A Patchwork of Pay Floors
The federal minimum wage has been $7.25 per hour since 2009 — a 16-year freeze that represents the longest period without an increase in history. Cumulative inflation has eroded its purchasing power by roughly 30%. A full-time worker earning federal minimum takes home $15,080 annually, below the poverty line for a household of two.
The real story is at the state level. Washington leads at $16.28/hour, followed by California at $16.00 and Connecticut at $15.69. At the other end, 20 states still use $7.25 as their floor. The gap between highest and lowest has never been wider — a fast food worker in Seattle earns twice the legal floor of a counterpart in Houston.
Does the Minimum Wage Still Matter?
Market forces during the post-pandemic labor shortage pushed most entry-level wages above $12-14/hour even in minimum-wage states. But the minimum wage remains important as a baseline for tipped workers (still $2.13 federally), and as a benchmark that influences wages above it through compression effects.
The inflation-adjusted perspective is stark. At its peak purchasing power in 1968, the $1.60 minimum was equivalent to about $14.50 today. Even states at $15-16 have only restored what the federal minimum provided 56 years ago. For millions of workers near the bottom of the wage scale, inflation has been particularly cruel — their costs for housing, food, and transportation have grown faster than their pay.