Minimum Wage by State: A Complete Guide for 2024

It’s been over a decade since the inception of the Fight for $15. The now global labor movement began in 2012 when hundreds of fast-food workers in New York City walked off the job to demand better wages and union rights. While the movement’s protests and advocacy have helped push rate raises into mainstream political discourse, the federal minimum wage has been frozen since 2009.

This marks the longest period in American history without a minimum wage increase at the federal level. On the bright side, progress has still been made as the majority of states have taken matters into their own hands.

As an ongoing policy battle fought at the grassroots, statehouse, and congressional levels, it’s key for employers to stay on top of current minimum wage requirements. Otherwise, they risk facing severe penalties like hefty fines and potential imprisonment.

Manually juggling payroll can be a handful with special pay situations and multi-state taxation rules to track, but it doesn’t have to be this way. With BambooHR® Payroll, everything works together in one platform that ensures compliance and accuracy every time. Keep reading to learn how state minimum wage rates affect your business.

What Is Minimum Wage?

Minimum wage is the lowest hourly rate an employer can pay an employee, according to the Fair Labor Standards Act (FLSA). While many organizations pay above the federal minimum, this law helps protect workers with lower wages and fewer job opportunities from exploitation. Regulations at federal and state levels help ensure businesses comply.

The first US federal minimum wage was set in 1938 at 25 cents an hour. Signed into law by President Franklin D. Roosevelt, the FLSA also banned child labor and mandated a maximum 44-hour workweek. Since then, US labor standards have been updated to ensure they align with economic, social, and political changes.

What Is the Federal Minimum Wage in 2023?

The federal minimum wage is currently $7.25 per hour. This rate was established on July 24, 2009.

How Often Does the Federal Minimum Wage Increase?

The federal minimum wage does not increase regularly. It happens when Congress passes a bill for the President to sign into law. However, many states have separate minimum wage laws.

Minimum Wage by State

As of 2023, 30 states and the District of Columbia have higher wage rates than the federal minimum. On a more granular level, multiple cities and regions within states have their own minimum wage that accounts for cost-of-living variances. For example, California’s minimum wage is $15.50 per hour. However, the minimum wage in Emeryville, a suburb of San Francisco, is $18.67 per hour.

In these areas, employees are entitled to the rate that benefits them the most. If a state’s minimum wage is lower than the $7.25 federal minimum, employers must pay the federal rate. Conversely, if the state minimum wage is higher than the federal, employers must adhere to the state rate.

The following table compares the minimum wage in all 50 states and the District of Columbia. Plus, it provides employers with the yearly minimum salary they can expect to pay per non-exempt employee. Keep in mind this list doesn’t consider every locality with a wage requirement.

State Minimum Wage Rates (Department of Labor)

* Full-time = 40 hours per week

**Part-time = 20 hours per week

Who Is Exempt from Minimum Wage Laws?

While the federal rate is the bare minimum an employer can pay, subminimum wage provisions apply to certain employees, such as:

Workers Who Receive Tips

In applicable industries, employers are only required to pay an employee $2.13 an hour in direct wages if:

• That amount plus their tips equals at least the federal minimum wage.
• The employee gets to keep all their tips.
• The employee regularly receives more than $30 per month in tips.

However, if an employee’s tips and direct wages don't add up to the federal minimum hourly wage, the employer must pay them the difference.

Young Workers

Young workers, or employees under age 20, can earn $4.25 an hour during their first 90 consecutive days of work. Afterward, employers must pay these workers the full federal minimum wage. If the employee reaches age 20 before the 90-day window ends, they're entitled to the federal rate sooner.

Workers with Disabilities

Employers may pay workers with disabilities less than the federal minimum. This FLSA provision only applies under certain circumstances—in other words, a disability doesn't automatically qualify someone for lower income.

Among other requirements, employers must first obtain an authorization certificate from the Secretary of Labor. While there's no definitive wage rate for this situation, it's typically calculated based on the individual's productivity capacity and how much the company pays employees without disabilities for similar work. However, a study by the US Government Accountability Office found that many employees earn less than $3.50 an hour.

Full-Time Students

Certified employers can pay full-time students working in retail or service stores, agriculture, or colleges and universities 85% of the federal minimum wage ($6.16 per hour). When students graduate or leave school for good, employers must pay at least the full amount.

Student Learners

Student learners are high school students at least 16 years old and enrolled in vocational courses. Certified employers can pay students 75% of the federal minimum wage ($5.44 per hour) for as long as the student is enrolled in the program.

