Understand the Minimum Wage System in the USA: A Very Different Reality from Brazil

Many Brazilians who dream of moving to the United States are surprised to learn how the minimum wage works in the US. Unlike Brazil, which adopts a single national minimum wage set annually by the federal government, the United States operates under a decentralized model where the federal government establishes a floor, but each state — and even individual cities — can set their own levels. This fragmentation creates significant disparities: while some workers earn US$ 7.25 per hour, others receive up to US$ 17.50. For those planning to work in the country, understanding this structure is absolutely essential.

The Decentralized Model: How Does the Minimum Wage in the US Work?

The federal minimum has remained at US$ 7.25 per hour since 2009 — a fact that shocks most people, as it has not been adjusted in over 15 years. However, this amount represents only a “floor” minimum. States like California, New York, Washington, and the District of Columbia have already established significantly higher state minimums, ranging from US$ 15.50 to US$ 17.50 per hour. Cities with high operational costs, such as San Francisco, Seattle, and downtown Manhattan, often adopt even higher levels.

The logic behind this local autonomy is to reflect regional differences in the cost of living. A city with an average rent of US$ 3,000 per month cannot have the same minimum wage as a rural area where rent costs US$ 600.

How Much Does a Worker Actually Earn: Practical Calculations

Since the American system is based on hourly pay, the monthly salary varies according to the standard workweek. Using a typical 40-hour workweek over four weeks as a reference:

In the case of the federal minimum: 7.25 × 40 hours × 4 weeks results in approximately US$ 1,160 per month. This amount remains insufficient to cover basic expenses in most US states.

In regions with higher minimums: A worker in Washington D.C., earning US$ 17.50 per hour, would receive about US$ 2,800 per month — a much closer figure to real sustainability, though still challenging in high-cost cities.

Converted to reais (considering an approximate exchange rate of US$ 1 = R$ 5.20), the US federal minimum wage of US$ 1,160 corresponds to about R$ 6,032 per month, while Brazil has an official minimum wage of R$ 1,518. The nominal difference is dramatic, but this superficial analysis masks a more nuanced reality regarding purchasing power.

State Variations: A Complex Geography

State minimum wages reflect different economic realities. At the top are states like the District of Columbia (US$ 17.50/h), Washington (US$ 16.66/h), California (US$ 16.50/h), and New York (US$ 15.50/h) to US$ 16.50/h depending on the region(. These states contain major urban centers and robust economies.

At the other extreme, states like Georgia and Wyoming officially adopt US$ 5.15/h, but in practice, the federal minimum of US$ 7.25 prevails, as federal law overrides when higher. Most states fall into an intermediate range, between US$ 11 and US$ 13 per hour.

This variation creates a scenario where the same job can have drastically different earnings depending solely on the geographic location.

Who Actually Receives the Minimum Wage?

The minimum wage in the US mainly applies to entry-level workers starting their careers from age 14. Among the most affected groups are restaurant and fast-food attendants, cashiers, stockers, cleaning aides, and supermarket employees. Apprentices and interns often have legal exceptions, earning reduced percentages.

An important detail: workers who receive tips as a significant part of their compensation — such as waiters and bartenders — can have a base salary below the official minimum, with the expectation that tips will make up the difference. This practice remains controversial and varies according to state legislation.

Purchasing Power: Why Direct Conversion Doesn’t Tell the Whole Story

Mechanically comparing the minimum wage in the US with the Brazilian real is misleading. Although the US dollar converted results in nominally higher values, the reality of purchasing power requires a more sophisticated analysis.

A federal minimum of US$ 1,160 in the US is widely considered insufficient to cover basic needs. Average rent, food, transportation, and healthcare quickly consume this amount, leaving little or no room for savings. In Brazil, although the nominal minimum wage is lower, the cost structure also differs substantially.

Experts use the Purchasing Power Parity )PPC metric for more accurate comparisons. Through this lens, one dollar in the US often buys fewer goods and services than the equivalent in reais in Brazil. Therefore, the apparent advantage in absolute value does not translate proportionally into a higher quality of life.

Living on Minimum Wage: A Realistic Analysis

The direct answer is: living solely on the minimum wage in the US is extremely challenging in most scenarios. Basic monthly costs — housing, food, transportation, insurance — range around US$ 2,800 to US$ 3,500 in common urban areas. The federal minimum of US$ 1,160 covers only a fraction of this reality.

Even in states with higher minimums, like California or New York, the cost of living increases proportionally. A one-bedroom apartment in Los Angeles or Brooklyn easily exceeds US$ 2,000 per month, consuming a large part of a higher minimum wage. Workers in these situations often need to share housing, work multiple jobs, or rely on additional support.

The Secular Freeze: Why 15 Years Without Adjustment?

The federal minimum remaining at US$ 7.25 since 2009 reflects deep political and ideological tensions. While some argue that increases harm small businesses and reduce employment opportunities, others contend that the freeze is responsible for the erosion of real purchasing power. Progressive states have compensated through local increases, while more conservative states stay close to the federal floor.

This political dynamic explains why the solution came through decentralization: unable to reach an agreement at the federal level, states took the initiative to adjust their minimum wages to the local economic reality.

Comparative Perspective: Minimum Wage in the US vs. Brazil

The comparison goes beyond currency conversion. Brazil implements a centralized model with annual adjustments based on inflation and economic growth, while the US uses a fragmented system where only state authorities promote revisions. This structural difference results in greater national consistency in Brazil but less regional flexibility. In the US, there is greater capacity for local adaptation but also greater regional inequality.

Both countries face similar challenges: maintaining a minimum wage that preserves dignity and sustainability without compromising employment opportunities. The solution adopted by each nation reflects its political priorities and constitutional structures.

For Brazilians considering moving to the US, the clear recommendation is: research in detail not only the minimum wage in the desired state but also the specific cost of living in the city. The difference between a viable opportunity and an illusion often lies in this regional level of detail.