How does the minimum wage work in the United States: analysis of values and regional differences in 2025

Many Brazilians planning to move to the USA wonder about the American compensation system. Unlike Brazil, where there is a single national minimum wage, the United States adopts a decentralized model where the minimum wage varies significantly depending on the location. The federal minimum has remained at US$ 7.25 per hour since 2009, but states, counties, and even specific cities set their own rates, creating a range from US$ 7.25 up to US$ 17.50 per hour depending on the region.

The American dual system: federal and state

Contrary to what many imagine, the American minimum wage does not operate as a single value. It follows a hierarchical model where states and cities can (and should) set higher rates than the federal minimum. This structure creates very different scenarios: workers in California or Washington DC earn nearly three times more than those in states that maintain the federal minimum.

The federal minimum of US$ 7.25/hour serves as a baseline, preventing any employer from paying less. However, when a state establishes a higher rate, the more advantageous one for the worker prevails. This flexibility reflects the different economic realities and living costs across regions.

How much does it generate monthly?

To understand actual compensation, it is necessary to convert the hourly system into monthly values. Considering the standard American workweek (40 hours) applied to the federal minimum:

Basic calculation: 7.25 × 40 hours × 4 weeks = US$ 1,160 per month

This amount is approximately R$ 6,032 using the 2025 exchange rate (US$ 1 = R$ 5.20). However, in jurisdictions with higher minimum wages, monthly earnings are substantially greater. In the District of Columbia, for example, the calculation results in: 17.50 × 40 hours × 4 weeks = US$ 2,800 per month (approximately R$ 14,560).

Mapping minimum wages by region

American states show considerable disparities. Regions with high living costs have implemented significant increases:

Regions with the highest minimum wages:

• District of Columbia: US$ 17.50/hour
• Washington: US$ 16.66/hour
• California: US$ 16.50/hour
• New York (city): US$ 16.50/hour
• New York (state): US$ 15.50/hour

Regions maintaining the federal minimum:

• Georgia: US$ 5.15/hour (federal rate of US$ 7.25)
• Wyoming: US$ 5.15/hour (federal rate of US$ 7.25)

States like Massachusetts, Vermont, and Connecticut also adopt rates between US$ 14 and US$ 15 per hour, reflecting pressure to adjust to inflationary costs.

Who benefits from this compensation?

The minimum wage generally applies to workers aged 14 and above in regular positions. The main categories covered include:

• Retail and supermarket clerks
• Cashiers
• Stock and warehouse helpers
• Cleaning and maintenance staff
• Fast food employees
• Entry-level positions in various sectors

An important caveat: workers receiving tips (such as waiters) may be subject to a lower base salary, as it is assumed that tips will supplement income. However, some states prohibit this practice, requiring the full minimum wage even for tipped professions.

Brazil versus United States comparison

Superficial analysis can lead to misleading conclusions. While the American minimum wage converted into reais (US$ 1,160 = R$ 6,032) appears to be four times higher than the Brazilian (R$ 1,518), the reality is more nuanced.

Relative purchasing power: Purchasing power parity studies show that one US dollar buys fewer goods and services than its equivalent in reais in Brazil. This means that the absolute difference does not translate linearly into proportionally higher quality of life.

Cost structure: In the US, a federal minimum wage is often insufficient to cover basic expenses:

• Cost of living (excluding rent): US$ 1,185/month
• Average rent: US$ 1,626/month
• Total: US$ 2,811/month

With a minimum income of only US$ 1,160, the equation does not balance. In Brazil, despite limitations, the minimum wage aims to cover more immediate needs in contexts of relatively lower living costs.

Institutional model: Brazil maintains a uniform national minimum wage. The US, on the other hand, operates a hybrid system where federal, state, and municipal levels coexist, creating regional disparities. States with higher inflation pressure for more frequent adjustments, while the federal rate has remained stagnant since 2009.

The viability of subsistence with the minimum

The pragmatic answer is: for most circumstances, the US federal minimum wage does not adequately support an individual. Even with full-time hours (40h/week), the income falls below what is needed in any major metropolis.

Regions with higher minimum wages offer better margins but simultaneously have some of the highest housing costs in the country. Workers earning the minimum often need to:

• Hold multiple jobs
• Rely on government assistance programs
• Share housing to reduce costs
• Seek additional benefits (meal vouchers, employer health insurance)

Calculation framework: simplified method

The American system uses hours as the base unit, making calculations easier:

Weekly formula: hourly rate × 40 hours

Monthly formula: hourly rate × 160 hours (40h × 4 weeks)

Application: A worker in Washington DC (US$ 16.66/h) working full-time: 16.66 × 160 = US$ 2,665.60 per month

Final considerations for potential immigrants

The US minimum wage remains a complex topic precisely because of its decentralized nature. Brazilians interested in working in the US should research not only the state minimum but especially the local cost of living (housing, transportation, food) before making decisions related to relocation or job opportunities. The comparative analysis with Brazil, although relevant, should not be the sole criterion for decision-making.