Friday

 Minimum Wage Data

Grok summary of Cato Institute Briefing Paper No. 725: "The $7.25 Minimum Wage Myth" by Ryan Bourne and Nathan Miller (June 3, 2026).
The common narrative that the federal minimum wage has been "frozen" at $7.25 per hour since 2009 leading to a significant real-value loss due to inflation is misleading.
In reality, due to widespread state and local minimum wage increases, the effective minimum wage that most American workers face is much higher and has risen substantially in both nominal and real inflation-adjusted terms.
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The working-age, population-weighted effective minimum wage accounting for federal, state, and local floors rose from $7.45 in 2010 to $12.13 by January 2026.
This represents a nominal increase of about 63% since 2010.
In real inflation-adjusted terms, it has increased by about 8%, countering claims of erosion.
The weighted median effective minimum wage was $13.73.
A significant majority of the U.S. workforce, over two-thirds, lives in areas with minimum wages above the federal floor.
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Proponents of raising the federal minimum wage often cite the "stagnant $7.25" as justification, arguing it has lost substantial purchasing power due to inflation.
The authors argue this overlooks the patchwork of higher sub-federal wages, meaning the national labor market has already seen considerable upward pressure on low-end wages without federal action.
High minimum wages in high-cost areas may lead to business adjustments e.g., automation, reduced hours, or price increases, without necessarily producing large aggregate disemployment effects everywhere, but uniform federal increases could still harm lower-wage regions.
The paper challenges the premise for further large federal hikes, suggesting the effective wage floor is not as outdated as commonly portrayed.
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This briefing paper pushes back against calls for a significant federal increase (e.g., to $15+), aligning with Cato's general skepticism of minimum wage laws due to potential disemployment effects on low-skilled workers, youth, and minorities.
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What is the minimum wage in California? Grok:
California's statewide minimum wage is $16.90 per hour as of January 1, 2026.
This applies to all employers no small vs. large employer distinction anymore.
It is the same for tipped and non-tipped employees — California does not allow a tip credit.
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Higher local minimum wages:
Many cities and counties set rates above the state level.
Examples as of mid-2026:
Los Angeles County unincorporated areas: $18.47/hour (July 1, 2026).
City of Los Angeles: Around $18.42/hour as of July 2026.
Other cities like Pasadena, Santa Monica, West Hollywood, etc., often range from ~$17.50 to over $20/hour depending on the location and industry.
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Industry-specific rates:
Fast food workers: $20.00/hour since April 2024.
Healthcare facility workers: Higher rates often $18–$24+/hour depending on the facility and role, effective from late 2024.
Exempt employees e.g., salaried executive/ administrative/ professional): Minimum annual salary threshold is approximately $70,304 as of 2026.
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Which states do not have their own higher than the federal $7.25 minimum wage? Grok:
The five states that do not have their own state minimum wage law are:
Alabama
Louisiana
Mississippi
South Carolina
Tennessee
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In these states, the federal minimum wage of $7.25 per hour applies to covered employees under the Fair Labor Standards Act (FLSA). Most workers are covered by federal rules.
There are no state-specific floors higher than the federal rate.
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In these states do many people only earn this $7.25 minimum wage? Grok:
No, relatively few workers in Alabama, Louisiana, Mississippi, South Carolina, and Tennessee earn the $7.25 federal minimum wage.
According to the latest U.S. Bureau of Labor Statistics data on Characteristics of Minimum Wage Workers, 2024:
Nationally, only about 1.0% of hourly paid workers earned at or below $7.25 per hour.
In these five states, the share remains low — typically between 0.9% and 2.2% of hourly workers, everyone else earns more than $7.25.
Most low-wage workers in these states earn above $7.25 due to market forces, competition for labor, local cost-of-living differences, and employer practices.
Many in restaurants and hospitality are tipped workers who have a lower base pay but rely on tips to meet or exceed the minimum. Minimum wage earners tend to be disproportionately young (ages 16–24), part-time, and in entry-level service or food preparation roles.
In short, while the federal floor applies, very few workers are actually paid $7.25 — the labor market generally demands more for the vast majority of jobs.