Understand the Minimum Wage System in the USA: State Variations and Purchasing Power in 2025

How the Minimum Wage Works in the USA: A Decentralized Structure

Unlike the Brazilian model, which establishes a single national minimum, the United States adopts a hybrid and fragmented system. The federal minimum wage remains fixed at US$ 7.25 per hour since 2009, but this is only a baseline: states, counties, and municipalities have the autonomy to set their own rates, often higher. This decentralization creates a scenario where the minimum compensation varies drastically depending on the worker’s geographic location.

The structure operates in layers: first, there is the federal minimum; above it, state minimums; and there are also specific regulations in cities with high living costs, such as New York, Los Angeles, and Seattle. In practice, the highest value always prevails — a worker in a jurisdiction that sets US$ 16.50 will receive that amount, even if the federal minimum is lower.

2025 US Minimum Wage Values by State

Currently, most states already adopt rates between US$ 11 and US$ 16 per hour. Some locations stand out:

Highest minimum wages in the country:

• District of Columbia: US$ 17.50/h (the highest in the USA)
• Washington: US$ 16.66/h
• California and New York: US$ 16.50/h
• Massachusetts and Maryland: US$ 15/h

Lower rates:

• Georgia and Wyoming: US$ 5.15/h (although the federal minimum of US$ 7.25 applies in most cases)
• Several states: US$ 7.25/h (following only the federal minimum)

This disparity directly reflects regional living costs — metropolises with higher housing and service inflation set higher minimums.

Who Benefits from the US Minimum Wage

This minimum applies to workers:

• Aged 14 and above
• With regular employment contracts
• Excluding apprentices or interns
• Without primary income supplementation via tips

The professions most earning this amount include: restaurant and fast-food chain service assistants, cashiers, stock associates, cleaning and hygiene staff, retail employees, and entry-level operational positions. It’s worth noting that workers in service sectors (waiters, bartenders) often receive a reduced base salary, compensated by expected tips.

Conversion to Reais and Purchasing Power Analysis

Considering an approximate exchange rate of US$ 1 = R$ 5.20 in 2025, the US federal minimum converted amounts to about R$ 6,032 per month (calculated on 160 hours/month). In Washington D.C., where the US minimum wage reaches US$ 17.50, the conversion results in approximately R$ 14,560 per month.

Compared to, the Brazilian minimum wage of R$ 1,518 appears significantly lower in nominal terms. However, this superficial analysis masks reality: actual purchasing power tells a different story.

Purchasing Power Parity (PPP): One dollar in the US buys fewer goods and services than R$ 5.20 would buy in Brazil. International economics experts use PPP metrics for more accurate comparisons, demonstrating that the absolute difference in reais does not translate linearly into proportionally higher quality of life.

Cost of Living Comparison: While a minimum wage in the US is theoretically higher in reais, basic expenses are also significantly greater:

• Cost of living without rent: US$ 1,185/month
• Average rent: US$ 1,626/month
• Total basic expenses: US$ 2,811/month

With a federal minimum of US$ 1,160, the numbers simply don’t add up. Even in states with higher minimum wages, housing costs are proportionally higher.

Calculating Your Monthly Income in the US System

The US system uses hours as the base unit. The calculation is straightforward:

Weekly: Hourly wage × 40 hours = weekly amount
Example: US$ 7.25 × 40 = US$ 290

Monthly: Hourly wage × 40 × 4 weeks = monthly amount
Example: US$ 7.25 × 40 × 4 = US$ 1,160

In states like California or District of Columbia, these amounts can exceed US$ 2,500 per month.

Feasibility of Living on the US Minimum Wage

The answer is clear: in most scenarios, it’s not feasible. Even working 40 hours a week, the federal minimum leaves little margin after covering essential expenses. States offering more competitive minimum wages — such as California, Washington, or D.C. — compensate with substantially higher housing costs, eliminating the real advantage.

Brazilian professionals considering moving to the US should research not only the US state minimum wage but also the specific cost of living in the region, including housing, food, transportation, and health insurance — factors that determine the actual viability of settling there.