Minimum wage in the United States

The minimum wage in the United States is set by a network of federal, state, and local laws. Employers generally must pay workers the highest minimum wage prescribed by federal, state, or summer local law. As of July 2016, the federal government mandates a nationwide minimum wage of $7.25 per hour. There are 29 states with a minimum wage higher than the federal minimum as of October 18, 2016. From 2014 to 2015, nine states increased their minimum wage levels through automatic adjustments, while increases in 11 other states occurred through referendum or legislative action. In real terms, the federal minimum wage peaked near $10.00 per hour in 1968, using 2014 inflation-adjusted dollars.

Beginning in January 2017, Massachusetts and Washington state have the highest minimum wages in the country, at $11.00 per hour. New York City's minimum wage will be $15.00 per hour by the end of 2018. There is a racial difference for support of a higher minimum wage. While most blacks and Hispanics supported a $15.00 federal minimum wage, 54% of whites opposed it. In 2015, about 3 percent of White, Asian, and Hispanic or Latino workers earned the federal minimum wage or less. Among Black workers, the percentage was about 4 percent.

On March 27, 2014, Connecticut passed legislation to raise the minimum wage from $8.70 to $10.10 by 2017, making it one of about six states to aim at or above $10.00 per hour. In 2014 and 2015, several cities, including San Francisco, Seattle, Los Angeles, and Washington passed ordinances that gradually increase the minimum wage to $15.00. On July 1, 2018, San Francisco is expected to become the first U.S. city to reach a minimum wage of $15.00 per hour. The minimum wage in Los Angeles and Washington, D.C., will be $15.00 per hour in 2020.

The Congressional Budget Office (CBO) estimated in 2014 that increasing the minimum wage to $10.10 and indexing it to inflation would increase the wages of 16.5 million workers in 2016, while raising it to $9.00 without indexing would affect 7.6 million. Among workers paid by the hour in 2013, 1.5 million reportedly earned the federal minimum wage. About 1.8 million were earning wages below the minimum. Together, these 3.3 million workers earning at or below the federal minimum represent 2.5% of all workers and 4.3% of hourly workers.

In 1912, Massachusetts organized a commission to recommend non-compulsory minimum wages for women and children. Within eight years, at least thirteen U.S. states and the District of Columbia would pass minimum wage laws. The Lochner era United States Supreme Court consistently invalidated compulsory minimum wage laws. The laws were considered unconstitutional for interfering with the ability of employers to freely negotiate appropriate wage contracts with employees.

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