What is the Minimum Wage?

Despite a steady rise in living costs, the federal minimum wage of $7.25 an hour has not changed since 2009.

Minimum wages are set higher than the federal minimum in thirty states and Washington, D.C.

When you compare nominal wages (not adjusted to inflation) and their spending power in 2022 numbers, (adjusted to inflation), the minimum wage has not kept up with inflation.

The federal minimum wage has not been raised since 2009, so its real purchasing power has declined dramatically. It’s now even harder for workers to survive on minimum wages due to the decrease in their purchasing power.

Each state has a different minimum wage. Five states do not have minimum wage laws. However, the federal minimum wage applies in all five. The minimum wage in some states is higher depending on whether the state’s cities or regions have a higher minimum.

No. No. The minimum wage has not changed since 2009, so the current inflationary conditions are not due to it.

All employees covered by Fair Labor Standards Act have to be paid at minimum the federal minimum wage. Workers may earn more if they are paid the state minimum wage.

According the Department of Labor workers who are not covered under the FLSA and may earn less than the minimum wage include:

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  Employees at certain seasonal amusement and recreational establishments.
  

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  Newspaper delivery workers and employees of small newspapers.
  

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  Employees engaged in fishing operations or seamen on foreign vessels.
  

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  Some farmworkers.
  

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  Casual babysitters.
  

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  Companions for older people and the infirm.
  

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  Professional, executive and administrative employees.
  

These workers are exempted from overtime pay. Learn more on the Department of Labor’s website about who is eligible for overtime pay. )

Tiered employees are those who depend on tips from customers for their income. According to the Department of Labor, a tipper typically earns more than $30 per monthly in tips.

Tipped employees must be paid a minimum wage, also known as a cash wage, of $2.13 an hour. To reach the federal minimum wage, $7.25 an hour, that cash wage must be combined with tips. These tips are referred to as a “tip credit,” which allows employers and employees to pay less than the federal minimum wage.

Employers may credit tips up to $5.12 an hour against worker’s earnings. Employers are required to compensate employees whose wages (at minimum $2.13 an hour) and tips are less than $7.25 an hour.

The minimum tip wage and maximum tip credit vary from one state to the next.

Washington, D.C. has the highest minimum wage in the country for tipped workers. Washington, D.C. residents voted to increase the minimum wage each year for tipped workers incrementally until July 1, 2027, as of the 2022 elections. The tipped minimum wage will then be equal to the non-tipped minimum wage. Current minimum wage for tipped workers is $5.35 an hour, and for non-tipped workers it’s $16.10.

The minimum wage is set by 14 states and Washington, D.C., each year according to inflation. This index is usually linked to the U.S. Bureau of Labor Statistics consumer price index, CPI. The index does not change and the minimum wage doesn’t. Some states also have annual caps on inflation increases like Minnesota (2.5%), California (3.5%), and Vermont (5 %).).

The Economic Policy Institute reports that states that tie inflation to minimum wage increases adjust their wages starting January 1, unless otherwise noted. These states are:

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  California.
  

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  District of Columbia (adjusts to July 1).
  

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  Minnesota.
  

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  New Jersey.
  

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  New York (adjusted Dec. 31).
  

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  Oregon (adjusts July 1 1).
  

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  South Dakota.
  

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  Washington.
  

As of January 1, 2024, Connecticut will index its wages to inflation

According to the U.S. Census Bureau’s most recent population survey data, $70,784 is the median household income of a single person.

Since 2012, the median income in the U.S. outpaces the consumer price index. This gap has widened the most from 2018 to 2019. The gap widened most from 2018 to 2019.

Women always bring home less than men. According to the Census Bureau, in 2020, women earned 83c for every dollar earned by men.

The national median earnings gap for men and women working full-time, year-round in 2019 was $10,150. Men earned a median income of $53,544 while women earned a median income of $43,394.

Each state has a wage gap that is wider. These are the states with the greatest median wage gaps between men and women:

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  Wyoming: $21,676.
  

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  Utah: $17,303.
  

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  District of Columbia: $16,032.
  

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  Louisiana: $14,926.
  

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  Washington: $14,609.
  

These are the states with the lowest median wage gaps between men & women in

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  Vermont: $4,600.
  

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  Nevada: $6,013.
  

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  Hawaii: $7,022.
  

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  California: $7,162.
  

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  Maryland: $7,594.
  

Women with lower education levels also have a gender pay gap. According to the U.S. Government Accountability Office, women earn 66 cents per dollar for workers who have less than a high-school diploma.

These are the latest median earnings differences by degree according to gender and race compiled by National Center for Education Statistics

According to data from the Department of Labor, wage inequalities are even more severe when they are broken down by race and ethnicity. Comparing with white workers earning every dollar:

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  Hispanic/Latino workers make 73 cents
  

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  Black workers make 76 cents
  

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  Native American/American Indian workers make 77c.
  

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  Multiracial workers earn an average of 81 cents
  

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  Asian Pacific Islander workers earn $1.12.
  

According to data from the Government Accountability Office, the gender pay gap is further exacerbated by the racial wages gap. Comparing to every dollar earned white men:

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  Hispanic/Latina women make 58 cents
  

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  Black women make 63 cents
  

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  Women of color earn 79c.
  

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  Asian women earn 97 cents.
  

According to the Human Rights Campaign’s 2021 analysis of salaries data, gender and gender identity also have an impact on earnings. LGBTQ+ workers earn 90 cents per dollar for a typical worker, which is a full-time worker in the private and nonfarm sectors. The Human Rights Campaign data shows that this is compared to every dollar earned by a typical worker.