Minimum wage in the United States

In the United States, the minimum wage is set by U.S. labor law and a range of state and local laws.^[4] The first federal minimum wage was instituted in the National Industrial Recovery Act of 1933, signed into law by President Franklin D. Roosevelt, but later found to be unconstitutional.^[5] In 1938, the Fair Labor Standards Act established it at 25¢ an hour ($5.41 in 2023).^[6] Its purchasing power peaked in 1968, at $1.60 ($14.00 in 2023)^[6]^[7]^[8] In 2009, it was increased to $7.25 per hour, and has not been increased since.^[9]

Employers have to pay workers the highest minimum wage of those prescribed by federal, state, and local laws. In August 2022, 30 states and the District of Columbia had minimum wages higher than the federal minimum.^[10] In January 2020, almost 90% of Americans earning just minimum wage got more than $7.25 an hour.^[11] The effective nationwide minimum wage (the wage that the average minimum-wage worker earns) was $11.80 in May 2019; this was the highest it had been since at least 1994, the earliest year for which effective-minimum-wage data are available.^[12]

In 2021, the Congressional Budget Office estimated that incrementally raising the federal minimum wage to $15 an hour by 2025 would benefit 17 million workers but would also reduce employment by 1.4 million people.^[13]^[14] It would also lift about 900,000 people out of poverty and might raise wages for 10 million more workers, cause prices to rise and overall economic output to decrease slightly, and increase the federal budget deficit by $54 billion over the next 10 years.^[13]^[14]^[15]^[a] An Ipsos survey in August 2020 found that support for a rise in the federal minimum wage had grown substantially during the ongoing COVID-19 pandemic, with 72% of Americans in favor, including 62% of Republicans and 87% of Democrats.^[16] A March 2021 poll by Monmouth University Polling Institute, conducted as a minimum-wage increase was being considered in Congress, found 53% of respondents supporting an increase to $15 an hour and 45% opposed.^[17]

In 2019, 1.6 million Americans earned no more than the federal minimum wage—about 1% of workers, and less than 2% of those paid by the hour. Less than half worked full time; almost half were aged 16–25; and more than 60% worked in the leisure and hospitality industries, where many workers received tips in addition to their hourly wages. No significant differences existed among ethnic or racial groups; women were about twice as likely as men to earn minimum wage or less.^[18] In May 2022, the legislature of Hawaii passed a bill to raise the minimum wage to $18 by 2028, the highest state minimum wage in the United States.^[19] Governor David Ige signed the bill the next month.^[20]

