Americans have debated where to set the federal minimum wage for decades. President Joe Biden’s proposed stimulus plan aims to increase the federal minimum to $15 an hour, more than doubling the current wage of $7.25. Currently, wages vary by state, with some cities mandating more than double the federal minimum and other states with requirements below $7.25. Employees covered by both state and federal minimum wage laws are entitled to the higher of the two minimums.
How many people earn the federal minimum wage?
According to the Bureau of Labor Statistics (BLS) 1.6 million workers, or 1.9% of all hourly paid, non-self-employed workers, earned wages at or below the federal minimum wage in 2019. That year, 82.3 million people were paid hourly rates, making up 58.1% of all wage and salary workers in the United States.
Fewer Americans today make the federal minimum wage or less.
In 1980, when the federal minimum wage was $3.10 ($9.86 in 2019 dollars), 13% of hourly workers earned the federal minimum wage or less. Today, only 1.9% of hourly workers do. The number of federal minimum wage workers has decreased from 7.7 million in 1980 to 1.6 million in 2019. This is partly due to states establishing higher minimum wages than the federal level.
What is the federal minimum wage? When does it apply?
The federal minimum wage was established as part of the Fair Labor Standards Act in 1938. Since then, congressional amendments have periodically increased it —most recently in July 2009, when Congress set the minimum wage at $7.25 per hour. But the minimum only applies in the absence of stricter state mandates. At present, 29 states and Washington, DC have minimum wages above $7.25, which take precedence over the federal requirement.
Adjusted for inflation, the federal minimum wage was at its highest in 1979, when it was $2.90 an hour at the time, but equivalent to $10.47 in 2019 dollars. If a worker earning the federal minimum wage in 2019 worked 40 hours per week, every week of the year, they would earn just over $15,000 annually. That’s less than half of the US median annual wage of about $39,810, but more than the individual federal poverty threshold of about $13,011. Meanwhile, a worker earning the 1979 federal minimum wage, with the same hours, would make just under $21,800 in 2019 dollars.
Federal minimum wage law doesn’t cover all workers.
Not everyone is required to receive the federal minimum wage, which partly explains why the BLS measures workers “at or below” minimum wage. Various exclusions and exemptions can mean some workers may earn less than $7.25 per hour. For example, the federal minimum wage for tipped employees is $2.13 per hour so long as that amount plus tips received equals at least the federal minimum wage. Workers 20 years old or younger may earn $4.25 an hour for their first 90 consecutive days of employment. Plus, federal minimum wage law only applies to employees of enterprises with an annual gross volume of sales of at least $500,000 or certain types of smaller firms.
How does the minimum wage vary across states?
As of January 1, 2021, there were five states without minimum wage laws, two states with minimum wages below the federal minimum, 14 states with minimum wages at the federal level, and 29 states, plus Washington, DC, with minimum wages above the federal level, according to the Department of Labor. This is a significant change from 1980, when only two states, plus Washington, DC, had minimum wages above the federal level.
State minimum wages in 2021 range from $5.15 per hour in Georgia and Wyoming to $15 per hour in Washington, DC.
| State | Minimum wage |
|---|---|
| Alabama | No state minimum wage law |
| Alaska | $10.34 per hour |
| Arizona | $12.15 per hour |
| Arkansas | $11.00 per hour |
| California | $13.00 for employers with 25 or fewer employees. Will increase to $14.00 per hour on January 1, 2022 and $15 per hour on January 1, 2023; $14.00 for employers with more than 25 employees (will increase to $15.00 per hour on January 1, 2022 |
| Colorado | $12.32 per hour |
| Connecticut | $12.00 per hour |
| Delaware | $9.25 per hour |
| Florida | $8.65 per hour |
| Georgia | $5.15 per hour |
| Hawaii | $10.10 per hour |
| Idaho | $7.25 per hour |
| Illinois | $11.00 per hour. Will increase by $1 on January 1 of each year until reaching $15 per hour in 2025 |
| Indiana | $7.25 per hour |
| Iowa | $7.25 per hour |
| Kansas | $7.25 per hour |
| Kentucky | $7.25 per hour |
| Louisiana | No state minimum wage law |
| Maine | $12.15 per hour |
| Maryland | $11.60 per hour for employers with fewer than 15 employees; $11.75 per hour for employers with 15 or more employees |
| Massachusetts | $13.50 per hour |
| Michigan | $9.65 per hour. Will increase to $9.87 per hour in first calendar year following a year in which the annual unemployment rate was lower than 8.5%) |
| Minnesota | $10.08 per hour |
| Mississippi | No state minimum wage law |
| Missouri | $10.30 per hour |
| Montana |
$8.75 per hour for businesses with gross annual sales of more than $110,000; $4.00 per hour for businesses making less than $110,000 and not covered by federal statute |
| Nebraska | $9.00 per hour for employers with more than three employees |
