Understanding the Minimum Wage in the USA: Structure, State Variations, and Financial Reality in 2025

Who is considering working in the United States inevitably faces a central question: what is the minimum wage in the USA and how does this system actually work? The search for this information is common among Brazilians contemplating moving abroad — and it’s no coincidence, since the American model is radically different from what we’re used to here.

The main distinction starts right at the concept: while Brazil maintains a single national minimum wage, the system in the United States is decentralized. There is a federal minimum set at US$ 7.25 per hour since 2009, but states, counties, and even cities have the authority to establish their own minimum values. This institutional arrangement creates an impressive variety of wages — a worker can earn from US$ 7.25 up to US$ 17.50 per hour, depending on where they work.

The Contrast Between the United States and Brazil: Purchasing Power in Focus

Before diving into technical details about the US minimum wage, it’s worth contextualizing how it compares to the Brazilian scenario. In 2025, the US federal minimum is around US$ 1,160 per month (considering 40 hours per week), while in Brazil, the legal minimum is R$ 1,518.

Numerically, converting the American figure using the 2025 exchange rate (approximately R$ 5.20 per dollar), the US federal amount corresponds to about R$ 6,032 — a nominally higher sum. However, this simple arithmetic conversion masks a more complex reality.

Purchasing power — what your money can effectively buy in each country — tells a different story. In the US, a minimum wage of US$ 1,160 is insufficient to cover basic expenses in most states. Research indicates that the monthly cost of living (excluding rent) is around US$ 1,185, while the national average rent is US$ 1,626. The math is simple and discouraging: the amount does not cover housing and food.

In Brazil, although R$ 1,518 also poses a challenge for maintaining a decent standard of living, the relationship between cost of living and wages follows a slightly different dynamic in certain regions. Using Purchasing Power Parity (PPP) metrics, experts demonstrate that one dollar in the US buys fewer goods and services than the equivalent in reais converted in Brazil — reversing, in practical terms, the apparent nominal American advantage.

How Much Does a Worker Earn: From Hourly Calculation to Monthly Income

Unlike Brazil, where monthly salaries are the norm, in the United States the starting point is hourly pay. This affects the entire calculation structure.

For the federal minimum wage in the US, the basic formula is:

Hourly wage × 40 hours × 4 weeks = Monthly salary

Applying: 7.25 × 40 × 4 = US$ 1,160 per month

However, this figure is just a starting point. States with high living costs have established much higher minimums:

• District of Columbia (Washington D.C.): US$ 17.50/hour → US$ 2,800 monthly
• Washington: US$ 16.66/hour → US$ 2,666 monthly
• California: US$ 16.50/hour → US$ 2,640 monthly
• New York: US$ 15.50 to US$ 16.50/hour (depending on region) → US$ 2,480 to US$ 2,640 monthly

Interestingly, some states like Georgia and Wyoming officially maintain wages below the federal level (US$ 5.15/hour), but federal law prevails, guaranteeing a minimum of US$ 7.25.

Who Receives It and How the System Works

The minimum wage in the United States applies to a specific audience. Any worker hired from age 14, working regular hours, without being an apprentice or intern, is entitled to this minimum. The most notable exception involves professionals dependent on tips — waiters, baristas, and attendants can, in various states, receive a lower base wage, since tips supplement their income.

The sectors that most frequently employ people at minimum wage include:

• Restaurant and fast-food service
• Cashier operations
• Stocking and merchandise handling
• Cleaning and maintenance
• Retail and supermarkets
• Entry-level operational roles

Regional Disparity: A Complex Map

The US minimum wage landscape by state illustrates regional inequalities well. Major urban centers with high living costs — New York, Los Angeles, San Francisco — set their own levels, often between US$ 15 and US$ 17 per hour. Rural or less economically developed regions tend to follow the federal rate or stay slightly above.

This fragmentation reflects varied state and municipal policies. California, for example, not only sets a minimum of US$ 16.50/hour but also defines specific rules for overtime: after 8 hours daily, pay increases to 1.5x; after 12 hours, to 2x.

Living with Minimum Wage in the US: Reality Check

The direct answer to the question “Can you live on minimum wage in the United States?” is, in most scenarios: not adequately.

Taking the federal minimum of US$ 1,160 per month, and considering typical expenses:

• Basic cost of living (food, transportation, utilities, excluding rent): US$ 1,185
• National average rent: US$ 1,626
• Total: US$ 2,811

The deficit is clear. Even states offering higher minimums face the same paradox: where the minimum wage is more generous, the cost of living is also proportionally higher. Washington D.C., with its record US$ 17.50/hour (US$ 2,800/month), faces rents that easily exceed US$ 1,800 for a modest apartment.

Conversion to Reais: A Practical Perspective

For Brazilians evaluating opportunities in the US, translating numbers into reais is useful. At the 2025 exchange rate (R$ 5.20 per dollar):

• Federal minimum wage: US$ 1,160 ≈ R$ 6,032/month
• Washington D.C. minimum wage: US$ 2,800 ≈ R$ 14,560/month

These figures seem attractive compared to the Brazilian minimum wage of R$ 1,518. However, the cost of living — rent, food, transportation, insurance — in the US is also substantially higher, significantly compressing the real purchasing power.

Final Reflection

The US minimum wage system is notably decentralized and complex, reflecting the country’s economic and geographic diversity. While the federal minimum has been frozen for over a decade, several states have been approving regular increases to keep pace with inflation and rising local costs. For those considering working or moving to the United States, researching not only the specific state minimum but also the detailed cost of living in the region is essential for an informed decision.