Definition
The lowest hourly pay allowed by law; the federal minimum is $7.25, and many states and cities set higher rates.
What it means
The federal minimum wage under the Fair Labor Standards Act has been $7.25 an hour since July 24, 2009. When state and local minimums are higher, employers must pay the highest rate that applies, and many states adjust their minimums for inflation every year. Employers may pay tipped employees a cash wage as low as $2.13 an hour under federal law, if tips bring them to at least the full minimum wage, but several states require the full minimum before tips. Workers under 20 can be paid $4.25 an hour for their first 90 consecutive calendar days with an employer. Some workers are exempt from minimum wage rules. The Department of Labor's state table shows current state rates.
Example
A full-time worker at the federal $7.25 earns $290 for a 40-hour week, about $15,080 a year. In a state with a $16.00 minimum, the same hours pay $640 a week, about $33,280 a year.
Illustrative numbers only. Your situation will differ.