What is the minimum wage in the United States in 2024?

In the United States, the minimum wage is the minimum hourly amount that employers are legally required to pay their employees. First introduced in 1938 with the Fair Labor Standards Act (FLSA), the minimum wage aims to protect low-income workers and ensure a basic standard of living. This measure is part of a broader effort to regulate working conditions, including working hours and overtime compensation.

Since its inception, the federal minimum wage has evolved to respond to economic and social changes. However, its revision remains a subject of intense debate. Proponents of its increase argue that it is necessary to offset inflation and the rising cost of living, while opponents fear that higher wages could harm employment, particularly for young and low-skilled workers. The current federal minimum wage, set at $7.25 per hour since 2009, is considered by many to be insufficient for a decent living, especially in high-cost-of-living areas.

The landscape of the minimum wage in the United States is complex due to significant differences between states. Some states and cities have taken the initiative to set higher minimum wages to better reflect local economic realities. For example, cities like Seattle and San Francisco have minimum wages well above the federal rate, demonstrating local efforts to provide a more adequate standard of living for their residents.

The minimum wage in the United States

Current amount

Since July 24, 2009, the federal minimum wage has been set at $7.25 per hour. However, many states and cities have established higher minimum wages to reflect the local cost of living. For example:

• California: $15.50 per hour starting January 1, 2024, reflecting the state's efforts to offset the high cost of living, particularly in major metropolitan areas like Los Angeles and San Francisco.
• New York: $15.00 per hour in New York City, Long Island, and Westchester; $14.20 elsewhere in the state, to address regional differences in living costs.
• Washington: $16.28 per hour starting January 1, 2024, making it one of the states with the highest minimum wage, partly due to the cost of living in cities like Seattle.

Working hours

In the United States, the legal full-time workweek is generally 40 hours per week. Any hours worked beyond this limit must be compensated at the overtime rate, which is at least 1.5 times the regular hourly rate. This regulation aims to discourage employers from imposing excessive hours without adequate compensation, while ensuring that workers are fairly paid for their extra time.

However, variations exist depending on collective bargaining agreements and specific company policies. For example, certain sectors like healthcare or retail may have specific rules regarding overtime due to particular operational needs.

Minimum wage calculation

For a full-time employee, the calculation of the federal minimum wage is as follows:

• Monthly gross: $7.25 x 40 hours x 4.33 weeks ≈ $1,256
• Annual gross: $7.25 x 40 hours x 52 weeks = $15,080

These calculations show that the federal minimum wage does not always cover essential needs, especially in high-cost living areas. This is why many states and cities have established higher minimum wages to better meet local economic realities.

Payment frequency

In the United States, wages are generally paid on a weekly, biweekly, or monthly basis, depending on the employer's policies. This flexibility allows businesses to manage their cash flow and accounting effectively, while providing employees with some predictability in receiving their compensation.

Revaluation and economic impact

Annual reviews

The federal minimum wage is adjusted by Congress, but this revision is rare and heavily dependent on the prevailing political dynamics. The reviews take into account various economic factors, such as inflation and labor market conditions. However, the lack of regular revisions of the federal minimum wage since 2009 has drawn criticism, with unions and some economists arguing that the purchasing power of low-wage workers has significantly decreased.

In contrast, many states and cities regularly adjust their minimum wages to align with inflation and the cost of living. These revisions are often the result of local legislation or popular votes, reflecting residents' concerns about their standard of living.

Purchasing power

The minimum wage is an essential tool for maintaining the purchasing power of low-income workers. However, due to inflation and the stagnation of the federal minimum wage, the purchasing power of workers earning the minimum has decreased over the years. A study by the Economic Policy Institute showed that the federal minimum wage would need to be about $12 to $15 per hour to have the same purchasing power as in 1968, after adjusting for inflation.

Effects on employment

The effects of minimum wage increases on employment are widely debated. Some studies indicate that higher minimum wages can lead to a reduction in employment for low-skilled workers or young people, as businesses may reduce their workforce or automate certain tasks to offset the additional costs. For example, a study by the National Bureau of Economic Research found evidence of reduced youth employment in certain regions following significant minimum wage increases.

Other studies suggest that the benefits in terms of purchasing power and poverty reduction outweigh the potential negative impacts on employment. A report from the Center on Wage and Employment Dynamics showed that minimum wage increases in California led to significant improvements in workers' incomes without causing significant job losses.

Rights and obligations of employers

Compliance and penalties

Employers must comply with the minimum wage laws of the state or locality where they operate, in addition to federal law. In case of non-compliance, they may be subject to fines and legal actions. The U.S. Department of Labor and local labor agencies have the authority to investigate employee complaints and enforce penalties. Employees can also claim back wages and damages if their employer does not comply with minimum wage laws.

Exemptions

Certain groups of workers, such as tipped employees, interns, apprentices, and agricultural workers, may be paid at lower rates under certain conditions. For example, employees who regularly receive more than $30 per month in tips can be paid a lower base wage, provided that their tips combined with the base wage meet at least the federal minimum wage.

The minimum wage internationally

Comparison with other countries

The minimum wage in the United States is often compared to those in other developed countries. For instance, it is lower than in countries like the United Kingdom, France, or Germany, where minimum wages are higher and regularly adjusted to keep up with inflation. These comparisons highlight the differences in social and economic policies between the United States and other nations. For example, the minimum wage in the United Kingdom is £10.42 per hour for workers aged 23 and over starting from April 2024, which is significantly higher than the U.S. federal rate.

The minimum wage in the United States is a key element in ensuring a basic income for workers, although it is subject to much debate and revision. States and cities play a crucial role in supplementing the federal minimum wage to meet local needs. These adjustments are essential to ensure that the minimum wage remains relevant in the face of inflation and changes in the cost of living. For more information, visit the dedicated minimum wage page on the U.S. Department of Labor's website.