US Minimum Wage History: Why $7.25 Buys Less Than in 1968
On paper the federal minimum wage has only ever gone up — from $1.00 an hour in the early 1960s to $7.25 today. But that's the nominal number. Adjusted for inflation, the minimum wage actually bought the most in 1968, and it has lost ground in every decade since, especially during the long freeze at $7.25 that began in 2009. This guide separates the headline dollar figure from its real purchasing power and shows why the gap matters.
How much is the federal minimum wage?
The federal minimum wage is $7.25 per hour, and it has been since July 2009 — the longest stretch without an increase since the minimum was created in 1938. Congress must vote to raise it, and it does not adjust automatically for inflation, so its real value erodes a little every month that prices rise and the dollar figure stays frozen.
Why the minimum wage is worth less than in 1968
The blue line above adjusts the minimum wage into today's dollars. It peaked in 1968, when the minimum was equivalent to well over $11 an hour in modern purchasing power. Every year since, inflation has chipped away at it between the occasional congressional raise. Today's $7.25 buys substantially less than the minimum did more than half a century ago — even though the nominal number is seven times higher.
How long has it been frozen at $7.25?
Since July 24, 2009. Because the federal minimum doesn't track inflation, a multi-year freeze is effectively a steady pay cut in real terms: the longer $7.25 holds, the less it buys. The chart's widening gap between the flat nominal line and the falling real line shows exactly how much purchasing power has quietly slipped away during the freeze.
States set their own — often much higher
The federal $7.25 is a floor, not the rule most workers face. The majority of states (and many cities) have set higher minimums, some above $15 an hour, and several index theirs to inflation so they rise automatically. As a result, the federal minimum increasingly matters only in the shrinking number of states that haven't set their own — but it remains the national benchmark and the number Congress fights over.
Frequently asked questions
What is the federal minimum wage in 2026?
It is $7.25 per hour, unchanged since July 2009 — the longest period without a federal increase on record.
When was the minimum wage worth the most?
In 1968, when, adjusted for inflation, it was equivalent to well over $11 per hour in today's dollars — far above the current $7.25.
Why hasn't the federal minimum wage gone up?
It only rises when Congress passes a law to raise it; it does not adjust automatically for inflation, so it has stayed at $7.25 since 2009.
Do all states use the $7.25 federal minimum?
No. Most states and many cities set higher minimums — some above $15 — and several index theirs to inflation. The federal figure is a floor.
What's the difference between nominal and real minimum wage?
Nominal is the dollar figure on paper; real is that figure adjusted for inflation to reflect actual purchasing power. The real minimum wage has fallen since 1968.