What Is the Federal Minimum Wage? ($7.25 in 2026)

Ask most people what is the federal minimum wage and they will get the number right. Ask how long it has been that number, and many are surprised. The law that sets the legal floor for American pay has been frozen for well over fifteen years, through a pandemic, an inflation surge, and a historic run-up in housing costs.

What is the federal minimum wage, and who sets it?

It is the lowest hourly pay most employers can legally offer, set by the Fair Labor Standards Act, first passed in 1938. Congress controls the figure. The Department of Labor enforces it. The rate today is $7.25.

The law does not index the wage to prices. There is no formula that raises it when rent rises. Each increase has required a new act of Congress, and the last one phased in over three steps, ending in July 2009. That is the whole mechanism: a number on a page, changed only by a vote.

How long has the minimum wage been stuck at $7.25?

Since July 24, 2009. That is the longest period without an increase since the federal minimum was created, according to the Department of Labor's history of the wage. It rose in 2007, 2008, and 2009 as part of one law, then stopped.

Does the federal minimum wage still buy what it used to?

No. A wage fixed in dollars loses value every year prices rise. Using the BLS consumer price index, the cost of living is up by around half since 2009, which means $7.25 today buys roughly two thirds of what it bought when the rate took effect. Housing, childcare, and health insurance have often outpaced the average, so the loss for the cost categories that matter most is larger.

The federal minimum has no cost-of-living adjustment, so every year of inaction is a pay cut. That is a different thing from a debate about whether wages should be higher. It is a built-in decline that no one voted for. We lay out the long arc in wage stagnation.

Which workers does the federal rate actually cover?

Most workers, with exceptions. The law covers employees of larger businesses and most public employers, with carve-outs for certain categories, such as some agricultural and seasonal jobs and workers under 20 during a limited training period. Tipped employees are covered by a separate, lower cash wage that has also sat still for decades. Details on exemptions live with the Department of Labor.

Where states set a higher floor, the higher rate controls. Roughly 30 states and D.C. now do. In the rest, the federal $7.25 applies. That patchwork means a worker in one state can earn nearly double what a worker doing the same job earns across a border. For a broader walk-through, see the federal minimum wage explained.

How does $7.25 compare with what life costs?

Badly. Full-time at $7.25 is about $15,080 a year before taxes. The MIT Living Wage Calculator puts a single adult's basic budget near $52,000 nationally, which works out to roughly $25 an hour. The minimum wage covers less than a third of it.

The same worker would need an extra $37,000 a year to meet the basic budget. Rent alone can consume most of a minimum wage paycheck in many metros. And a median home now costs about five times median household income, up from two or three times in the 1980s (NAR and U.S. Census Bureau). Our post on whether the minimum wage is a living wage works through the arithmetic, and the living wage vs minimum wage comparison shows the gap in detail.

What did the last increase look like?

The 2007 law raised the rate in three steps: $5.85 in July 2007, $6.55 in July 2008, and $7.25 in July 2009 (U.S. Department of Labor). The steps came after a long earlier stretch with no increase, which tells you how rarely Congress moves on this. Since 2009 the rate has stayed where the third step left it.

Meanwhile some states and D.C. now set floors above $16 an hour. Those jurisdictions raised their own wages because the federal number gave workers no way to keep up. The result is a country with two minimum wage systems: one that tracks local costs and one that waits for Congress.

Why hasn't Congress raised it?

Because raising it takes a majority in both chambers and a president's signature, and the proposals have repeatedly stalled. Supporters argue the wage has lost too much buying power to defend. Opponents argue a higher federal floor could cost jobs in low-cost regions, and some prefer that states decide. Economists disagree about the size of any job effects, and our minimum wage pros and cons post lays out both sides with the data.

What is not in dispute is the arithmetic. The number has not moved in over fifteen years, and the price of living has.

What does the freeze tell us?

It tells us the federal minimum wage stopped being a policy and became a default. Nobody decided $7.25 was the right figure for 2026. The figure simply survived, because changing it takes effort and leaving it takes none. Meanwhile, the cost of a basic life kept compounding, and the distance between the two grew into one of the starkest gaps in American economic life, visible across our data hub.

A floor that never adjusts is a rule that rewards inaction and charges the bill to the lowest-paid workers. That is the systemic cause behind the affordability crisis: wages set by statute, costs set by markets, and a legal minimum left behind. Linking the floor to what a basic life costs would end the freeze.