The highest minimum wage in the US (2024)

In 2023, San Diego’s minimum wage increased to $1 6.30 per hour—over double the federal minimum wage of $7.25 per hour since 2009. The highest minimum wage in the US overall goes to Washington D.C. which has eclipsed the $17.00 mark! The highest minimum wage state however is Washington which is currently $16.28 per hour. Now states and big cities like New York City and Seattle can have their minimum wage laws, but businesses have control over how much higher they go past the minimum. Case in point,  Hobby Lobby increased its to $18.50 per hour .

How does the minimum wage work in the US

The United States has a diverse economic landscape in which the federal minimum wage sets a baseline for the entire country. However, individual states have the authority to establish their own minimum wage laws, often surpassing the federal standard. However, there are states where the minimum wage remains lower than the national baseline. The federal and state-level minimum wage rates have been a contentious issue in America for decades, and employers, employees, and politicians all seem to have varying opinions on whether a higher minimum wage would be good for workers or not.

On one hand, the cost of living has continued to increase each year while wages have remained stagnant. According to Investopedia, a family of four living on the federal minimum wage would fall well below the poverty line , which is $26,200 for the 48 contiguous states. And while the highest minimum wages in the U.S. generally belong to Washington, California, and Massachusetts; the cost of living is also high in those states to justify the rates.

On the other hand, the argument for a lower minimum wage is that a family was never actually meant to live off of this wage . Rather, the federal minimum wage is mostly for teens finding their first jobs, or those working supplemental jobs in addition to their main gigs. Raising the minimum may lead to employers not being able to offer new jobs, and for automation to push low-skilled workers out of the workforce completely. And of course, the federal minimum wage is a much more acceptable hourly rate in lower-cost areas of the U.S.

Whichever side a business owner falls on, at the end of the day, there are two main considerations to keep in mind when determining the hourly rate you pay to your employees: 1) the actual law, and 2) the law of the market.

Lucky for you, Workstream has created an hourly wage index tool that answers the ever stress-inducing question: how much should you pay your hourly workers? 

Which states have the highest minimum wages?

We already mentioned that Washington state wears the crown for the highest minimum wage in the US at $17 an hour. California is another state that boasts one of the highest minimum wages in the nation which is currently set at $14 per hour. The state has been at the forefront of the fight for workers' rights, and this commitment is reflected in its minimum wage policy. The high cost of living in many parts of California, particularly in major metropolitan areas, has been a driving force behind the push for a more substantial minimum wage to ensure that workers can meet their basic needs.

Massachusetts rounds out the trio of states with high minimum wages, currently set at $13.50 per hour. The state has a history of prioritizing workers' rights, and the minimum wage reflects a commitment to providing fair compensation. Massachusetts has also implemented legislation to gradually increase the minimum wage over time, addressing concerns about income inequality and the rising cost of living in the state.

These states' decisions to set higher minimum wages are part of a broader national conversation about income inequality and the need for fair compensation. While critics argue that higher minimum wages could lead to job losses or increased costs for businesses, proponents emphasize the importance of ensuring that all workers earn a living wage. As these states continue to grapple with economic challenges and social justice issues, the debate over minimum wage policies remains a central aspect of shaping the future of labor in the United States.

Which states have the lowest minimum wages?

One such state is Wyoming, where the minimum wage is set at the federal level of $7.25 per hour. Despite the state's relatively low cost of living, this minimum wage can present challenges for workers trying to make ends meet, particularly in areas with higher living costs. Wyoming's economic dependence on industries like agriculture and mining may contribute to the resistance in raising the minimum wage to levels seen in other states.

Georgia maintains a minimum wage of $5.15 per hour, though most workers in the state are covered by the federal minimum wage. Georgia's approach to the minimum wage reflects a combination of economic factors and political ideologies, where concerns about potential job losses due to wage hikes are weighed against the necessity of providing a living wage for workers.

In Alabama, the minimum wage is also set at $7.25 per hour. The state's economic landscape, characterized by a mix of industries including manufacturing, finance, and healthcare, has contributed to the decision to align with the federal minimum wage. The debate over minimum wage policy in Alabama reflects broader discussions about economic inequality and the balance between fostering business growth and ensuring fair wages for workers.

While these states currently have lower minimum wage rates, the broader national conversation about income inequality and the push for a higher federal minimum wage continues. Advocates argue that a living wage is essential for workers to meet basic needs, while opponents express concerns about potential job losses and the impact on small businesses. As the economic landscape evolves, the minimum wage debate remains a crucial aspect of shaping labor policies across the United States.

Federal and state minimum wage laws

The federal minimum wage for nonexempt employees is $7.25 per hour, and to stay in line with the law, a business cannot pay any non-exempt employee lower than this rate. Exempt employees (for example, restaurant workers who earn tips) can make under this rate, but their average hourly income including tips must come out to $7.25 per hour or more. The ultimate authority on the federal minimum wage is the Fair Labor Standards Act (FLSA) as defined by the U.S. Department of Labor. Whether it’s a small business or one of the large employers, the FLSA applies to all. Using the hourly wage index will help clear up any confusion on how much to pay your employees.

On the state level, over half of the states require businesses to pay more than the federal minimum, while other states at least meet the federal minimum, though they may have a lower rate that would solely apply to employers and employees that are not covered by the FLSA. Examples of such employees include commission-based employees (e.g. auto sales), taxi drivers, farm workers, and live-in domestic service workers.

The law of the market

The minimum wage is simply that: the minimum wage allowed by law. However, there is the law of the market that may be what truly defines what a business should pay in different cities and states, leading many organizations to compete for offering the highest minimum wage. As mentioned above, Hobby Lobby is setting its own “minimum wage” at $18.50 an hour, which is more than double the federal rate, and also higher than the state-level minimum of many of the states they operate in. This is one of the highest minimum wages in the U.S. and raises the baseline wages far above the minimum for job seekers in the area.

Businesses in competitive states like New Jersey, Oregon, and Florida have been far outpacing the federal minimum wage to attract more talent. Amazon, for example, had set its minimum wage to $19 per hour, making it another company offering one of the highest minimum wages in the U.S.

As the economy recovers, we expect hourly rates in most competitive cities to lean toward $15 and up, even if the federal minimum wage doesn’t change. Hiring at lower rates than this may be difficult, so employers must reassess how much they can afford to pay to attract the best talent.