Understand how the American minimum wage works in 2025: complete state-by-state guide

Considering working in the USA, one of the first questions is: what exactly is the American minimum wage and how does it really work? The answer is more complicated than it seems. Unlike Brazil, which adopts a single national minimum wage, the United States operates under a decentralized system where the federal government sets a minimum, but states, counties, and even cities can — and often do — establish their own levels.

The hybrid system of the American minimum wage: federal + state

The federal minimum wage in the US has been frozen at US$ 7.25 per hour since 2009. This amount is mandatory nationwide, serving as a “floor” that no one can go below. However, about 30 states have already approved higher state minimum wages, creating a fragmented scenario where compensation varies dramatically depending on the location.

This means that a worker can earn from US$ 7.25 up to US$ 17.50 per hour, depending solely on the state or city where they work. It’s not uncommon for neighbors in border towns to receive completely different wages for the same job.

How much do you really earn per month with the American minimum wage?

Since wages in the US are calculated hourly, the monthly amount depends on the workweek. Using a standard 40-hour week:

Basic calculation: 7.25 × 40 hours × 4 weeks = US$ 1,160 per month

This is the federal baseline. However, in states with higher living costs, the reality is entirely different:

Washington D.C. has the highest minimum wage in the country: US$ 17.50/hour, which results in approximately US$ 2,800 monthly — more than double the federal minimum.

California operates at US$ 16.50/hour, generating a monthly income of about US$ 2,640.

New York offers US$ 15.50/hour in most regions, reaching US$ 16.50 in Manhattan and surrounding areas, equivalent to US$ 2,480 to US$ 2,640 per month.

States like Georgia and Wyoming have wages below the federal level on paper, but in practice, the federal minimum prevails, keeping workers at US$ 1,160 per month.

Who actually earns the American minimum wage?

The minimum wage applies to workers hired regularly from age 14, with clear exceptions for apprentices, interns, and professionals who primarily receive tips as part of their compensation.

The most affected are:

• Restaurant, fast-food, and chain restaurant employees
• Cashiers in supermarkets and stores
• Stock and warehouse personnel
• Cleaning and maintenance crews
• General assistants in commercial establishments

Important detail: Waiters and other professionals who depend on tips can legally receive a lower base salary (in some states as low as US$ 2.13/hour), since tips are theoretically meant to supplement income up to the established minimum.

Map of the American minimum wages in 2025: state by state

Regional disparity is striking. While Washington D.C. leads with US$ 17.50/hour, many states still rely on the federal minimum of US$ 7.25/hour.

Top of the list:

• D.C.: US$ 17.50/hour
• Washington: US$ 16.66/hour
• California: US$ 16.50/hour
• New York: US$ 15.50 to US$ 16.50/hour (depending on region)
• Massachusetts: US$ 15.00/hour
• Maryland: US$ 15.00/hour

Bottom of the list:

• Georgia, Idaho, Indiana, Iowa, Kansas, Louisiana, Mississippi, North Carolina, North Dakota, Pennsylvania, South Carolina, South Dakota, Tennessee, Texas, Utah, Wisconsin, Wyoming: US$ 7.25/hour (federal minimum)

This variation directly reflects the local cost of living. Cities hosting major tech hubs (Seattle, San Francisco, Austin) or corporate headquarters (New York, Boston) set higher minimum wages to keep the labor market viable.

Converting to reais: how much is the American minimum wage in Brazilian currency?

With an approximate exchange rate of US$ 1 = R$ 5.20 in 2025, conversions are as follows:

Federal minimum wage in the US:

• Per hour: US$ 7.25 ≈ R$ 37.70
• Per week: US$ 290 ≈ R$ 1,508
• Per month: US$ 1,160 ≈ R$ 6,032

In Washington D.C.:

• Per month: US$ 2,800 ≈ R$ 14,560

At first glance, the American minimum wage converted to reais seems substantially higher than the Brazilian (R$ 1,518 in 2025). However, this direct comparison is misleading.

American minimum wage vs. Brazil: beyond the numbers

The crucial difference lies in purchasing power. One dollar in the US buys significantly fewer goods and services than the equivalent in reais in Brazil. Purchasing Power Parity (PPP) metrics reveal that the apparent advantage does not translate linearly into a higher quality of life.

Additionally, the two countries operate under completely different models:

• Brazil: A single national minimum wage, adjusted annually by the federal government
• USA: A hybrid system with a federal minimum wage coexisting with multiple state minimum wages, creating intense regional inequality

Is it possible to live on the American minimum wage?

The practical answer is: in most cases, no.

Even working 40 hours a week at the federal minimum wage, expenses don’t balance out. Basic monthly costs:

• Cost of living (excluding rent): US$ 1,185
• Average rent: US$ 1,626

Total: US$ 2,811 — nearly 2.5 times the federal minimum wage.

Even in states with higher minimum wages, like California or D.C., rents keep pace with salary inflation, maintaining pressure on low-income workers.

Why does the American minimum wage vary so much between states?

The system reflects economic federalism: each state has autonomy to set its own minimum wage policy. States with strong economies and high living costs — such as California, New York, and Washington — have approved successive increases. Less developed states keep the federal minimum due to lack of political pressure or ideological alignment with less interventionist philosophies.

The result is a mosaic where geography influences more than profession what your income will be.

Start your journey in global markets: Register and trade confidently using professional tools and real-time data.