How does the minimum wage work in the United States: values, disparities, and realities in 2024 and 2025

Understanding the American compensation system is essential for Brazilians dreaming of working or relocating to the USA. Unlike Brazil, where there is a single national minimum wage set by the federal government, the United States adopts a decentralized and complex model. What few know is that the federal minimum wage coexists with dozens of different state and local minimum wages, creating a scenario where compensation can vary drastically depending solely on where you work.

The dual system: understand how the minimum wage in the United States really works

Since 2009, the federal minimum wage has remained fixed at US$ 7.25 per hour. Seems low? It is indeed. But here’s the crucial nuance: states have full freedom to establish their own rules. Some only respect the federal minimum, while others — especially those with high living costs — have set minimum wages up to US$ 17.50 per hour in Washington D.C.

This federalist structure is not random. It reflects the autonomy of American states, a constitutional principle that allows regions with different economies to establish labor policies suitable to their local context. A worker in Mississippi earns significantly less than one in San Francisco, not just because of differences in companies, but because the states themselves have set different minimum wages.

How much do minimum wage workers really earn?

The calculation is simple, but the results vary greatly. Considering a standard 40-hour workweek over 4 weeks:

Federal Scenario (US$ 7.25/h):

• Weekly: US$ 290
• Monthly: US$ 1,160

Washington D.C. Scenario (US$ 17.50/h):

• Weekly: US$ 700
• Monthly: US$ 2,800

The difference is enormous. While someone earns US$ 1,160 in a state like Mississippi, their colleague in D.C. earns almost three times more for the same work and same number of hours.

States with the highest minimum wages in 2024 and 2025

Some states stand out for their wages significantly above the federal minimum:

District of Columbia — US$ 17.50/h The undisputed leader, reflecting the heated economy of the American capital and the astronomical housing costs. Comparable to converted into reais (approximate exchange rate R$ 5.20), this amounts to about R$ 14,560 per month.

Washington — US$ 16.66/h Driven by the presence of tech giants like Microsoft and Amazon, this Pacific Northwest state offers one of the highest minimum wages nationally. Its real estate market is as competitive as the wages offered.

California — US$ 16.50/h The western giant maintains a significant minimum wage, with additional layers: work beyond 8 hours daily receives a 1.5x multiplier; beyond 12 hours, 2x. Converted, this generates approximately R$ 10,140 per month just at the minimum, excluding overtime.

New York — US$ 15.50/h (state) up to US$ 16.50/h (premium counties) The city that never sleeps also never stops raising its minimum wages. Different regions of the state have different values, with New York and surrounding areas paying more to compensate for rent of +US$ 2,000 monthly for modest apartments.

The lowest minimum wages: the reality in less urbanized states

Georgia and Wyoming have nominal minimum wages of only US$ 5.15/h, technically below the federal level. In practice, the federal minimum of US$ 7.25 prevails, but indicates a lack of legislative pressure in these states for increases.

Converting to reais: how much is that in Brazilian currency?

For those thinking in reais, the conversion is revealing. Considering the current exchange rate:

Federal Minimum (US$ 7.25/h):

• Per hour: ~R$ 37.70
• Monthly (160h): ~R$ 6,032

California (US$ 16.50/h):

• Per hour: ~R$ 85.80
• Monthly: ~R$ 13,728

Washington D.C. (US$ 17.50/h):

• Per hour: ~R$ 91
• Monthly: ~R$ 14,560

At first glance, it seems extraordinary. But there is a fundamental caveat.

The illusion of direct conversion: purchasing power in perspective

The most common mistake is comparing gross numbers between Brazil and the USA. An US$ 1,160 salary converted into reais (R$ 6,032) does not mean you will live 4 times better than with R$ 1,518 (Brazilian minimum wage in 2025).

Why? Because the cost of living in America is proportionally higher. While rent in São Paulo varies between R$ 1,500 and R$ 3,000 for a decent apartment, in New York rent starts at US$ 1,800 (R$ 9,360) for comparable quality.

Experts use the Purchasing Power Parity (PPP) metric for these comparisons. Through this lens, the difference reduces significantly. One dollar in the USA buys fewer goods and services than the linear conversion would suggest.

Can you live on minimum wage in the United States?

The answer is pragmatic: rarely, in most cases.

Average monthly expenses in the USA:

• Food (excluding restaurants): US$ 300-400
• Transportation/car: US$ 400-600
• Basic services (electricity, water, internet): US$ 150-200
• Rent (national average): US$ 1,626

Basic total: US$ 2,476-2,826

The federal minimum wage (US$ 1,160) would cover only half. Even in states with higher wages like California (US$ 2,640 monthly), the margin is tight considering education, health, emergencies, and leisure.

Behind the scenes of the system: who really earns minimum wage?

Certain professional categories end up earning this minimum:

• Retail and fast-food attendants
• Cashiers
• Cleaning staff
• Stockers and re-stockers
• Warehouse helpers
• Receptionists
• Entry-level workers

An important exception exists: waiters and professionals receiving tips have a reduced federal minimum (US$ 2.13/h), with the expectation that tips will complete the income. This practice generates constant controversy.

Brazil versus the United States: two systems, two logics

Brazil adopts a centralized model: a single national minimum wage, adjusted annually by federal decree, applicable to all formal workers.

The United States uses a federalist model: a minimum wage that functions as the “minimum of the minimum,” allowing states to establish their own policies according to their economies, living costs, and political priorities.

Which is better? It depends on the perspective. The Brazilian system offers uniformity and predictability. The American system allows regional adaptation but creates significant regional disparities.

Conclusion: research before moving

Any Brazilian considering working in the United States should go beyond the gross numbers. Research not only the specific state’s minimum wage but also:

• Exact city rent costs
• Transportation expenses
• Local tax burden
• Benefits (health, retirement)
• Salary progression opportunities

The minimum wage is just the starting point. The economic reality is much more nuanced and regional than any value table can capture.