^ "State Minimum Wage Laws". Wage and Hour Division (WHD). United States Department of Labor. Click on states on that map to see exact minimum wage info by state. See bottom of page for District of Columbia and U.S. territories. See: table and abbreviations list.
^ Wage Rates in American Samoa. Wage and Hour Division of the U.S. Department of Labor.
^ "Wage Rate in American Samoa" (PDF). Wage and Hour Division (WHD). United States Department of Labor.
^ Bradley, David H. (February 3, 2016). State Minimum Wages: An Overview (PDF). Washington, D.C.: Congressional Research Service. Retrieved January 31, 2018.
^ "Fair Labor Standards Act of 1938: Maximum Struggle for a Minimum Wage | U.S. Department of Labor". www.dol.gov. Retrieved January 19, 2021.
^ ^a ^b 1634–1699: McCusker, J. J. (1997). How Much Is That in Real Money? A Historical Price Index for Use as a Deflator of Money Values in the Economy of the United States: Addenda et Corrigenda (PDF). American Antiquarian Society. 1700–1799: McCusker, J. J. (1992). How Much Is That in Real Money? A Historical Price Index for Use as a Deflator of Money Values in the Economy of the United States (PDF). American Antiquarian Society. 1800–present: Federal Reserve Bank of Minneapolis. "Consumer Price Index (estimate) 1800–". Retrieved February 29, 2024.
^ Cite error: The named reference :5 was invoked but never defined (see the help page).
^ Wenger, Jeffrey B. (September 2016). "Working for $7.25 an Hour: Exploring the Minimum Wage Debate". Rand. Retrieved December 14, 2017. By 1968, the minimum wage had reached its peak purchasing power of $1.60 per hour ($11.08 in 2016 dollars).
^ "Minimum Wage". United States Department of Labor. Retrieved November 20, 2017.
^ "State Minimum Wages". National Conference of State Legislatures. Retrieved May 19, 2023.
^ Vanek-Smith, Stacey; Garcia, Cardiff (May 16, 2019). "The Real Minimum Wage". NPR. Retrieved January 9, 2020.
^ Vanek-Smith, Stacey; Garcia, Cardiff (May 16, 2019). The Real Minimum Wage. NPR. Event occurs at 6:44 to 7:45. Retrieved January 9, 2020. Ernie [Economist Erin Tedeschi] added up all the hours worked by these minimum wage workers. And he applied the relevant minimum wage depending on where those workers lived. And then finally, he just took the average pay of all the hours worked. That average was $11.80 an hour.
^ ^a ^b "The Budgetary Effects of the Raise the Wage Act of 2021" (PDF). Congressional Budget Office. February 1, 2021. Archived (PDF) from the original on February 8, 2021. Retrieved February 9, 2021. The cumulative budget deficit over the 2021–2031 period would increase by $54 billion. Increases in annual deficits would be smaller before 2025, as the minimum-wage increases were being phased in, than in later years. Higher prices for goods and services—stemming from the higher wages of workers paid at or near the minimum wage, such as those providing long-term health care—would contribute to increases in federal spending.
^ ^a ^b Selyukh, Alina (February 8, 2021). "$15 Minimum Wage Would Reduce Poverty But Cost Jobs, CBO Says". NPR. Raising the federal minimum wage to $15 an hour by 2025 would increase wages for at least 17 million people, but also put 1.4 million Americans out of work, according to a study by the Congressional Budget Office released on Monday. A phase-in of a $15 minimum wage would also lift some 900,000 out of poverty, according to the nonpartisan CBO. This higher federal minimum could raise wages for an additional 10 million workers who would otherwise make sightly above that wage rate, the study found.
^ Morath, Eric; Duehren, Andrew (February 8, 2021). "$15 Minimum Wage Would Cut Employment, Reduce Poverty, CBO Study Finds – Nonpartisan study says raising minimum wage would cost 1.4 million jobs but lift 900,000 people above the poverty line". Wall Street Journal. While many Americans would see raises, the analysis showed a minimum-wage increase would cause prices to rise, the federal budget deficit to widen and overall economic output to slightly decrease over the next decade. ... Higher wages would increase the cost of producing goods and services, and businesses would pass some of those increased costs on to consumers in the form of higher prices, resulting in reduced demand, the CBO said. "Employers would consequently produce fewer goods and services, and as a result, they would tend to reduce their employment of workers at all wage levels," the report said. "Young, less educated people would account for a disproportionate share of those reductions in employment."
^ "America's Hidden Common Ground on Economic Opportunity and Inequality – Public Agenda". Public Agenda. September 24, 2020. Retrieved January 25, 2021.
^ "Public Wants Stimulus Checks More Than GOP Support for Plan". Monmouth University Polling Institute. March 3, 2021. Retrieved March 6, 2021.
^ "Characteristics of Minimum Wage Workers, 2019". BLS Reports. United States Bureau of Labor Statistics. Retrieved January 25, 2020.
^ "Hawaii could have nation's highest minimum wage in 2028". May 4, 2022.
^ "Hawaii Governor Signs $18 Minimum Wage Law, First of Its Kind". News.bloomberglaw.com. June 22, 2022. Retrieved August 7, 2022.

Cite error: There are <ref group=lower-alpha> tags or {{efn}} templates on this page, but the references will not show without a {{reflist|group=lower-alpha}} template or {{notelist}} template (see the help page).

[minwage-1] "State Minimum Wage Laws". Wage and Hour Division (WHD). United States Department of Labor. Click on states on that map to see exact minimum wage info by state. See bottom of page for District of Columbia and U.S. territories. See: table and abbreviations list.

[Samoa-2-2] Wage Rates in American Samoa. Wage and Hour Division of the U.S. Department of Labor.

[Samoa-3] "Wage Rate in American Samoa" (PDF). Wage and Hour Division (WHD). United States Department of Labor.

[4] Bradley, David H. (February 3, 2016). State Minimum Wages: An Overview (PDF). Washington, D.C.: Congressional Research Service. Retrieved January 31, 2018.

[5] "Fair Labor Standards Act of 1938: Maximum Struggle for a Minimum Wage | U.S. Department of Labor". www.dol.gov. Retrieved January 19, 2021.

