terms in a second). States and cities can establish minimum wages, and many have mandated more than double the federal minimum. Employees who meet federal minimum wage requirements and are covered by both state and federal laws are entitled to the higher of the two.
Other states have wage requirements below $7.25, which are applicable to employees who can’t earn the federal minimum because they’re not covered under the Fair Labor Standards Act.
A person earning $7.25 per hour for 40 hours a week would make just over $15,000 a year before taxes. The 2024 poverty level was $16,320 for a single person under 65 years old.
Subscribe to get unbiased, data-driven insights sent to your inbox weekly.
When was the federal minimum wage established?
The federal minimum wage was established in the Fair Labor Standards Act in 1938, which set it at $0.25 an hour. Congressional amendments have periodically increased it, most recently to $7.25 in July 2009.
Who’s eligible for the federal minimum wage?
To be eligible for minimum wage, an employee must be both covered and nonexempt.
“Covered” employees are those employed by a business with annual sales of $500,000 or more; or by a government agency, school, hospital, or resident nursing home; who are involved in interstate commerce; or who are domestic workers like cooks, babysitters, and housekeepers.
Non-profits are not covered organizations unless they have a commercial aspect to their operations, such as a gift shop or a service for a fee.
“Exempt” employees either earn a fixed salary that’s not hour-dependent or have weekly pay above a certain threshold, making them exempt from the minimum wage (and often from overtime pay). Commissioned salespeople, mechanics, people working at seasonal and recreational establishments, and computer professionals are commonly exempt.
The weekly pay threshold for exempt employees is currently enforced at $684. A rule change was made by the Department of Labor in April 2024 to increase the threshold to $844 as of July 2024 and $1,128 as of July 2025. That rule is currently being challenged in the court system.
These exclusions and exemptions can mean some workers may earn less than $7.25 an hour. For example, the federal minimum for tipped employees is $2.13 an hour if that amount plus tips equals at least the federal minimum wage.
Workers 20 years old or younger may earn $4.24 an hour for their first 90 days.
How often does Congress increase the federal minimum wage?
The minimum wage has been raised 22 times since 1938. It was last raised in July 2009, making this the longest period without a change since its introduction. In 2021, the Biden administration signed an executive order to raise the minimum wage to $15 for federal contractors.
The Trump administration revoked this order in March 2025 and set the federal contractor wage to a minimum of $13.30.
Adjusting for inflation, the federal minimum wage was highest in 1968: $1.60 an hour in 1968 was equivalent to $14.42 in 2024.
Who earns the federal minimum wage?
Of all the hourly workers in the US, some are more likely to earn the federal minimum, based on factors like age, occupation, education level, race, and gender.
Young people
While 2.3% of hourly workers ages 16 to 24 earn $7.25 an hour or less, 1.2% of hourly workers ages 25 to 34 earn the minimum wage. Less than 1% of hourly workers older than 35 years old earn the minimum wage.
People with less formal education
Hourly workers with higher levels of formal education are more likely to outearn the federal minimum wage. In 2023, 1.1% of hourly workers with a high school diploma earn the federal minimum wage or less, as do 1.6% of people who do not have a high school diploma.
By comparison, 0.7% of people with an associate degree and 0.9% of those with a bachelor’s degree earn at or below the federal minimum.
Food prep and service workers
Hourly food preparation and service jobs have the highest proportions of workers earning the minimum or less: 8.1%. These workers often earn income through tips, which is one explanation why there’s a higher proportion of them earning at or below the minimum wage.
Personal care and service workers have the second largest share of its workforce that earn the federal minimum or less at 1.9%. Of all other occupations, 0.8% or fewer hourly workers earn the minimum wage.
Black women and white women
White women and Black or African American women have the highest rate of earnings at or below federal minimum wage, at 1.5% and 1.4% of hourly workers, respectively. Among all groups reported, Asian men have the lowest share at 0.5%.
What’s the minimum wage in your state?
Thirty states plus Washington, DC, have minimum wages above $7.25. Five states — Alabama, Louisiana, Mississippi, South Carolina, and Tennessee — do not have a state-mandated minimum wage. Thirteen states have minimum wages equal to the federal minimum, while Wyoming and Georgia have minimums below the federal level.
In some but not all states, cities and municipalities may establish their own minimum wage rates. These local minimum wages are tailored to address the cost of living and economic conditions in local areas and differ from the statewide minimum.
In Flagstaff, Arizona, for example, the hourly minimum wage is $17.85. Beginning in 2026, it will be annually adjusted by either the Consumer Price Index or a minimum of $2.00 per hour higher than the state minimum, whichever is higher.
Which states have the lowest minimum wage?
Georgia and Wyoming have the lowest state-mandated minimum wage, at $5.15. This minimum applies when employees are not subject to federal wage law, which applies when an employee is exempt, or doesn’t meet coverage requirements
How is minimum wage different from living wage?
The minimum wage is established by Congress and enforced by the Department of Labor.
The living wage is a concept some researchers and advocacy groups use to estimate the income needed to cover basic expenses such as housing, food, healthcare, and transportation, based on cost of living in a given area.
When the minimum wage in an area is below the estimated living wage, analysts suggest that full-time earnings may not cover typical living expenses without additional support.
Find out what the average wage is in the US and get the data delivered to your inbox weekly by signing up for our newsletter.
