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]
The Pew Center reported in January 2014 that 73% of Americans supported raising the minimum wage from $7.25 to $10. By party, 53% of Republicans and 90% of Democrats favored this action.[183] Pew found a racial difference for support of a higher minimum wage in 2017 with most blacks and Hispanics supporting a $15.00 federal minimum wage, and 54% of whites opposing it.[184]
A Lake Research Partners poll in February 2012 found the following:
Regardless of the ruling, the idea of raising the minimum wage to $15 by 2025 from its current $7.25 is broadly popular, a Reuters/Ipsos poll found. Some 59% of respondents said they supported the idea, with 34% opposing it.
When told that "raising the minimum wage should lift some families out of poverty, but government economists also expect it could eliminate some low income jobs, potentially making some families worse off," 55% of respondents said they supported it.
About 40% of American adults said that they would benefit – either personally or through a member of their family – if the U.S. raised the federal minimum wage.[186]
Some large employers in the traditionally low-paying retail sector have declared an internal minimum wage. As of 2020: