Career Planning Succeeding at Work Pay & Getting a Raise What Is the Minimum Wage? Federal and State Minimum Wage Regulations, Exceptions, and History By Alison Doyle Alison Doyle Facebook Twitter Website Alison Doyle is one of the nation’s foremost career experts. learn about our editorial policies Updated on October 30, 2022 In This Article View All In This Article How Does the Minimum Wage Work? Federal Minimum Wage Rates State Minimum Wage Rates Local Minimum Wage Rates U.S. Minimum Wage History Increases in the Minimum Wage When Can Employees Be Paid Less Than Minimum Wage? Photo: shapecharge / Getty Images Definition The minimum wage is the lowest amount that an employer is required to pay an hourly worker. The hourly minimum wage rate you will be paid depends on the state in which you work and the type of job you are working at. Key Takeaways The U.S. minimum wage is $7.25 per hour. Some cities and states have higher minimum wage rates than the federal minimum.Workers in certain categories of employment can legally be paid less than the federal minimum wage.Employees in a location with a higher minimum wage than the federal minimum must be paid the higher rate. How Does the Minimum Wage Work? The minimum wage was enacted in the United States in 1938 as part of the Fair Labor Standards Act (FLSA). The first minimum wage was 25 cents an hour. The current U.S. minimum wage is $7.25 per hour. However, some states and cities have set minimum wage rates that are higher than the federal minimum. Employees, with some exceptions, must be paid at least the federal minimum wage. If they work in a state with a higher minimum wage, they will receive the higher amount. Federal Minimum Wage Rates Federal Minimum Wage Effective July 24, 2009, the federal minimum wage is $7.25 an hour for covered non-exempt employees, meaning employees who are covered under the FLSA. Employers in covered employment categories cannot pay their employees less than $7.25 per hour. Minimum Wage for Federal Contractors As of January 1, 2023, the minimum wage for federal contractors is $16.20 per hour, and for tipped federal contractors, the minimum wage is $13.75 per hour. State Minimum Wage Rates Some states pay a higher minimum wage than the federal minimum. For example, Florida's minimum wage is $11 an hour effective September 30, 2022, and will increase by $1 per hour each year until it reaches $15 in September 2026. Note Here is a list of current state minimum wage rates you can use to get information on the minimum wage in your location. Local Minimum Wage Rates Finally, some cities have set higher minimum wages than both the state and federal minimums. Typically, higher local minimum wages are found in areas with a higher cost of living, such as San Francisco, which has a $16.99 per hour minimum wage as of 2022. Cities may also occasionally set different minimums for different types of workers. For example, as of January 1, 2023, Seattle mandates a minimum wage of $18.69 for employees who work for companies with more than 500 workers globally. Seattle has varying rates based on the category of employer and whether the company pays for health insurance. If an employee is subject to local, state, and federal minimum wage laws, the employee is entitled to the higher of the three minimum wages. U.S. Minimum Wage History The federal minimum wage originated in the Fair Labor Standards Act (FLSA), signed by President Franklin Roosevelt on June 25, 1938. The law established a minimum wage of 25 cents per hour for all employees who produced products shipped in interstate commerce. Increases in the Minimum Wage Until 1956, the federal minimum wage was still below a dollar, only rising to $1.15 by 1961. The minimum wage did not reach the current hourly rate of $7.25 until 2009. Since 1938, the federal minimum wage has been raised 22 times. In order for the minimum wage to go up, either the federal government or a state or local legislature must pass a law that stipulates a change in the minimum wage. The last time the federal minimum wage was increased was in 2009. Major U.S. Minimum Wage Increases 1939: $0.301945: $0.401950: $0.751956: $1.001961: $1.151963: $1.251967: $1.401968: $1.601974: $2.001975: $2.101976: $2.301978: $2.651979: $2.901980: $3.101981: $3.351990: $3.801991: $4.251996: $4.751997: $5.152007: $5.852008: $6.552009: $7.25 When Can Employees Be Paid Less Than Minimum Wage? There are some employees who can be paid at rates below the hourly minimum wage. Those employees are permitted to be paid at a rate called a subminimum wage. What Is Subminimum Wage? What does subminimum wage mean? There are some employees who can be paid at hourly rates below the minimum wage, according to the Fair Labor Standards Act (FLSA). Workers in certain categories of employment can legally be paid less than the federal minimum wage, which is currently $7.25 an hour. Subminimum wage employees include student-learners (vocational education students) and full-time students working in retail, service, agriculture, or higher education. Employees who fall under this category also include those whose mental or physical disability (due to age, injury, etc.) impairs their earning or productive ability. Employment at less than the minimum wage helps to preserve the jobs for workers in these categories. Subminimum wage employment is allowed only under certificates issued by the Wage and Hour Division. Exceptions: Tipped Workers An employer of an employee who receives tips is only required to pay $2.13 an hour in wages if that amount plus the tips received equals at least the federal minimum wage, the employee retains all tips, and the employee customarily and regularly receives more than $30 a month in tips. Note If an employee's tips combined with the employer's direct wages of at least $2.13 an hour do not equal the federal minimum hourly wage, the employer must make up the difference. Exceptions: Young Workers A minimum wage of $4.25 per hour applies to young workers under the age of 20 during their first 90 consecutive calendar days of employment with an employer, as long as their work does not displace other workers. After 90 consecutive days of employment or the employee reaches 20 years of age, whichever comes first, the employee must receive a minimum wage of $7.25 per hour. Other Workers Exempt from the Minimum Wage There are other classes of employees who are exempt from minimum wage requirements, including the following: Babysitters on a casual basisCompanions for the elderlyFederal criminal investigatorsFishing workersHomeworkers making wreathsNewspaper delivery workersNewspaper employees of limited-circulation newspapersSeamen on foreign vesselsSwitchboard operatorsFarm workers employed on small farmsEmployees of certain seasonal amusement and recreational establishments Frequently Asked Questions (FAQs) How often does the federal minimum wage increase? The federal minimum wage does not increase automatically. Congress must pass a bill that the President signs into law in order for the minimum wage to increase. The last time the federal minimum wage was increased was in 2009. What can I do if I am being paid less than minimum wage? If your employer is paying you less than the minimum wage, visit the How To File a Complaint section of the U.S. Department of Labor's Wage and Hour Division for information on how to proceed. Was this page helpful? Thanks for your feedback! Tell us why! Other Submit Sources The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy. Department of Labor. "Minimum Wage." U.S. Department of Labor. "Minimum Wage for Federal Contracts Covered by Executive Order 14026, Notice of Rate Change in Effect as of January 1, 2023." Florida Department of Economic Opportunity. "Florida's Minimum Wage." City and County of San Francisco. "Minimum Wage Ordinance." Seattle.gov. "Minimum Wage." U.S. Department of Labor. "Minimum Wage." Department of Labor. "Fair Labor Standards Act of 1938: Maximum Struggle for a Minimum Wage." U.S. Department of Labor. "History of Federal Minimum Wage Rates Under the Fair Labor Standards Act, 1938 - 2009." Department of Labor. "Subminimum Wage." U.S. Department of Labor. "Tips." Department of Labor. "Questions and Answers About the Minimum Wage." . U.S. Department of Labor. "Fair Labor Standards Act Advisor: Exemptions." U.S. Department of Labor. "Questions and Answers About the Minimum Wage."