What Is the Minimum Wage?
Since then, it has been raised 22 separate times–most recently, in July 2009, to $7.25 an hour. A minimum wage is the lowest wage that employers may legally pay to workers. The FLSA affords a private right of action for employees to recover unpaid minimum wages. In fact, an employee may bring a claim on the employee’s own behalf and on behalf of any “similarly situated” employees. Furthermore, an individual can be held personally liable for civil damages, if she effectively controls an employer and/or serve as an alter ego of it.
Pay increases set to take hold in the new year will bring the wage floor to $15 an hour or higher in Washington, D.C., as well as 10 states, among them Delaware, Illinois and Rhode Island. Those areas play host to one of every three U.S. workers, EPI found. State Minimum Wage LawsA clickable map that tells you what the minimum wage laws are in each state.
Questions and Answers About the Minimum Wage
Jennifer keeps readers current on Payroll news, covering topics such as employment taxes, fringe benefits and the Fair Labor Standards Act. The proliferation of artificial intelligence in the workplace, and the ensuing expected increase in productivity and efficiency, could help usher in the four-day workweek, some experts predict. Learn how Marsh McLennan successfully boosts staff well-being with digital tools, improving productivity and work satisfaction for more than 20,000 employees.
Application of gendered wage rates
The first minimum wage law in the United States went into effect in 1912 when Massachusetts set a minimum hourly rate for women and children under age 18. During the same legislative session, the State Legislature passed 2023 SB 525 (Durazo) which increases minimum wages for healthcare workers to $25.00 per hour by June 1, 2028. Below is a table outlining state minimum wages increases that were required for employers to comply with from 2023.
- These lower minimum wage rates are variously known as the tipped wage, subminimum tipped wage, or base cash wage.
- Because the federal minimum wage has not changed since 2009, its real purchasing power has decreased dramatically.
- In cases where an employee is subject to both the state and federal minimum wage laws, the employee is entitled to the higher of the two minimum wages.
- Minors (Under 18) may be paid 85% of the minimum wage for their first 90 days of employment.
- The federal minimum wage originated in the Fair Labor Standards Act (FLSA), signed by President Franklin Roosevelt on June 25, 1938.
What are the characteristics of minimum wage workers?
For businesses with six to 100 employees, it’s $15.00 per hour (was $14). The last increase occurred at the beginning of 2025, and the next one is scheduled for January 1, 2026. In Maryland, employers located in Montgomery County must pay a higher minimum wage than in the past. The rate will be $17.65 per hour (up from $17.15) for large employers; $16 per hour (up from $15.50) for mid-sized employers; and $15.50 per hour (up from $15) for small employers. In Illinois, where the state minimum wage is $15 per hour, Chicago has decided to raise its hourly rate from $16.20 to $16.60. The latest round of pay increases, however, will not affect more than a dozen states concentrated in the South that lack a minimum wage or offer a minimum wage that does not exceed the federal minimum of $7.25 per hour.
- An employee earning a guaranteed monthly compensation of $4,000 or more is exempt from the State minimum wage and overtime law.
- Because it hasn’t been increased at all in over three decades, its relative value has plummeted to less than 30 percent of the federal minimum wage.
- Together these workers make up 4 percent of all hourly paid workers.
- A living wage is the minimum income deemed necessary for a worker to meet their basic needs.
Various minimum wage exceptions apply under specific circumstances to workers with disabilities, full-time students, youth under age 20 in their first 90 consecutive calendar days of employment, tipped employees and student-learners. Five states have no minimum wage laws, but the federal minimum wage still applies; those include Alabama, Louisiana, Mississippi, South Carolina and Tennessee. In certain states, the minimum wage is more, depending on whether a particular city or region within that state sets a higher minimum.
Stay up to date with the latest HR news, trends, and expert advice each business day. Coverage Under the Fair Labor Standards Act Fact SheetGeneral information about who is covered by the FLSA. The median household income in the U.S. is $74,580, according to the U.S. Six states had wages and sick leave on the ballot this election season. Let us know in a single click, and we’ll fix it as soon as possible.
From January of 1981 toApril of 1990, the federal minimum wage was not increased at all. Infact, in these nine years, the real value of the minimum wage,adjusted to 2012 dollars, decreased from $8.29 to $6.66. Time and one-half premium pay for work on Sundays and holidays in retail and certain other businesses is required under two laws that are separate from the minimum wage law. The Full-time Student Program is for full-time students employed in retail or service stores, agriculture, or colleges and universities. The employer that hires students can obtain a certificate from the Department of Labor which allows the student to be paid not less than 85% of the minimum wage.
Minimum Wage Increases and Worker Protections Coming in 2025 as Worker Momentum Builds
The “Grand Bargain” passed in 2018 raised wages on an annual schedule, phasing out time-and-a-half while prohibiting employers from requiring work on Sundays and holidays against employee wishes. In addition, some counties and cities within states may implement a higher minimum wage than the rest of their state. Sometimes this higher wage applies only to businesses that contract with the local government, while in other cases the higher minimum applies to all work. Employers using a voluntary flexible work hour plan approved by the Alaska Department of Labor, who schedule employees for a 10-hour day, 40-hour workweek may be eligible for premium pay after 10 hours a day instead of after 8 hours. Altogether, over 60 cities and counties have raised the minimum wage locally since 2012, including more than 20 since 2020.
Check These Minimum Wage Updates, Effective July 1, 2025
Efficiency wages are the level of wages paid to workers above the minimum wage to retain a skilled and efficient workforce. Efficiency wage theory posits that an employer must pay its workers highly enough that workers are incentivized to be productive and that highly skilled workers don’t quit. Critics say that companies, not the government, should decide how much their employees are paid. They add that a minimum wage doesn’t always increase the spending power of a population and can instead lead to higher unemployment. The employer is expected to compensate the employee for the shortfall if the employee’s total tips and hourly rate fall below the minimum wage.
Minimum Wage by State Charts
The minimum wage did not reach the current hourly rate of $7.25 until 2009. Cities may also occasionally set different minimums for different types of workers. For example, as of January 1, 2023, Seattle mandates a minimum wage of $18.69 for employees who work for companies with more than 500 workers globally. Seattle has varying rates based on The Minimum Wage the category of employer and whether the company pays for health insurance.
How is the minimum wage raised? Who raises the minimum wage?
The federal minimum wage of $7.25 per hour has not budged since 2009 despite a steady increase to the costs of living, which has accelerated into skyrocketing inflation in recent years. The purchasing power of minimum wage workers peaked in 1968, according to the Seattle Times. Inflation and price increases after that point caused the real earnings of minimum wage workers to fall as productivity increased. The United States enforces a federal minimum wage but individual states, cities, and localities can enact different minimum wage requirements provided that the stipulated hourly wage is not lower than the federal minimum wage. An employer who is subject to the federal and state minimum wage requirements must pay the higher of the two. The government periodically assesses the federal minimum wage level with changes in inflation or the cost of living.
HRMorning, part of the SuccessFuel Network, provides the latest HR and employment law news for HR professionals in the trenches of small-to-medium-sized businesses. Rather than simply regurgitating the day’s headlines, HRMorning delivers actionable insights, helping HR execs understand what HR trends mean to their business. The nation’s highest wage floors will take effect in some of the nearly 50 cities and other localities that will impose minimum pay hikes. The pay increases will affect about 9.2 million workers, who will gain a combined $5.7 billion over the course of 2025, according to the left-leaning Economic Policy Institute, or EPI. If your employer is paying you less than the minimum wage, visit the How To File a Complaint section of the U.S.