In the United States, there are both federal and state minimum wages, which can lead to complexities in determining appropriate compensation for employees.
The minimum wage varies based on the state where the business is located and where the employee is contracted to work.
This dual framework means that employers must be mindful of both federal and state regulations to ensure compliance with minimum wage laws.
Federal minimum wage vs state minimum wage
Federal minimum wage:
The U.S. government establishes the federal minimum wage, and each state is obligated to follow it, unless they opt to implement a higher state minimum. Currently, the minimum wage stands at $7.25 for the majority of employees.
Not all individuals in the U.S. are eligible for the standard minimum wage. Those employed in positions that involve receiving tips, such as servers, bartenders, hotel workers, or taxi drivers, among others, have a lower minimum wage set at $2.13 per hour.
To meet the federal minimum wage of $7.25 per hour, the combined amount from tips and the base of $2.13 must reach or exceed $7.25, or the employer is required to compensate for the difference.
State minimum wage:
Several states and territories have chosen to implement minimum wage rates that surpass the federal standard to better align with the cost of living and economic conditions specific to their regions.
These state-specific minimum wages are intended to ensure that workers receive a basic level of compensation that reflects the economic conditions in their localities.
State minimum wage in 2024
| State | Minimum Wage |
| Alaska | $11.73 |
| Arizona | $14.35 |
| Arkansas | $11.00 for employers with more than 4 workers |
| California | $16 |
| Colorado | $14.42 |
| Connecticut | $15.69 |
| Delaware | $13.25 |
| Florida | $13.00 |
| Hawaii | $14 |
| Illinois | $14 |
| Maine | $14.15 |
| Maryland | $15 for employers with more than 15 workers
$12.80 for employers with 15 or less workers |
| Massachusetts | $15.00 |
| Michigan | $10.33 |
| Minnesota | $10.85 for large employers
$8.85 for small employers |
| Missouri | $12.30 |
| Montana | $10.30 |
| Nebraska | $12 |
| Nevada | $12 for employers offering health benefits (effective July 1, 2024)
$11.25 for all others |
| New Jersey | $15.13 for most employers
$11.90 for seasonal and employers will less than 6 workers |
| New Mexico | $12.00 |
| New York | $15
$16.00 in NYC and Long Island / Wincester |
| Ohio | $10.45 |
| Oregon | $14.20 (minimum wage will adjust for inflation on July 1)
$15.45 in Portland $13.20 in Non-Urban Counties |
| Rhode Island | $14 |
| South Dakota | $11.20 |
| Vermont | $13.67 |
| Virginia | $12.00 |
| Washington D.C | $17.00 |
| Washington | $16.28
$18.69 in Seattle $19.06 in SeaTac |
| West Virginia | $8.75 for employers with 6 or more workers |
If the table does not include the state in which you are hiring someone, then that means the state currently does not have its own minimum wage.
In such cases, you should adhere to the federal minimum wage rate.
States which don’t have a state minimum:
- Alabama
- Georgia
- Idaho
- Indiana
- Iowa
- Kansas
- Kentucky
- Louisiana
- Mississippi
- New Hampshire
- North Carolina
- North Dakota
- Oklahoma
- Pennsylvania
- South Carolina
- Tennessee
- Texas
- Utah
- Wisconsin
- Wyoming
What is the highest minimum wage in the U.S. in 2024?
In 2024, the highest minimum wage is projected to be in Washington state at $16.28 per hour, up from the current rate of $15.74.
Following closely, California is set to raise its minimum wage to $16 from the current $15.50.
How will the increase in minimum wages impact the U.S. workforce?
Twenty-two states are raising their minimum wages on January 1. But 20 states are still using the federal minimum wage of $7.25, which hasn’t gone up since 2009.
For years, there has been a continuous effort to increase the minimum wage as workers earning $7.25 have experienced a significant erosion of their purchasing power.
“Every minimum wage increase since 1968 has been too little too late. Full-time jobs used to keep people out of poverty.” Holly Sklar, CEO of Business for a Fair Minimum Wage
Sklar references MIT’s living wage calculator to determine the hourly earnings needed for a single person without children to cover essential expenses like food, housing, transportation, and medical care.
In Mississippi, for example, where the minimum wage stands at $7.25, an individual in Pike County would require an hourly wage of $15.30 merely to meet basic needs.
Given the limited progress at the federal level in substantially raising the country’s minimum wage, Sklar anticipates that states and local jurisdictions will continue to take the lead in addressing this issue.
How can U.S. businesses proactively respond to the minimum wage increase in 2024?
In light of the 2024 minimum wage rises, businesses are compelled to implement specific strategies. This goes beyond mere budget adjustments and extends to the exploration of fresh operational efficiencies.
This may entail a potential overhaul of business models, the enhancement of productivity, or a reconsideration of staffing solutions. The goal is to strike a balance where financial sustainability harmonises with employee satisfaction and upholds customer service standards.
The increased minimum wages don’t just pose a challenge; they present an opportunity to innovate and fortify your business for long-term success.
- Optimise operations: Enhance operational efficiency by streamlining processes, compensating for wage increases by identifying areas for reduction elsewhere.
- Invest in technology: Increase productivity by automating processes wherever feasible.
- Revise pricing strategies: Adapt pricing structures to account for rising labour expenses while maintaining competitiveness.
- Improve outsourcing: Explore cost-effective measures by outsourcing non-core activities.
- Employee training: Allocate resources to employee training to enhance both productivity and service quality.
- Flexibility in staffing: Entertain the option of part-time or flexible staffing to efficiently handle payroll expenses.
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