Minimum wage laws are bad economic policy. Yet they remain one of the progressive Left’s favorite solutions to poverty, despite the fact that even many left-leaning economists are reluctant to defend a high national wage floor without major caveats. Public opinion, meanwhile, remains firmly on the other side: roughly two-thirds of Americans support raising the federal minimum wage to $15 an hour.
The federal minimum wage has been stuck at $7.25 an hour since 2009. But the more interesting fact is that the federal minimum wage has become almost entirely meaningless. As of 2024, just one percent of hourly workers earned at or below $7.25. In other words, market wage growth, productivity, and inflation have largely left the federal floor behind.
The Federal minimum wage was effectively repealed over the last 17 years. https://t.co/1OvLO5IcfC
— Jason Furman (@jasonfurman) October 15, 2026
When Congress last raised the federal minimum wage to $7.25 in 2009, the median American worker earned $15.95 an hour, already well above the wage floor. Today, the median hourly wage is $24.51, over three times the federal minimum all the while it hasn't moved. Even more impressive, in 2009, about 4.9 percent of hourly workers earned at or below the federal minimum, about 3.6 million people. By 2025, that share had fallen to 1.0 percent, or roughly 820,000 workers.
Now, a progressive might be quick to argue that the rise in market-rate wages is merely a reflection of state and local minimum wage laws. But even that cannot account for the level of growth. Across the country, the median hourly wage for American workers is roughly double even state minimum wage laws. And you might be surprised to learn that this includes states like California, where the minimum wage is $16.90 but the median hourly wage is $28.
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This phenomenon is, of course, thanks to the productive capacity of free markets. The labor market has become more competitive amid a mix of factors, slower labor-force growth, demographic changes, tighter labor markets, and rising productivity, but each has contributed to the same result: companies must pay workers more to attract and retain them.
This is how economic policy is supposed to work. We do not need price controls, mandates, or the threat of federal force to raise wages. We need competition: among employers for workers, among workers for opportunity, and among businesses to produce more value at lower cost.
The past 17 years prove that point. Congress left the federal minimum wage untouched, and the free market did the work anyway. The only difference between that and a bill raising the minimum wage is that the latter comes with a press conference and politicians boasting to voters about their compassion. The former delivers real results, and gets none of the credit.
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