What Is Minimum Wage?
The minimum wage is the lowest hourly wage an employer can pay an employee for labor. The Fair Labor Standards Act (FLSA) of 1938 set the first federal minimum wage in the U.S. at $0.25 per hour. Since then, the federal minimum wage has increased 22 times. The most recent federal minimum wage increase was in 2009, bringing the minimum wage to $7.25.
The current Federal Minimum Wage in the United States is $7.25 per hour, according to the Fair Labor Standards Act. However, thirty states and the District of Columbia have increased their minimum wage above the federal minimum of $7.25. Alabama, Louisiana, Mississippi, South Carolina, and Tennessee have not adopted a state minimum wage. If the state, county, or city minimum wage is mandated higher than the federal wage, employers must pay their workers the greater of the two amounts.
Minimum Wage by State
The National Conference of State Legislatures (NCSL) has a minimum wage table with each state’s minimum wage. According to the NCSL, 21 states began 2021 with higher minimum wages, and five raised their minimum wages later in the year. Nine states (Alaska, Arizona, Colorado, Maine, Minnesota, Montana, Ohio, South Dakota, and Washington) increased their minimum wages based on the cost of living while 17 states increased their minimum wages as a result of previously passed legislation.
Some states have two minimum wages depending on specified employment conditions. In Nevada, the minimum wage for an employee who receives health benefits is $9.50 while the minimum wage for employees who do not seek health benefits is $10.50. Montana has a $4.00 minimum wage for businesses with annual gross sales of $110,000 or less; all other businesses must pay $9.20. Ohio also allows a lower minimum wage for businesses grossing $299,000 or less.
Additionally, some states have different minimum wages for tipped workers vs. non-tipped workers. In some states, the minimum wage for tipped workers can be as low as $2.13 per hour. Some states require that tipped employees are paid the state’s minimum wage for non-tipped employees.
Eleven states and the District of Columbia (Nevada, Minnesota, California, Washington, Oregon, Arizona, Maine, Vermont, Alaska, South Dakota, and Montana) have minimum wages that automatically adjust annually. Five more states (Colorado, Connecticut, Missouri, New Jersey, and Florida) plan to add an annual adjustment.
States With a $15 Minimum Wage
Several states are currently in the process of automatically increasing their minimum wage annually to eventually reach $15 over a set period. Currently, only California($15.00), Massachusetts ($15.00), and the District of Columbia ($15.20) have at least a $15 minimum wage. There are more states that have voted to approve a $15 minimum wage.
In Massachusetts, the minimum wage rose from $14.25 to $15 in January 2023. Connecticut will follow in June 2023 with a raise increase from $14.00 to $15.00. New York currently has a $13.20 minimum wage and it will increase to $15.00 with annual adjustments for inflation.
New Jersey’s minimum wage rose to $14.00 on January 1, 2023, and will raise to $15.00 on January 1, 2024. Maryland will follow a similar trajectory from $13.25 to $14 and finally $15.00 on January 1, 2025. Illinois and Delaware will reach the $15.00 minimum wage on January 1, 2025, as well. Nebraska’s and Florida’s $15.00 minimum wage will be reached in 2026 with small increases to reach that point.