How the US minimum wage compares to other countries

For almost 15 years, the U.S. federal minimum wage has remained stuck at $7.25 an hour, amounting to $15,080 annually for a full-time, 40-hour week. That's just over the poverty line.

More than 3 out of 5 adults representing almost every demographic group in the U.S. favor raising the federal wage floor to $15 an hour, according to a 2021 survey by the Pew Research Center. Even among those who oppose the $15 raise, a majority still favor a slight increase.

Inflation and productivity have long outpaced the $7.25 federal minimum wage. Its purchasing power dropped 17% between 2009 and 2019, reflecting an annual loss of over $3,000 in earnings for full-time workers. It is an unlivable wage in most parts of the U.S., covering only 29% of living expenses in places like New Hampshire. The National Low Income Housing Coalition points out that the average minimum wage earner would have to work 97-hour weeks to afford rent in a two-bedroom apartment at fair market value.

What's more, swaths of low-wage workers in the U.S. aren't covered by the minimum wage umbrella. This includes tipped employees, disabled workers, and teenagers who have been employed for under 90 days.

In addition to stagnant wages and decreased purchasing power, other cutbacks are affecting minimum wage earners. Around 20% less federal spending is now going to benefits like Medicaid, public housing, and social security insurance than in the early 1990s. Squeezed between an unlivable wage and a social safety net that's wearing thin, many minimum wage earners are in an untenable situation.
 

The minimum wage backstory

The mandate to establish standardized pay for workers—the minimum wage—in the U.S. was almost always contentious, finally enacted by former President Franklin Delano Roosevelt in 1938 after years in the courts on grounds of unconstitutionality. Since its foundation, the minimum wage has been raised 22 times, creeping up from a pittance of 25 cents per hour until plateauing in July 2009.

In some cases, raising the minimum wage had an effect on equality across the economy. The 1966 raise bridged the income gap by more than 20% between Black and white Americans, according to an analysis by University of California, Berkeley researchers.

Until the 1970s, rate increases were linked to inflation and productivity—the ability to generate income by creating goods and services. By adjusting the minimum wage in tandem with other economic increases, workers were better able to keep up with rising costs.

Today, the stagnant minimum wage makes the U.S. an outlier among other countries. According to the Pew Research Center, at least 80 other countries have requirements to review their minimum wages every few years. However, unlike some other countries, the U.S. has the ability to give states, cities, and industries the power to set their own minimum wages exceeding the federal mandate. For instance, California fast-food workers earn at least $20 an hour, and in Tukwila, Washington, a $20.29-per-hour minimum wage makes it the highest local rate in the country.
 

Resistance to change

Some opponents of raising the rate argue that minimum wage workers are "unskilled," just getting started in the workforce, or only need extra spending money. This contradicts analysis from the Brookings Institution, a nonprofit and nonpartisan organization, which found that the majority of low-wage workers were at the peak of their earning years and were the primary breadwinners for their families.

To chart the wage disparities between the U.S. and other developed nations, JobTest.org used data from the Organisation for Economic Co-operation and Development to look at minimum wages across continents. Only 18 of the 35 OECD countries are illustrated here, representing only the countries with higher minimum wages than the U.S.

This analysis used purchasing power parities conversion rates to compare earnings across currencies, adjusting dollar values for cost differences.