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Minimum wage by state

Editorial Team

4 min read

Every election cycle brings renewed debate over the minimum wage and its implications for workers, businesses, and society as a whole. So, what is a minimum wage – and why do we need one?

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A minimum wage is the lowest legally allowed hourly amount that employers can pay to the wage earners in their organizations. These thresholds are created to protect workers from exploitative practices and to help reduce poverty within society. However, because pricing, purchasing power, and economic health fluctuate over time, policymakers must constantly readjust wage requirements to reflect these changes.

At the federal level, the minimum wage is currently $7.25.1 However, it varies from state to state.

What is the minimum wage by state?

Provided they don’t go below the federally mandated minimum wage, states have a lot of flexibility when setting their own hourly amounts. Because of this latitude, there is a lot of variation as you move from coast to coast.

Some of the common reasons for the differences in minimum wage per state include:

  • The political climate: Generally speaking, states that are more conservative tend to focus on the negative economic impact that employee wages have on businesses, while states that are more progressive favor higher wages as a tool to protect workers.
  • The business climate: Service industry jobs often benefit from higher wage thresholds than jobs in agriculture, manufacturing, and mining. Union activity and collective bargaining can also influence policy decisions at the state level.
  • Cost of living: Markets that are more expensive often set their own minimum wages higher than the federal threshold in order to ensure local citizens can afford to maintain a basic standard of living.

When you look at the actual state-by-state minimum wage, these differences become very clear:

  • Although technically not a state, the District of Columbia has the nation’s highest minimum wage at $15 an hour.2
  • At $14 an hour, California has the next highest minimum wage. However, this requirement only applies to companies with 26 or more employees. Smaller businesses must pay a minimum of $13 per hour to their workers.2
  • Washington state has the highest “universal” minimum wage of any state, requiring employers to pay their employees at least $13.69 an hour.2

However, there are 13 to 14 states that have set their minimum wages at the federal level of $7.25. In fact, Alabama, Louisiana, Mississippi, South Carolina, and Tennessee do not have any requirements at all – so the wages then default to the federal minimum.3

See a complete chart of minimum wage per state here.

Let us help you navigate your state’s minimum wage guidelines

At Clover, we specialize in cutting-edge POS solutions designed to simplify employee management. Whether you need help with scheduling, employee benefits, shift planning, or payroll, our comprehensive suite of business management apps sync with your POS devices to help automatically factor in local regulations. These features can help your business remain compliant with municipal, state, and federal wage guidelines. Check out the Clover App Market.

Automating these tasks not only saves you time, but it can also help save you money – especially since wages are often amended based on the industry. For example, restaurant owners in Alabama can pay their wait staff $2.13 per hour if those employees also generate tips.4 However, that same restaurant still has to pay the full minimum wage of $14 an hour if it’s located in California.4 As such, it is important you have a restaurant POS solution that helps factor in these differences. The same is true if you are a retail store owner who pays sales staff a commission. Having the right POS technology for your retail business helps you keep more of every sale.

To learn more about our complete line of payment processing and employee management solutions, schedule a free consultation with our merchant services team today.

1 “Minimum Wage,” U.S. Department of Labor
2 “State Minimum Wages,” National Conference of State Legislatures, 8 January 2021
3 “Consolidated Minimum Wage Table,” U.S. Department of Labor
4 “Minimum Wage – In Your State,” Minimum Wage

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