Minimum wage is defined as the lowest hourly wage that 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 increase of the federal minimum wage 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. Twenty-nine states and the District of Columbia, however, have increased their minimum wage higher than 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, then employers are required to pay their workers the greater amount.
Some states have two minimum wages depending on specified employment conditions. For example, Montana’s minimum wage for businesses with gross annual sales of $110,000 or less is $4.00 but the rate is $8.00 for all other businesses. In Nevada, the minimum wage for an employee who receives health benefits is $7.25 while the minimum wage for employees who do not seek health benefits is $8.25.
Additionally, some states have different minimum wages for tipped workers vs. non=tipped workers. The minimum wage for tipped workers can be as low as $2.13 per hour in some states, which is the federal minimum for tipped employees Some states require that tipped employees are paid the state’s minimum wage for non-tipped employees.
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 2020 with higher minimum wages. Seven states (Alaska, Florida, Minnesota, Montana, Ohio, South Dakota, and Vermont) increased their minimum wages based on the cost of living while 14 states (Arizona, Arkansas, California, Colorado, Illinois, Maine, Maryland, Massachusetts, Michigan, Missouri, New Jersey, New Mexico, New York, and Washington) increased their minimum wages as a result of previously passed legislation.
States with $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. For example, in Massachusetts, the minimum wage currently sits at $12.75 per hour. In January 2021, it will increase to $13.50; in January 2022, it will increase to $14.25 per hour; and in January 2023, it will increase to $15 per hour.
Below are the states that are slowly increasing their minimum wages to $15 are:
- California by 01/01/2022
- Connecticut by 06/01/2023
- Illinois by 01/01/2025
- Maryland by 01/01/2025
- Massachusetts by 01/01/2023
- New Jersey by 01/01/2024
- New York: starting 12/31/20 is adjusting the rate annually until it reaches $15.00
As of August 2020, only the District of Columbia has a $15 minimum wage. The rate increased from $14.00 per hour to $15.00 starting July 1, 2020. Starting July 1, 2021, the District of Columbia will increase its minimum wage annually adjusted to the annual average increase in the Consumer Price Index for All Urban Consumers.
Other states have enacted legislation to increase their minimum wages in increment over the next few years to $13.50 (Washington and Oregon) or $12.00 (Arizona, Colorado, Maine, Michigan, Missouri, and New Mexico).