The last federal minimum wage increase occurred on July 24, 2009, when it rose from $6.55 to $7.25 per hour during President Barack Obama’s first year in office. Since then, the national wage floor has remained unchanged, setting a new record for the longest period of stagnation since the wage was established in 1938.
According to the Department of Labor, the buying power of $7.25 has sharply declined. The Consumer Price Index (CPI) shows that a dollar today has only about 70% of the purchasing power it had in 2009, meaning workers earning the minimum wage effectively make far less than they did 15 years ago.
Data from the Bureau of Labor Statistics (BLS) reveals that in 2023, around 869,000 workers earned at or below the federal minimum wage. Of that number, over two-thirds were women, highlighting a persistent gender gap in low-wage employment.
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Who Earns the Minimum Wage Today
While the federal minimum remains $7.25, not all low-income workers are paid equally. Certain categories of workers are legally permitted to earn less, as outlined under federal law.
Groups eligible for subminimum wages include:
| Worker Group | Federal Minimum Wage Rule | Additional Conditions |
|---|---|---|
| Tipped Employees | $2.13/hr direct wage | Employer must ensure tips equal at least $7.25/hr |
| Youth Workers (Under 20) | $4.25/hr for first 90 days | Must shift to $7.25/hr after probation |
| Full-Time Students | 85% of $7.25/hr | Applies to limited work hours |
| Workers with Disabilities | Subminimum wage permitted | Requires special Labor Department certification |
State and City Wage Variations
Across the nation, state and local governments have stepped in to counteract federal inaction. According to the Economic Policy Institute (EPI), 20 states, primarily in the South and Midwest, still follow the $7.25 federal minimum, while 30 states and Washington, D.C. have implemented higher rates. Additionally, 63 cities and towns, including New York City, Los Angeles, and Chicago, have adopted even higher local minimum wages.
For instance, Chicago’s minimum wage rose to $16.20 per hour in 2024, while California and Washington have statewide rates exceeding $16 per hour. These increases highlight growing regional efforts to align wages with modern living standards.
| Minimum Wage Category (2024) | Number of States/Cities | Examples |
|---|---|---|
| Federal Minimum ($7.25/hr) | 20 States | Texas, Alabama, Georgia |
| State Minimum Above Federal | 30 States + D.C. | California ($16), Washington ($16.28), New York ($16) |
| Local Ordinances Above State | 63 Cities/Towns | Los Angeles, Seattle, Chicago |
Why $7.25 U.S. Minimum Wage Hasn’t Changed for 15 Years
One major reason for the stagnant federal minimum wage is political gridlock in Congress. Since 2009, multiple proposals to raise the wage have been introduced, including the Raise the Wage Acts of 2017, 2019, and 2023, yet none have passed both chambers. Lawmakers remain sharply divided along party lines, with supporters emphasizing living wage reforms and opponents warning of potential harm to small businesses and rural economies.
Economic concerns have also slowed momentum. According to data from the Congressional Budget Office (CBO), raising the federal wage to $15 per hour could boost earnings for 27 million workers but potentially reduce employment by 1.4 million due to increased business costs. This trade-off has been a central argument for policymakers hesitant to implement broad increases.
Additionally, because states and cities have increasingly adopted their own minimum wage laws, federal pressure for reform has weakened. As of 2024, 60% of U.S. workers live in states with higher wage floors than the federal standard. This decentralized system allows regional adjustments but also leaves millions of workers in low-wage states without protection against inflation.
Federal Efforts and Legislative Challenges
In 2022, the Biden administration raised the minimum wage for 70,000 federal employees and 300,000 federal contractors to $15 per hour, aiming to set a benchmark for broader reform. However, efforts to increase the federal minimum for all workers have stalled. The Raise the Wage Act of 2023, which proposes lifting the rate to $17 per hour over five years, remains unpassed in Congress.
Supporters argue that higher wages can alleviate poverty, stimulate consumer demand, and promote greater economic equity. Critics, however, warn of potential downsides, such as higher labor costs, reduced hiring, and inflationary pressure on small businesses.
- Wage growth would help workers meet basic living costs and reduce poverty.
- Increased income could boost local economic activity and reduce reliance on public assistance.
- Higher labor costs could hurt small businesses and lead to layoffs.
- Companies might respond by raising prices or increasing automation.
The Growing Economic Divide
The United States currently ranks 19th globally in minimum wage standards, behind several other advanced economies. Economist Sylvia Allegretto from the Center for Economic and Policy Research (CEPR) noted that “nowhere in the U.S. can a full-time worker meet basic needs on the federal minimum wage.”
As inflation drives up prices for housing, food, and energy, workers earning $7.25 an hour find it increasingly difficult to sustain themselves. While some states have made progress, the federal rate’s stagnation continues to deepen inequality between low-wage earners and the broader workforce.
Frequently Asked Questions
1. When was the last federal minimum wage increase?
The last increase occurred on July 24, 2009, when the wage rose from $6.55 to $7.25 per hour. It has remained unchanged for 15 years.
2. How many workers still earn the federal minimum wage?
According to BLS data for 2023, approximately 869,000 U.S. workers earn the federal minimum wage or less, with women making up about 67% of this group.
3. Which states follow the $7.25 federal rate?
Twenty states, mostly located in the South and Midwest, including Texas, Alabama, and Georgia, still adhere to the federal minimum wage.
4. What is the highest state minimum wage currently in effect?
As of 2024, Washington State holds the highest statewide minimum wage at $16.28 per hour, followed closely by California and New York.
5. Is there any plan to raise the federal minimum wage soon?
The Raise the Wage Act of 2023 proposes an increase to $17 per hour over five years, but the bill has not advanced in Congress yet.
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