Topline
Minimum wage violations reached a record high in 2025, according to Cleveland Fed researchers who found around 5.8 million workers in the U.S. were shortchanged—primarily in states with the highest minimum wages.
Key Facts
A record 5% of non-exempt workers, employees who can receive minimum wage and overtime pay, across the 10 most populous states in the U.S. were paid below the minimum wage last year, according to a Cleveland Fed analysisdrawing on Census Bureau data.
Researchers estimated around 6.5 million workers in the U.S. were paid below the minimum wage last year, with roughly 5.8 million experiencing an outright violation as opposed to a legal exemption.
Among workers experiencing minimum wage violations, underpayment was roughly $95 a week, which is below the 2023 peak of over $110, but still well above historical norms.
Cleveland Fed researchers found a lack of enforcement may be a driving reason behind wage theft, as seven states had no investigators to handle minimum wage violations while 26 states had fewer than 10 investigators to handle lawsuits or administrative wage claims in 2018.
The rise in minimum wage theft is primarily driven by states with minimum wage requirements well above the federal minimum—California ($16.90), Florida ($14), New York ($16) and Illinois ($15).
The federal minimum wage has been frozen at $7.25 an hour for nearly 20 years over congressional gridlock, marking the longest period in U.S. history it has been left unchanged.
Over $1.5 billion. That is how much in stolen wages was recovered between 2021 and 2023 through federal, state and local enforcement, according to the Economic Policy Institute.
The federal minimum wage has stalled at $7.25 per hour since 2009, pushing dozens of states to set their own minimum wage higher, something the Cleveland Fed researchers have considered a possible link to an uptick in violation rates. The researchers said a driver of the problem is linked to the Department of Labor just enforcing the federal floor and not state minimums, leaving states to enforce their own rules. A 2021 Pew Research survey found about six-in-10 U.S. adults supported raising the minimum wage to $15 an hour, and former President Joe Biden attempted to raise the minimum wage to $15 an hour over a five-year course, though the legislation failed after facing strong resistance from Republicans and some moderate Democrats concerned with its potential impact on job losses. Inflation and prices were Americans’ largest self-reported financial challenges, according to Federal Reserve data, followed by basic living expenses and housing.
Source: www.forbes.com
