The minimum compensation system in the USA: decentralized structure and regional disparities in 2025

Understanding how the base compensation system works for workers in the United States is essential for Brazilians considering a professional move to the country. Unlike Brazil, which establishes a single national minimum wage, the American model follows a federalist logic: there is a federal minimum that serves as a general floor, but states, counties, and even municipalities have autonomy to set their own thresholds. This decentralization creates a scenario of significant variation — depending on where you work, your hourly pay can range from US$ 5.15 to US$ 17.50. This article provides a comprehensive analysis of how this system functions, the updated values, and what it practically means for those wishing to work in the US in 2025.

The federal base and state variations: understanding the average salary in the United States

The federal minimum has remained at US$ 7.25 per hour since 2009 — a fact that surprises those coming from a system that adjusts annually. However, this amount is not the reality for millions of Americans. About 30 states have established minimum wages higher than the federal, creating a broad spectrum of compensation.

At the top end, Washington D.C. leads with US$ 17.50 per hour — more than double the federal minimum. States like Washington, California, and New York also offer significantly higher values, ranging between US$ 16 and US$ 16.66 per hour. On the lower end, some states like Georgia and Wyoming maintain formally lower values than the federal (US$ 5.15/h), although federal legislation generally prevails in practice.

What explains these disparities? Mainly, the cost of living. Cities like San Francisco, Seattle, and New York have much higher rent, food, and service costs — requiring the average salary in these locations to be substantially higher just so workers can get by.

Conversion to reais and purchasing power: more money, but with caveats

For Brazilians, converting these amounts into reais can be misleading. Using an approximate exchange rate of US$ 1 = R$ 5.20 in 2025:

• Federal minimum: US$ 7.25/h is approximately R$ 37.70
• Monthly income (40h/week × 4 weeks): US$ 1,160 ≈ R$ 6,032
• In Washington D.C.: US$ 2,800/month ≈ R$ 14,560

At first glance, these numbers seem attractive when compared to the Brazilian minimum wage of R$ 1,518 in 2025. However, this direct comparison is misleading because it ignores purchasing power parity. One dollar in the US buys fewer goods and services than one real in Brazil — so the apparent advantage in reais does not proportionally translate into quality of life.

Practical calculation: how to convert worked hours into monthly salary

The American system is solely based on hours. There is no concept of a “fixed monthly salary” — everything is calculated per hour worked:

Basic formula:

• Hourly rate × 40 hours/week × 4 weeks = approximate monthly salary

Practical examples:

• At US$ 7.25/h: US$ 7.25 × 160 hours = US$ 1,160/month
• At US$ 16.50/h (California): US$ 16.50 × 160 hours = US$ 2,640/month
• At US$ 17.50/h (Washington D.C.): US$ 17.50 × 160 hours = US$ 2,800/month

Important: these calculations assume regular work hours. Overtime (above 40h/week) is generally paid with a 50% increase.

Profile of minimum wage earners and most affected sectors

The minimum wage applies to workers aged 14 and over, employed under regular contracts, and who do not primarily rely on tips for income. The main sectors are:

• Fast-food and restaurant service (without guaranteed tips)
• Cashiers in supermarkets and stores
• Stockers and warehouse helpers
• Cleaning and maintenance workers
• Administrative assistants with less experience

An important nuance: waiters, delivery persons, and other tip-receiving professionals may have a reduced base salary in some states, as tips are considered to supplement income.

State map: where are the highest and lowest minimum wages in 2025

The states with the highest average salary in the US for entry-level jobs are:

Top of the list:

• Washington D.C.: US$ 17.50/h
• Washington: US$ 16.66/h
• California: US$ 16.50/h
• New York (NYC and surroundings): US$ 16.50/h
• Massachusetts: US$ 15/h

At the bottom:

• Georgia and Wyoming: US$ 5.15/h (formally, though federal law prevails)
• Florida: US$ 13.50/h
• Texas: US$ 7.25/h (adopts federal)

This disparity directly reflects regional cost of living — prosperous states with heated real estate markets tend to offer higher minimum wages.

Real viability: is it possible to live on minimum wage in the US?

The answer is: hardly, especially at the federal minimum. Consider average costs:

• Rent for a single room (not a full apartment): US$ 800-1,500/month
• Food: US$ 300-400/month
• Transportation: US$ 100-150/month
• Basic utilities (electricity, water, internet): US$ 150-200/month

Total: US$ 1,350-2,250/month just for essentials.

A worker earning US$ 1,160/month (federal minimum) faces a deficit. Even in states like California with US$ 2,640/month, the margin is tight in expensive cities.

The reality is that most Americans earning minimum wage work more than 40 hours a week or hold multiple jobs to cover expenses.

Comparison with Brazil: structure and context

Brazil adopts a centralized model — a single value set by the federal government, adjusted annually. The US uses a hybrid: federal minimum + state/municipal minimums. This results in:

• Flexibility: states adjust according to local realities
• Inequity: workers in poorer states earn less for the same work
• Migration incentives: attraction to states with higher minimum wages

In nominal terms, the American minimum appears more generous when converted into reais. However, considering absolute cost of living, both systems leave workers in a delicate situation for self-sufficiency.

Conclusion: research before deciding

The minimum wage in the US in 2025 remains a fragmented and regional issue. For Brazilians considering working in the country, it is advisable to:

1. Identify the specific state/city of interest
2. Research the current minimum wage there
3. Compare it against local cost of living (not just conversion to reais)
4. Consider growth opportunities — most entry-level jobs offer rapid increases after initial months
5. Seek employment in sectors with better pay or tip opportunities

The federal minimum remains frozen, but regional dynamics continue to evolve, with more states increasing their minimum wages to keep pace with inflation.