# What is the federal minimum wage?

*Tipped workers and workers under age 20 can be paid a lower federal rate under set conditions, and a higher state minimum wage takes precedence over the federal one.*

- Type: Explainer
- Section: Business
- By: Business Desk
- Published: 2026-11-11T22:27:12-05:00
- Updated: 2026-11-11T22:27:12-05:00
- URL: https://factsdesk.com/business/what-is-the-federal-minimum-wage/

## Key facts

- The federal minimum wage is $7.25 per hour, effective July 24, 2009, according to the U.S. Department of Labor. Source: [U.S. Department of Labor, Wage and Hour Division](https://www.dol.gov/agencies/whd/minimum-wage). Confirmed 2026-11-11T22:27:00-05:00. Cite: https://factsdesk.com/business/what-is-the-federal-minimum-wage/#the-federal-minimum-wage-is-7-25-per-hour-effective-july-24
- An employee who is subject to both a state and the federal minimum wage law is entitled to the higher of the two rates. Source: [U.S. Department of Labor](https://www.dol.gov/general/topic/wages/minimumwage). Confirmed 2026-11-11T22:27:00-05:00. Cite: https://factsdesk.com/business/what-is-the-federal-minimum-wage/#an-employee-who-is-subject-to-both-a-state-and-the-federal
- An employer must pay a tipped worker a cash wage of at least $2.13 per hour and must make up the difference if tips do not bring the total to $7.25 per hour. Source: [U.S. Department of Labor, Wage and Hour Division](https://www.dol.gov/agencies/whd/fact-sheets/15-tipped-employees-flsa). Confirmed 2026-11-11T22:27:00-05:00. Cite: https://factsdesk.com/business/what-is-the-federal-minimum-wage/#an-employer-must-pay-a-tipped-worker-a-cash-wage-of-at-least
- Employees under age 20 may be paid not less than $4.25 for their first 90 consecutive calendar days of employment, as long as they do not displace other workers. Source: [U.S. Department of Labor](https://www.dol.gov/general/topic/wages/minimumwage). Confirmed 2026-11-11T22:27:00-05:00. Cite: https://factsdesk.com/business/what-is-the-federal-minimum-wage/#employees-under-age-20-may-be-paid-not-less-than-4-25-for
- The 2007 amendments raised the federal minimum wage in three steps: $5.85 on July 24, 2007, $6.55 on July 24, 2008, and $7.25 on July 24, 2009. Source: [U.S. Department of Labor, Wage and Hour Division](https://www.dol.gov/agencies/whd/minimum-wage/history). Confirmed 2026-11-11T22:27:00-05:00. Cite: https://factsdesk.com/business/what-is-the-federal-minimum-wage/#the-2007-amendments-raised-the-federal-minimum-wage-in-three

The federal minimum wage is $7.25 per hour, effective July 24, 2009, according to the [Wage and Hour Division](https://www.dol.gov/agencies/whd/minimum-wage) of the U.S. Department of Labor. The rate applies to covered nonexempt employees, and the federal minimum wage provisions are contained in the Fair Labor Standards Act, the department [says](https://www.dol.gov/general/topic/wages/minimumwage).

## Federal rates at a glance

| Rate | Amount | Who it applies to |
| --- | --- | --- |
| Federal minimum wage | $7.25 | Covered nonexempt employees |
| Minimum cash wage for tipped employees | $2.13 | Employees who receive more than $30 a month in tips |
| Youth minimum wage | $4.25 | Employees under age 20, for their first 90 consecutive calendar days of employment |

The standard and youth rates are stated on the department's [minimum wage page](https://www.dol.gov/general/topic/wages/minimumwage), and the tipped rate is stated in its [fact sheet on tipped employees](https://www.dol.gov/agencies/whd/fact-sheets/15-tipped-employees-flsa).

## How state minimum wages interact with the federal rate

Many states also have minimum wage laws. When an employee is subject to both the state and the federal law, the employee is entitled to the higher of the two minimum wages, the department [says](https://www.dol.gov/general/topic/wages/minimumwage). That is why the pay floor in a given state can be higher than $7.25.

The department's [table of state minimum wage laws](https://www.dol.gov/agencies/whd/minimum-wage/state), updated November 5, 2026, lists Alabama, Louisiana, Mississippi, South Carolina and Tennessee as having no state minimum wage law. In those states, employers subject to the Fair Labor Standards Act must pay the federal minimum wage of $7.25 per hour. The same table notes that some local governments set minimum wage rates higher than their state's rate, and that those local rates are not shown in it.

## The rate for tipped workers

An employer must pay a tipped worker a cash wage of at least $2.13 per hour under the Fair Labor Standards Act, according to the department's [fact sheet on tipped employees](https://www.dol.gov/agencies/whd/fact-sheets/15-tipped-employees-flsa). A tipped employee is one who customarily and regularly receives more than $30 a month in tips. The law lets the employer count tips toward the rest of the minimum wage, which is called a tip credit, and the department's [table of tipped wages](https://www.dol.gov/agencies/whd/state/minimum-wage/tipped) puts the maximum federal tip credit at $5.12 per hour.

The total still has to reach the full minimum. If an employee's tips combined with the employer's cash wage do not equal $7.25 per hour in each workweek, the employer must make up the difference.

## The youth minimum wage

Employees under age 20 may be paid a minimum wage of not less than $4.25 for their first 90 consecutive calendar days of employment, as long as their employment does not displace other workers, the department [says](https://www.dol.gov/general/topic/wages/minimumwage).

## When the rate last changed

The current rate came from the 2007 amendments to the law, which raised the minimum wage in three steps, according to the department's [history of the minimum wage law](https://www.dol.gov/agencies/whd/minimum-wage/history).

| Effective date | Rate per hour |
| --- | --- |
| July 24, 2007 | $5.85 |
| July 24, 2008 | $6.55 |
| July 24, 2009 | $7.25 |

For what workers earn on average, see [when the next jobs report is due](/business/when-is-the-next-jobs-report/), which carries the latest average hourly earnings. For how fast prices are changing, see [the current inflation rate](/business/what-is-the-inflation-rate-right-now/).

## Sources

1. [Minimum Wage](https://www.dol.gov/agencies/whd/minimum-wage), U.S. Department of Labor, Wage and Hour Division, 2026-11-11 (primary source)
2. [Wages: Minimum Wage](https://www.dol.gov/general/topic/wages/minimumwage), U.S. Department of Labor, 2026-11-11 (primary source)
3. [State Minimum Wage Laws](https://www.dol.gov/agencies/whd/minimum-wage/state), U.S. Department of Labor, Wage and Hour Division, 2026-11-05 (primary source)
4. [History of Changes to the Minimum Wage Law](https://www.dol.gov/agencies/whd/minimum-wage/history), U.S. Department of Labor, Wage and Hour Division, 2026-11-11 (primary source)
5. [Fact Sheet 15: Tipped Employees Under the Fair Labor Standards Act](https://www.dol.gov/agencies/whd/fact-sheets/15-tipped-employees-flsa), U.S. Department of Labor, Wage and Hour Division, 2026-11-11 (primary source)
6. [Minimum Wages for Tipped Employees](https://www.dol.gov/agencies/whd/state/minimum-wage/tipped), U.S. Department of Labor, Wage and Hour Division, 2026-11-05 (primary source)