The federal minimum wage has been $7.25 since July 24, 2009, the longest freeze in the 88-year history of the Fair Labor Standards Act. Inflation has eroded 30% of its purchasing power in that time, leaving workers across 20 states standing on a floor now worth roughly $5.10 in today's buying power. Seventeen years of congressional inaction is a policy outcome, not a coincidence.
The Collapse of the Floor
$7.25 in 2009 dollars buys what $5.10 does today. The high-water mark of American minimum wage policy was February 1968, when $1.60 per hour translated to roughly $14.50 in 2026 dollars. To match that 1968 standard, the current minimum would need to double. Congress has not moved it by a cent since the Obama administration's first term.
The 20 states that still anchor workers to the $7.25 federal floor are concentrated in the South and Plains: Alabama, Georgia, Mississippi, Tennessee, Texas, and 15 others. Roughly 60 million workers across those states live under that legal minimum. In Oklahoma City, the MIT Living Wage Calculator sets the living wage at $17.31 per hour. The state minimum covers 42% of it.
Peer nations have moved their floors. The UK raised its National Living Wage to £11.44 per hour in 2024, roughly $14.40. Germany's national minimum is €12.82 ($14.00). Australia's federal minimum is AUD $23.23 ($15.30). No other OECD country has held its national wage floor flat for 17 consecutive years.
What the Inaction Costs
The standard argument against raising the minimum wage is job loss. The Congressional Budget Office's analysis of a $15 minimum estimated a net reduction of 1.4 million jobs alongside poverty reduction for 900,000 workers and higher wages for 17 million workers. That tradeoff is real. What is equally real is the subsidy baked into $7.25: workers earning the federal floor are supported by Medicaid, SNAP, and housing assistance funded by taxpayers. The cost of a too-low minimum wage does not disappear. It transfers to public budgets.
The Raise the Wage Act of 2025, introduced April 8, 2025, would increase the floor to $17 by 2030, covering an estimated 22.2 million workers (15% of the wage-earning workforce). The states with the most to gain are the states where wages are lowest: Mississippi, Louisiana, and Oklahoma workers would see the highest share of wage increases under the bill. $17 by 2030 is still below what the 1968 minimum would be worth in today's dollars.
The 1968 minimum wage of $1.60 an hour is worth $14.50 today. The current floor is $7.25. The gap between those two numbers is 17 years of annual decisions by Congress to do nothing.
Seventeen annual decisions not to raise the federal floor have transferred income from workers to employers, from the South to shareholders, from families on the minimum to corporate margins above it. The Raise the Wage Act sets a new floor at $17 by 2030, still below the 1968 equivalent. Every year $7.25 stands, 60 million workers inherit the consequences of that choice.
Sources
- EPI: Congress Has Never Let the Federal Minimum Wage Erode for This Long
- U.S. Department of Labor: History of Changes to the Minimum Wage Law
- EPI: The Impact of the Raise the Wage Act of 2025
- EPI: The Federal Minimum Wage Has Been Eroded by Decades of Inaction
- Stateline: Dozens of Cities and States Hiking Minimum Wages in 2026 Amid Federal Inaction
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