The Complete Guide to Minimum Wage: All You Need To Know

Key takeaways

• Federal minimum wage as of 2025 is $7.25 for nonexempt workers, and has been the same since 2009.
• Minimum wage can vary depending on which state your business is based in.
• The minimum wage is higher than the federal requirement in 30 states across the US.

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 this pushed rate raises into mainstream political discourse, the federal minimum wage has been frozen since 2009.

Federal minimum wage is the lowest hourly rate an employer must pay an employee. All states must adhere to at least the federal minimum wage, but many have their own standards.
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.

In this guide we’ll cover what the federal minimum wage is in 2025, the current minimum wage rates in each state and how minimum wage rules are enforced.

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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.

As of July 24, 2009, the federal minimum wage for US nonexempt workers is $7.25 per hour. However, some states have a higher minimum wage than what is mandated by the federal government.

If there is a difference between the federal and state minimum wage, the higher wage is paid. For example, Washington state’s minimum wage is $16.66 per hour, meaning that this is what hourly workers (subject to the FLSA) are paid in Washington state. In the case of states without a minimum wage, like Alabama, employers subject to the FLSA must pay the federal minimum wage of $7.25 per hour.

Minimum wage by state

As of January 2025, 30 states and the District of Columbia, Puerto Rico, Guam, and the Virgin Islands 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 $16.50 per hour. However, the minimum wage in Emeryville, a suburb of San Francisco, is $19.90 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 District of Columbia has the highest minimum wage rate of $17.95 an hour.

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

2025 state minimum wage rates

* Full-time = 40 hours per week

**Part-time = 20 hours per week

Minimum wage vs. living wage

Minimum wage is the lowest hourly rate an employer can legally pay workers, whereas a living wage is the income required to cover basic family needs.

Basic needs expected to be covered under living wage include food, housing, transport, childcare, utilities and taxes. It allows a person working full-time to afford basic necessities for themselves and their dependents and still have some money left over for emergencies.

There's a significant disparity between the minimum wage and a living wage. 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.

Women are disproportionately affected by the federal minimum wage, as they are more likely to work in service occupations. In 2024, nearly 3 out of 4 workers earning minimum wage or less in 2024 were employed in the service industry.

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 a violation for employers to dismiss or discriminate against employees for filing a complaint under the FLSA.

Investigators are stationed around the US to enforce the FLSA through:

Investigations

Often investigations are initiated by confidential employee complaints, and other times Wage and Hour select multiple businesses (in a particular industry or geographic area) for inspection.

The representative examines several records and privately interviews certain employees to verify their time, payroll records, duties, and other information. The investigator then informs the employer if they're in violation and, if so, how to correct it.

Recovery of back wages

A two-year statute of limitations applies to back-wage cases (except willful violations, which have a three-year statute). If an employer owes back pay, the FLSA provides recovery methods, one of which is supervising the payment of back wages.

Penalties

Employers with FLSA violations are subject to specific penalties depending on the offense. These may include:

• 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 potential criminal prosecution for willful FLSA violations, plus potential  imprisonment  for a second conviction.

Minimum wage FAQs

As an HR professional, it’s vital to keep up to date with the latest federal minimum wage increases to ensure you’re paying your staff at least this amount—unless your state minimum wage is higher.

We’ll pulled together some commonly asked questions surrounding minimum wage, including what’s the current minimum wage is, so you won’t get caught out with your payroll.

What is the federal minimum wage in 2025?

The current federal minimum wage is $7.25 per hour. This rate was established on July 24, 2009, and has been the same ever since.

How often does the federal minimum wage increase?

The federal minimum wage does not increase regularly, or automatically. For the federal minimum wage to increase Congress must pass a bill for the President to sign into law. However, many states have their own separate minimum wage laws.

Who is exempt from the federal minimum wage?

Some workers are exempt from the federal minimum wage. These include professions like:

• Casual babysitters
• Companions for the elderly
• Fishing
• Newspaper delivery workers
• Switchboard operators
• Workers with disabilities
• Federal criminal investigators.

Be sure to check the Fair Labor Standards Act (FLSA) and the full list of exempted workers when making decisions about employee pay and compensation.

Has minimum wage kept up with inflation?

In short, no. According to Statista, US wages haven’t kept up with inflation. In fact, many people in America now feel financially worse off than they did a couple of years ago.

When adjusted for inflation, the 2024 minimum wage was more than 40% lower than the minimum in 1970. The minimum wage in 1970 was $1.60 per hour, which equates to $13.05 when expressed in 2024 dollars. This is in comparison to the 2025 federal minimum wage of $7.25 (which has been the same since 2009).