What it is, in one paragraphThe minimum wage is the lowest hourly pay an employer may legally offer. The United States has not one minimum but a stack of them: a federal floor of $7.25, a separate cash wage of $2.13 for tipped workers, and a growing patchwork of state and city minimums that in some places top $21. Where they overlap, the highest applicable rate wins — so what a minimum-wage job actually pays depends heavily on where you stand.
The federal floor — $7.25
Set by the Fair Labor Standards Act and enforced by the Labor Department's Wage and Hour Division. It applies to most employees of businesses with at least $500,000 in annual sales and to workers engaged in interstate commerce. Only Congress can change it — and it has not since 2009. The floor is a hard minimum: where a state or city sets a higher one, the higher rate wins.
The tipped wage — $2.13
Employers may pay tipped workers a cash wage as low as $2.13/hr — frozen since 1991 — and count tips toward the difference (a "tip credit"). If tips don't bring the worker to the full $7.25, the employer must legally make up the gap, though under-payment is common. Seven states, plus a growing list of cities, have abolished the tip credit and pay tipped workers the full minimum.
State & local floors — up to $21+
Thirty states and D.C. set a minimum above the federal one; more than 20 index theirs to inflation so it rises automatically each year. Cities can go higher still: the country's highest minimums are municipal ordinances in the Seattle area, led by Tukwila, WA at $21.65. Twenty states keep the federal $7.25, so what a minimum-wage job pays now depends heavily on the map.