Minimum Wage Rates in the U.S. and Why it is Important in Compensation Planning

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Minimum wage is the lowest allowable hourly rate that employers must pay their employees, as specified in the Fair Labor Standards Act (FLSA).

A key factor in minimum wage calculations is that it can vary at the federal, state, or local level. For employers, staying on top of these differences and changes is imperative in the process of offering fair and competitive compensation. When planning compensation strategies, ensure that you are paying the current, legally established minimum wage rates for your employees.

Addressing Minimum Wage in Compensation Planning

Performing a minimum wage analysis helps organizations remain compliant and develop compensation strategies that are internally fair and equitable, externally competitive, and tailored to the organization's specific goals. When developing compensation plans, organizations should perform a minimum wage analysis to identify and plan for the following:

Increased Labor Costs

Businesses may face higher labor costs when minimum wage rates increase.

Pay Compression

Increases in minimum wage can narrow the wage gap between entry-level and experienced employees, potentially causing dissatisfaction among the latter.

Financial Planning and Budgeting

Changes in minimum wage can require careful planning and forecasting to ensure that increased labor costs are accounted for in the budget.

Compliance

Adhering to changing minimum wage laws can be a complex task, especially for employers with employees distributed in different cities and states that may have varying minimum wage regulations.

Minimum Wage Database

ERI SalaryExpert, powered by ERI's Assessor Platform, offers the latest minimum wage data at the federal, state, and local levels.

The Assessor Platform compiles up-to-date minimum wages and forthcoming rate changes for all 50 U.S. states, the District of Columbia, and Canadian provinces. Our minimum wage database provides detailed information on minimum wage rates, including minimum salary thresholds. With our interactive map, you can easily view specific minimum wage rates by location.

The Assessor Platform has several tools to help you with minimum wage analyses:

Track current and scheduled minimum wage changes across the U.S. and Canada.
Search for minimum wage rates in major cities, counties, and municipalities.
Review minimum salary thresholds required to qualify for exemption from U.S. FLSA overtime provisions that took effect on January 1, 2020.
View current local and state pay transparency rules in the U.S.
Get notifications that alert you when employees drop below minimum wage requirements.
Receive weekly email notifications with the latest updates made to the minimum wage database.

The Benefits of Utilizing ERI's Minimum Wage Data

Our minimum wage data serve as a valuable resource for navigating complex regulatory environments by helping to ensure compliance and better compensation decisions. Compensation professionals rely on ERI's minimum wage data for salary benchmarking, compensation planning, and creating policies to promote equitable pay practices, as well as supporting the overall well-being of both their organization and employees. Understanding minimum wage trends is essential for organizations to ensure legal compliance, remain competitive in the labor market, and manage costs effectively. Learn how minimum wage laws can affect your pay philosophy and goals by trying a sample of minimum wage data today in a free demo of ERI's Assessor Platform.

Frequently Asked Minimum Wage Questions?

When does minimum wage increase?

As minimum wage laws may undergo changes at the federal, state, or local level, the timing of minimum wage increases depends on the jurisdiction and specific laws or regulations that apply within the area. Minimum wage increases may occur annually, biennially, or on a variable schedule determined by lawmakers.

What is tipped minimum wage?

Tipped minimum wage represents the lowest hourly wage that an employer can pay their tipped employees. A tipped employee is an individual whose job requires them to customarily and regularly receive more than $30 per month in tips, or otherwise specified by local laws. The tipped minimum wage rate may depend on several variables, such as location, employer size, job type, or other factors.

Some states require employers to pay their tipped workers the minimum wage even before they receive any tips, and other states require employers to pay the difference if tips received by an employee do not add up to the minimum wage.