The minimum wage is the lowest it’s been in 70 years and is ‘officially a poverty wage’

July marked the 17th full year in which the federal minimum wage has remained at $7.25, the think tank Center for Economic and Policy Research (CEPR) noted in a recent post. Apple would introduce its AI iPhone bot two years after the current wage was set. The base pay staying the same as inflation continues to rise means today’s wage floor is at its lowest value in 70 years, with a purchasing power lower than its 1968 peak.

“We are currently in the longest period of inaction on the federal minimum wage since its inception in 1938,” CEPR senior economist Sylvia Allegretto wrote. “In fact, today the federal wage floor is officially a poverty wage.”

Indeed, last year the federal minimum wage became a “poverty wage,” meaning a full-time, year-round job paying $7.25 an hour would fall under the $15,650 poverty threshold created by the Department of Health and Human Services.

Minimum wage has reentered the national spotlight amid an ongoing affordability crisis marked by increased inflation from tariffs and the Iran war, as well as stubbornly high home prices and childcare costs. Among the bleak economic markets for Americans is stagnating wage growth, which has declined from its peak of 6.7% in July 2022 to 3.6% as of last month, according to Federal Reserve Bank of Atlanta data.

Americans are generally in support of an increase to the federal minimum wage, with 62% supporting a $15 wage floor, according to a 2021 Pew Research Center survey. Those who opposed a $15 wage overwhelmingly believed wages should be higher than $7.25, though not $15.

Moreover, the desire for higher wages has been a charge for American voters. New York City Mayor Zohran Mamdani—the central figure in a wave of Democratic Socialist politicians with affordability platforms gaining popularity in the U.S.—proposed a $30 minimum wage as part of his mayoral campaign that would see the city’s pay floor increase from $16.50 to $30 by 2030.

The problem with historically low wages

Allegretto explained that despite 30 states and Washington, D.C. having minimum wages above the federal rate, that states with the $7.25 wage, mostly in the South, have among the highest levels of poverty nationwide. More than one-quarter of Mississippi’s workforce earned below $15 per hour, as do one-fifth of jobs in Arkansas, Oklahoma, and Alabama.

The relationship between low wages and higher poverty rates are well-documented: A 1987 study conducted by U.S. Congressional Budget Office economists Ralph E. Smith and Bruce Vavrichek found 20% of hourly wage workers paid at or below the $3.35 minimum wage at the time earned incomes under the U.S. poverty line. Research from the Center for American Progress, a public policy research organization, found childhood poverty reduces productivity and economic output by approximately 1.3% of GDP per year.

Opponents of minimum wage bumps argue actual market wages have increased alongside inflation and productivity growth. Libertarian thinktank the Cato Institute calculated that as of January, the average minimum wage was actually $12.13. Researchers claimed increasing wages would reduce employment for less specialized workers, as well as increase consumer prices and result in job loss as a result of higher labor costs.

These fears were exemplified in California, where Gov. Gavin Newsom passed a $20 minimum wage for fast-food workers in the state in 2024. Some studies, including a November 2025 Cato Institute report, found, citing Bureau of Labor Statistics data, the fast-food sector lost 18,000 roles relative to the rest of the job market following the passage of the $20 minimum wage law.

Other economists found opposition to these increased wages overblown. A working paper from University of California at Berkeley released earlier this year found the new California policy increased average weekly wages for eligible workers by about 11% but did not impact employment. Prices increased by about 1.5%, or by six cents for a $4 item.

California may foreshadow what’s to come with minimum wages for the rest of the country. A National Employment Law Project report found about two dozen states will increase their wages at some point this year.

“A lot of people are watching what’s happening in California,” Michael Reich, the study author and chair of the Center on Wage and Employment Dynamics at UC Berkeley, told Fortune. “And it could be a model for the rest of the country.”