Last year, Sen. Bernie Sanders introduced the “Raise the Wage Act of 2025” that would increase the federal minimum wage to $17 by 2030. An analysis estimates that, if implemented, this change would impact “22,247,000 workers across the country, or 15% of the U.S. wage-earning workforce” and “would provide an additional $70 billion annually in wages for the country’s lowest-paid workers.”
This isn’t the first “Raise the Wage” act introduced in recent years, so today, let’s talk about the minimum wage.
Who earns minimum wage?
According to the Bureau of Labor Statistics, 82,000 workers in the U.S. earned exactly the federal minimum of $7.25 an hour in 2024, and another 760,000 workers’ wages were below the federal minimum. The data show that these workers are more likely to be under the age of 25, have less formal education, and work part-time. Federal minimum-wage earners are also more likely to be women, with a high concentration of workers in the leisure and hospitality industry. For full-time workers, the minimum wage equates to an annual salary of $15,080, which is just under the federal poverty guideline for a one-person household ($15,960).
While the data show that the percentage of American workers earning the federal minimum wage or less has decreased significantly since the data was first collected in 1979 (1% in 2024 vs. 13.4% in 1979), it does not take into account how many workers are earning more due to an established state minimum wage.
The wide difference of the minimum
The federal minimum wage was first established in 1938 as part of the Fair Labor Standards Act (FLSA), which set it at 25 cents an hour. Over the next few decades, that amount was slowly raised as Congress deemed necessary, with the last increase taking effect in 2009. Since then, there have been repeated attempts to raise the federal minimum, but none have passed Congress.
However, states and municipalities are able to set their own minimum wage, and many do. Therefore, depending on where you work, the amount you will get paid for the same job can vary quite dramatically. For example, the minimum wage is $19.94 in Connecticut, $11.41 in Minnesota, and $8.75 in West Virginia. While about a dozen states have set their minimum wage at the federal level, five states (Alabama, Mississippi, Louisiana, Tennessee, and South Carolina) have no minimum established, and two others (Georgia and Wyoming) have their minimum set below the federal limit at $5.15. These states automatically default to the federal minimum.
Many states have updated their laws in recent years, with several choosing to index their minimum wage to inflation so that it automatically adjusts each year. Additionally, many localities have also adopted a minimum wage above their state’s minimum. This includes Flagstaff, Arizona, which set it at $18.35, well above the state’s minimum wage of $15.15, and San Francisco, California, which set theirs at $19.61, while the state’s is currently set at $16.90.
Subminimum wages
Despite the existence of a minimum wage, there are situations when employers are legally allowed to pay certain workers less than the federal or state minimum. While many people know that tipped workers receive less ($2.13 an hour), they aren’t the only workers with subminimum wages.
The FLSA allows employers to obtain certificates from the U.S. Department of Labor to pay certain groups below the minimum wage. This includes workers with disabilities, so long as the disability “actually impairs the worker’s earning or productive capacity for the work being performed,” and workers under the age of 20. For young workers, employers are able to pay them $4.25 an hour for the first 90 consecutive days of employment, so long as the work doesn’t displace other workers.
Another major group of subminimum-wage earners is students, who can be paid 75% of the minimum wage, so long as they are enrolled full-time at an accredited college program and are employed on a part-time basis. These certificates are available to employers of students in retail or service stores, agriculture, or at colleges and universities, and stipulate that students are not able to work more than 8 hours a day or more than 20 hours a week while school is in session. Students can work 40 hours per week when school is not in session.