[inflation-US-6] 1634–1699: McCusker, J. J. (1997). How Much Is That in Real Money? A Historical Price Index for Use as a Deflator of Money Values in the Economy of the United States: Addenda et Corrigenda (PDF). American Antiquarian Society. 1700–1799: McCusker, J. J. (1992). How Much Is That in Real Money? A Historical Price Index for Use as a Deflator of Money Values in the Economy of the United States (PDF). American Antiquarian Society. 1800–present: Federal Reserve Bank of Minneapolis. "Consumer Price Index (estimate) 1800–". Retrieved February 29, 2024.

[:5-7] Cite error: The named reference :5 was invoked but never defined (see the help page).

[8] Wenger, Jeffrey B. (September 2016). "Working for $7.25 an Hour: Exploring the Minimum Wage Debate". Rand. Retrieved December 14, 2017. By 1968, the minimum wage had reached its peak purchasing power of $1.60 per hour ($11.08 in 2016 dollars).

[9] "Minimum Wage". United States Department of Labor. Retrieved November 20, 2017.

[:8-10] "State Minimum Wages". National Conference of State Legislatures. Retrieved May 19, 2023.

[NPR_1-11] Vanek-Smith, Stacey; Garcia, Cardiff (May 16, 2019). "The Real Minimum Wage". NPR. Retrieved January 9, 2020.

[12] Vanek-Smith, Stacey; Garcia, Cardiff (May 16, 2019). The Real Minimum Wage. NPR. Event occurs at 6:44 to 7:45. Retrieved January 9, 2020. Ernie [Economist Erin Tedeschi] added up all the hours worked by these minimum wage workers. And he applied the relevant minimum wage depending on where those workers lived. And then finally, he just took the average pay of all the hours worked. That average was $11.80 an hour.

[CBO_2021_Min_wage-13] "The Budgetary Effects of the Raise the Wage Act of 2021" (PDF). Congressional Budget Office. February 1, 2021. Archived (PDF) from the original on February 8, 2021. Retrieved February 9, 2021. The cumulative budget deficit over the 2021–2031 period would increase by $54 billion. Increases in annual deficits would be smaller before 2025, as the minimum-wage increases were being phased in, than in later years. Higher prices for goods and services—stemming from the higher wages of workers paid at or near the minimum wage, such as those providing long-term health care—would contribute to increases in federal spending.

[NPR_2021_CBO-14] Selyukh, Alina (February 8, 2021). "$15 Minimum Wage Would Reduce Poverty But Cost Jobs, CBO Says". NPR. Raising the federal minimum wage to $15 an hour by 2025 would increase wages for at least 17 million people, but also put 1.4 million Americans out of work, according to a study by the Congressional Budget Office released on Monday. A phase-in of a $15 minimum wage would also lift some 900,000 out of poverty, according to the nonpartisan CBO. This higher federal minimum could raise wages for an additional 10 million workers who would otherwise make sightly above that wage rate, the study found.

[WSJ_1-15] Morath, Eric; Duehren, Andrew (February 8, 2021). "$15 Minimum Wage Would Cut Employment, Reduce Poverty, CBO Study Finds – Nonpartisan study says raising minimum wage would cost 1.4 million jobs but lift 900,000 people above the poverty line". Wall Street Journal. While many Americans would see raises, the analysis showed a minimum-wage increase would cause prices to rise, the federal budget deficit to widen and overall economic output to slightly decrease over the next decade. ... Higher wages would increase the cost of producing goods and services, and businesses would pass some of those increased costs on to consumers in the form of higher prices, resulting in reduced demand, the CBO said. "Employers would consequently produce fewer goods and services, and as a result, they would tend to reduce their employment of workers at all wage levels," the report said. "Young, less educated people would account for a disproportionate share of those reductions in employment."

[17] "America's Hidden Common Ground on Economic Opportunity and Inequality – Public Agenda". Public Agenda. September 24, 2020. Retrieved January 25, 2021.

[18] "Public Wants Stimulus Checks More Than GOP Support for Plan". Monmouth University Polling Institute. March 3, 2021. Retrieved March 6, 2021.

[:11-19] "Characteristics of Minimum Wage Workers, 2019". BLS Reports. United States Bureau of Labor Statistics. Retrieved January 25, 2020.

[20] "Hawaii could have nation's highest minimum wage in 2028". May 4, 2022.

[21] "Hawaii Governor Signs $18 Minimum Wage Law, First of Its Kind". News.bloomberglaw.com. June 22, 2022. Retrieved August 7, 2022.

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