What is the Minimum Wage?

Federal and State Minimum Wage Regulations, Exceptions, and History

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What is the minimum wage? 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.

Review information on federal and state minimum wage rates, exceptions to minimum wage requirements, and a history of the minimum wage in the United States for information on historical minimum wage rates.

What is the Minimum Wage?

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.

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, 2022, the minimum wage for federal contractors is $11.25 per hour, and for tipped federal contractors, the minimum wage is $7.90 per hour.

Covered contracts that are entered into, renewed, or extended on or after January 30, 2022, will generally be subject to a higher minimum wage rate of $15 per hour established by Executive Order 14026.

State Minimum Wage Rates

Some states pay a higher minimum wage than the federal minimum. For example, Florida's minimum wage is $10 an hour as of September 2021 and will increase $1 per hour each year until it reaches $15 in September 2026.


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 $16.32 per hour minimum wage as of 2021.

Cities may also occasionally set different minimums for different types of workers. For example, as of January 1, 2022, Seattle mandates a minimum wage of $17.27 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: $0.30
  • 1945: $0.40
  • 1950: $0.75
  • 1956: $1.00
  • 1961: $1.15
  • 1963: $1.25
  • 1967: $1.40
  • 1968: $1.60
  • 1974: $2.00
  • 1975: $2.10
  • 1976: $2.30
  • 1978: $2.65
  • 1979: $2.90
  • 1980: $3.10
  • 1981: $3.35
  • 1990: $3.80
  • 1991: $4.25
  • 1996: $4.75
  • 1997: $5.15
  • 2007: $5.85
  • 2008: $6.55
  • 2009: $7.25

When Employee Can Be Paid Less Than Minimum Wage

There are some employees that 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.) that 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 to Minimum Wage – Tips

An employer of an employee who receives tips is 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.


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 to Minimum Wage – 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 Classes of Workers Exempt From the Minimum Wage

There are other classes of employees who are exempt from minimum wage requirements, including the following:

  1. Babysitters on a casual basis
  2. Companions for the elderly
  3. Federal criminal investigators
  4. Fishing workers
  5. Homeworkers making wreaths
  6. Newspaper delivery workers
  7. Newspaper employees of limited circulation newspapers
  8. Seamen on foreign vessels
  9. Switchboard operators
  10. Farm workers employed on small farms
  11. Employees of certain seasonal amusement and recreational establishments

Minimum Wage Compliance

If your employer is paying you less than the minimum wage, visit the Compliance Section of the U.S. Department of Labor Employment Standards Administration Wage and Hour Division for information on how to proceed.

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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.
  1. Department of Labor. "Minimum Wage." Accessed Dec. 1, 2021.

  2. U.S. Department of Labor. "US Department of Labor Announces Annual Update to Current Minimum Hourly Wage Rate for Federal Contract Workers." Accessed Dec. 1, 2021.

  3. Florida Department of Economic Opportunity. "Minimum Wage." Accessed Dec. 1, 2021.

  4. City and County of San Francisco. "Minimum Wage Ordinance." Accessed Dec. 1, 2021.

  5. Seattle.gov. "Minimum Wage." Accessed Accessed Dec. 1, 2021.

  6. U.S. Department of Labor. "Minimum Wage." Accessed Dec. 1, 2021.

  7. Department of Labor. "Fair Labor Standards Act of 1938: Maximum Struggle for a Minimum Wage." Accessed Dec. 1, 2021.

  8. U.S. Department of Labor. "History of Federal Minimum Wage Rates Under the Fair Labor Standards Act, 1938 - 2009." Accessed Dec. 1, 2021.

  9. Department of Labor. "Subminimum Wage." Accessed Dec. 1, 2021.

  10. U.S. Department of Labor. "Tips." Accessed Dec. 1, 2021.

  11. Department of Labor. "Questions and Answers About the Minimum Wage." Accessed Dec. 1, 2021.

  12. U.S. Department of Labor. "Fair Labor Standards Act Advisor: Exemptions." Accessed Dec. 1, 2021.

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