Other FLSA Exemptions

Some employees are exempt from minimum wage provisions altogether, such as:

• Farmworkers
• Seasonal and recreational establishment workers
• Babysitters on a casual basis
• Companions for the elderly
• Federal criminal investigators
• Fishing employees
• Newspaper delivery people
• Seamen on non-American vessels
• Switchboard operators

Has Minimum Wage Kept up with Inflation?

In short, no. Today’s $7.25 minimum wage is 40% lower compared to the rate in 1970 when adjusted for inflation. The minimum wage in 1970 was $1.60 per hour, which equates to $12.04 when expressed in 2023 dollars.

The federal minimum wage hasn't changed for 14 years, resulting in the lowest value since 1956. According to the Economic Policy Institute (EPI), an employee earning the current minimum wage gets 27.4% less in inflation-adjusted terms than what their counterpart earned in July 2009 (when the rate was last raised). If today’s minimum wage matched inflation, it would be $10.24. However, if it kept pace with employee productivity growth since 1968, it would be around $21.50 per hour.

Minimum Wage vs. Living Wage

The minimum wage is the lowest hourly rate an employer can legally pay workers. On the other hand, a living wage allows a person working full-time to afford basic necessities for themselves and their dependents, such as food, housing, and healthcare, and still have some money left over for emergencies.

There's a significant disparity between the minimum wage and a living wage. For instance, a typical family of four (two working adults and two children) must work more than two full-time, minimum-wage jobs to make ends meet—that's a 96-hour workweek per adult. Single-parent families must work even harder.

Also, women and people of color are disproportionately affected by the federal minimum wage. Individuals in these underrepresented groups are more likely to work in the service industry, which represents about 74% of jobs that pay at or below $7.25 an hour. It’s a myth that minimum wage workers are exclusively teenagers—most are adults between ages 25 and 54, many of whom have families to support.

The Raise the Wage Act of 2023 was introduced in the US House of Representatives and Senate on July 25, 2023, to protect workers across the country, especially in Southern areas without state minimums. If signed into law, the bill would gradually raise the federal minimum wage to $17 an hour by 2028 and eventually eliminate subminimum wages for tipped workers, employees with disabilities, and youth.

How Are Minimum Wage Laws Enforced?

The Department of Labor’s Wage and Hour Division (Wage and Hour) enforces the FLSA for all non-exempt employees. It's illegal for employers to dismiss or discriminate against employees for filing a complaint under the FLSA. Representatives across the country bring businesses that violate employment practices into compliance through various methods, including:

Investigations

Many investigations are initiated by confidential employee complaints. In other instances, Wage and Hour selects multiple businesses in a particular industry or geographic area for inspection. To determine what laws or exemptions (if any) apply to businesses and employees, the representative examines several records, such as:

• Annual business dollar volume
• Government contract work
• Time and payroll data

Next, they privately interview certain employees to verify their time and payroll records, duties, and other information. Afterward, the investigator informs the employer if they're in violation and, if so, how to correct it.

Recovery of Back Wages

There's a two-year statute of limitations on back-wage cases (except willful violations, which have a three-year statute). If an employer owes back pay, the FLSA provides four recovery methods:

1. Wage and Hour supervises the payment.
2. The Secretary of Labor files a lawsuit for back wages, plus an equal amount as liquidated damages.
3. An employee files a private lawsuit for back pay, equal liquidated damages, and attorney/court fees.
4. The Secretary of Labor gets an injunction to prevent the employer from violating the law.

Penalties

Employers with FLSA violations are subject to specific penalties depending on the offense, such as:

• Up to $1,000 for each minimum wage violation
• Up to $10,000 for each young worker employed in violation
• Up to $10,000 and criminal prosecution for willful FLSA violations, plus potential imprisonment for a second conviction

Run Payroll with Confidence

When it comes to payroll, fast, simple, and accurate is the ideal trifecta. But that’s no easy feat if your HR team is working in a disjointed system where double data entry is the norm.

Features like centralized data give your administrators a bird’s eye view of company-wide payroll information, and automated tax filing helps avoid expensive penalties. And with self-service tools, employees gain more autonomy (meaning fewer shoulder taps for HR).

Managing payroll correctly is key to ensuring compliance and boosting employee satisfaction—and you can count on BambooHR® Payroll to deliver on both fronts, each and every payday.