The $7.25 Federal Minimum Wage Isn’t Just Outdated—It’s a 17-Year Policy Failure Locking Millions in Poverty

Posted on by

(SeaPRwire) –

By: Jonathan Barrett

The last U.S. federal minimum wage hike predates Apple’s Siri. That’s a wild benchmark for how stagnant American labor policy has gotten. 17 straight years of a $7.25 pay floor marks the longest stretch of inaction since the program launched in 1938. Inflation has eaten away so much value that the wage now sits at its lowest purchasing power in 70 years, well below its 1968 peak. CEPR senior economist Sylvia Allegretto calls it an official poverty wage, and hard data backs her claim.

Last year, a full-time minimum wage worker earned less than the HHS $15,650 poverty threshold for a single person. Wage growth has slowed steadily from 6.7% in July 2022 to 3.6% last month, per Federal Reserve Bank of Atlanta data. Voters are demanding concrete action on pay. 62% of Americans support a $15 federal minimum wage, per 2021 Pew Research Center data. Even opponents of the $15 floor overwhelmingly agree $7.25 is far too low to cover basic living costs.

Thirty states and Washington, D.C. already set minimum wages above the federal rate. The states stuck at $7.25, mostly concentrated in the South, have the country’s highest poverty rates. Over a quarter of Mississippi’s workforce earns less than $15 an hour, as do one-fifth of workers in Arkansas, Oklahoma, and Alabama. Childhood poverty directly linked to low wages cuts annual U.S. GDP by roughly 1.3%, per Center for American Progress research.

Opponents of minimum wage hikes, mostly backed by deep-pocketed business lobbying groups, rely on Cato Institute data that pegs average effective minimum wage at $12.13. They claim higher wages will cut low-skill job openings, raise consumer prices, and force small businesses to shut down. They point to California’s 2024 $20 fast-food minimum wage as proof, citing a November 2025 Cato report that found 18,000 fast-food jobs lost relative to the broader labor market.

The peer-reviewed counter-evidence tells a very different story. UC Berkeley research released earlier this year found California’s fast-food wage hike boosted weekly earnings for eligible workers by 11%, with no measurable negative impact on overall employment. Fast-food prices rose just 1.5% on average, equal to 6 extra cents for a $4 menu item. Two dozen states are set to raise their minimum wages this year, and policymakers across the country are closely tracking California’s results.

Congress will be forced to pass a federal minimum wage hike before the 2028 presidential election to avoid mass voter backlash.

Author bio: Jonathan Barrett, lead focus editor for an independent overseas public affairs weekly covering U.S. labor and economic policy.