| Nevada | $8.00 per hour for employees qualifying for health benefits and $9.00 for employees without health benefits. Both tiers will increase by 75 cents on July 1 of each year until reaching $11 per hour and $12 per hour in 2024 |
| New Hampshire | $7.25 per hour |
| New Jersey | $12.00 per hour. Will increase by $1 on January 1 of each year until reaching $15 per hour in 2025 |
| New Mexico | $10.50 per hour |
| New York | $12.50 per hour statewide; $15 per hour in New York City, Long Island and Westchester County |
| North Carolina | $7.25 per hour |
| North Dakota | $7.25 per hour |
| Ohio | $8.80 per hour |
| Oklahoma | $7.25 per hour for employers of ten or more full time employees at any one location and employers with annual gross sales over $100,000; $2 per hour for all other employers |
| Oregon | $12.00 per hour statewide standard; $13.25 per hour in the urban area around Portland; $11.50 per hour in non-urban parts of the state |
| Pennsylvania | $7.25 per hour |
| Rhode Island | $11.50 per hour |
| South Carolina | No state minimum wage law |
| South Dakota | $9.45 per hour |
| Tennessee | No state minimum wage law |
| Texas | $7.25 per hour |
| Utah | $7.25 per hour |
| Vermont | $11.75 per hour. Will increase to $12.55 per hour in 2022 with future increases pegged to inflation |
| Virginia | $7.25 per hour |
| Washington | $13.69 per hour statewide. Will change on January 1 of each year based on the federal Consumer Price Index; $16.69 per hour in Seattle; $16.57 per hour in SeaTac |
| West Virginia | $8.75 per hour |
| Wisconsin | $7.25 per hour |
| Wyoming | $5.15 per hour |
| District of Columbia | $15.00 per hour |
| Guam | $8.75 per hour |
| Puerto Rico | $7.25 per hour |
| U.S. Virgin Islands | $10.50 per hour |
Some states have larger proportions of minimum wage workers than others.
Some states have more minimum wage earners than others. For example, in South Carolina, 5.4% of hourly workers, or 64,000 people, earn the federal minimum wage or less. In California, Minnesota, Montana, Oregon, and Washington state, less than 1% of hourly workers earn the federal minimum wage or less.
Where is the minimum wage $15 an hour?
In addition to Washington, DC — which introduced a $15 minimum wage in 2020 — nine states have passed laws or referenda to set a $15 minimum wage.
Some cities also have minimum wages of $15 or more already in place. In 2014, Seattle was the first city to institute a $15 minimum wage, which fully went into effect this year. In San Francisco, a $15 minimum wage went into effect in 2018. In July 2019, the US House of Representatives passed a bill to raise the federal minimum wage to $15 per hour, with the Congressional Budget Office (CBO) releasing a report the same month analyzing the potential impact. The CBO report estimates that changing the federal minimum wage to $15 would increase the wages of 17 million workers in 2025. However, the CBO estimates that 1.3 million individuals would become jobless (CBO estimates that this number could be anywhere between zero and 3.7 million). The report explains that this predicted decrease in employment is based in employers decreasing their workforce to compensate for increased wages.
Who earns the federal minimum wage?
Demographics of minimum wage workers
Young workers are more likely to earn the minimum wage compared to older workers. While 4.3% of hourly workers between 16 and 24 years old earn $7.25 per hour or less, 1.4% for hourly workers over the age of 25 are.
Women hourly workers are also more likely to earn the minimum wage or less — 2.6% of female hourly workers make the minimum wage or below, compared to 1.3% of male hourly workers.
About 2.4% of Black hourly workers earn the federal minimum wage or less, compared to about 2% among white, Asian, and Hispanic hourly workers.
Among hourly workers without a high school degree, 3.1% earn the minimum wage or less. That’s compared to 2% of high school graduates and 1.2% of workers with a bachelor's degree or higher.
Occupation
Twelve percent of hourly food service workers make the minimum wage or less, the highest rate of any occupation type. Food service workers are also more likely to be paid an hourly rate compared to workers in other occupations, with more than half of food service employees (servers, cooks, cashiers, etc.) receiving hourly wages. After food service workers, personal care occupations, including manicurists, hairdressers, and cosmetologists, have the second highest rate of hourly workers at or below minimum wage, at 3.2%.
Weekly Hours
Part-time workers, or those who work between zero and 34 hours per week, are more likely to be minimum wage earners than those who work full-time. Roughly 4.3% of part-time hourly workers earn the minimum wage or less, compared to 1.1% of full-time hourly workers.
The minimum wage and the living wage are not the same thing.
The minimum wage is established by Congress and enforced by the Department of Labor. The living wage is a subjective concept calculated by policymakers and advocacy groups that works backward to calculate a wage to cover the basic needs and expenses of individuals in particular areas. In cases where the minimum wage is less than the estimated living wage, the suggestion is that earnings from a full-time minimum-wage job are not enough to support someone without additional income or aid.
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