Economics

Minimum Wage By State In The United States

A network of federal, state, and local statutes have set the minimum wage of US states with California and Massachusetts having the highest in the country.

Minimum Wage By State In The United States

A network of federal, state, and local statutes have set the minimum wage of US states with California and Massachusetts setting the minimum wage at 10 dollars per hour, which is typical in 29 of the 50 states in the US whose rates exceed the federal rates. Even though the United States has set the federal law, it allows individual states and localities to pass their wage laws.

What Is Meant By Minimum Wage?

Minimum wage is the lowest amount that the law requires an employer to pay a worker per hour. It is the price floor below which an employee may not sell their labor. As of June 2016, the US requires that the lowest paid worker should earn 7.25 dollars per hour.

What Is The Necessity Of Determining A Minimum Wage?

Setting a minimum wage raises earnings and reduces poverty. It ensures that firms have the responsibility to ensure that their workers earn enough for sustenance. It also protects the taxpayers from exploitation by companies who may want to get the most benefits at the cost of their employers. Not only does minimum wage protect the employee, but it also reduces the burden of the welfare payments on the federal. Determining a minimum wage causes a stimulus to the economy. The study shows that an increase in the minimum wage just by a dollar will increase the purchasing power of the worker's families. Such stimulus benefits the economy and increases the sales of the businesses which in turn boost profitability.

History Of Minimum Wage Legislation In The US

In 1938 Franklin Delano Roosevelt passed the first federal minimum wage in the US, set at 25 cents per hour, an equivalent of about 4 dollars per hour in the contemporary rates. It was part of the Fair Labor Standards Act (FLSA) which also covers aspects like youth employment overtime pay and recordkeeping. Although the US passed its first law in 1938, some individual states like Massachusetts already had their legislation in place. The wage keeps increasing over the years, and today it is 7.25 dollars per hour.

US States With The Highest Minimum Wage

The states with highest minimum wage are California and Massachusetts with a wage of 10 dollars per hour.

US States With The Lowest Minimum Wage

Although the federal government takes 7.25 dollars as the minimum pay, there are some states with wages lower than that. Wyoming and Georgia states have set their wages at 5.15 dollars per hour.

US States With No Minimum Wage Limit

Five of the southern States have not configured any laws on minimum wages. They include Tennessee, South Carolina, Mississippi, Louisiana, and Alabama. In these states, it is even legal for an employer to pay a worker 25 cents, thus it contributes to the high level of poverty experienced in these states.

Factors Determining The Minimum Wage By State

Four factors determine the setting of a minimum wage. They include the needs of workers and their families, the capacity to pay, comparable wages income and requirements for economic and social development. There is a high elasticity for low-skilled workers which mean that a small change in price causes a greater impact on its demand. The opponents of the minimum wage laws suggest that it leads to high unemployment rates in the states as a business tend to lay off workers to offset the cost of high wages.

Minimum Wage By State In The United States

RankStateMin Wage ($/h)
1California$10.00
2Massachusetts$10.00
3Alaska$9.75
4Oregon$9.75 (non-rural counties) $9.50 (rural counties)
5Connecticut$9.60
6Rhode Island$9.60
7Vermont$9.60
8Minnesota$9.50
9Washington$9.47
10Nebraska$9.00
11New York$9.00
12Maryland$8.75
13West Virginia$8.75
14South Dakota$8.55
15Hawaii$8.50
16Michigan$8.50
17New Jersey$8.38
18Colorado$8.31
19Delaware$8.25
20Illinois$8.25
21Nevada$8.25
22Ohio$8.10
23Arizona$8.05
24Florida$8.05
25Montana$8.05
26Arkansas$8.00
27Missouri$7.65
28New Mexico$7.50
29Idaho$7.25
30Indiana$7.25
31Iowa$7.25
32Kansas$7.25
33Kentucky$7.25
34Maine$7.25
35New Hampshire$7.25
36North Carolina$7.25
37North Dakota$7.25
38Oklahoma$7.25
39Pennsylvania$7.25
40Texas$7.25
41Utah$7.25
42Virginia$7.25
43Wisconsin$7.25
44Georgia$5.15
45Wyoming$5.15
46AlabamaNone
47LouisianaNone
48MississippiNone
49South CarolinaNone
50TennesseeNone

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