In the United States, the setting of minimum wage, wage rates below which some workers cannot be paid is a policy that has been highly debated by different political factions. This is because it bears a significant relation with millions of employment providers, employees, the state, and the general living conditions in a society.
About a month before the presidential elections in America, Trump assumed office for the second time, which triggered a movement to increase the discussion on Minimum Wage Increase.
What will change for the workers? How will it be for entrepreneurs? This article highlights some of the anticipated impacts of the increase in wages for American workers in 2025 under the Trump 2.0 regime.
2025 Minimum Wage Updates
The cost of Living in America has forced many low-wage earners not to support their families or end up in poverty growing the Matryoshka doll of issues in recent years. The minimum wage is currently set at $7.25 per hour federally as it has been with no shift in the year 2009.
| Title | 2025 Minimum Wage Updates |
| Amount Increase | 10-12 dollars an hour. |
| Country | US |
| Year | 2025 |
| Category | Finance |
In America, it is quite mind-boggling that there has not been an official movement with the onset of inflation as nearly earning the federal dollar is currently millions at the bottom.
In Trump’s first term, the federal minimum wage policy was not materially changed as it was entrusted to the states. During his second term, however, there are already plans for adjustments which include altering the federal wage rate.
The suggested increase in 2025 appears to be a compromise between the need for a living wage and the need for economic and business development.
State Wise US Minimum Wage 2024
Donald Trump’s political discourse has always been centered around the creation and development of more businesses, rather than federal control. In his first term, he preferred having states set their minimum wages. However, the political and economic environment demands a re-evaluation of the minimum wage in the US.
It is posited, though rather tentatively, that the federal minimum wage may be raised eventually to 10-12 dollars an hour. This proposal aims to strike a balance—providing relief to low-income workers while avoiding undue pressure on businesses, especially amid the pandemic.
The lower minimum wage bands, according to the Trump administration, would be more beneficial to smaller enterprises while preventing a loss in rural areas which generally offer lower rates.
| States | State Wise US Minimum Wage 2024 |
| Alaska | $11.73 |
| Arizona | $14.35 |
| Arkansas | $11 |
| California | $16 |
| Colorado | $14.42 |
| Idaho | $7.25 |
| Illinois | $14 |
| Indiana | $7.25 |
| Iowa | $7.25 |
| Washington | $16.28 |
| Vermont | $13.67 |
| Kansas | $7.25 |
| Kentucky | $7.25 |
| Maine | $14.15 |
| Connecticut | $15.69 |
| Delaware | $13.25 |
| District of Columbia | $17 |
| Florida | $12 |
| Georgia | $5.15 |
| Guam | $9.25 |
| Hawaii | $14 |
| Massachusetts | $15 |
| Maryland | $15 |
| Michigan | $10.33 |
| Minnesota | $10.85 |
| Missouri | $12.30 |
| New Mexico | $12 |
| New York | $16 |
| North Carolina | $7.25 |
| North Dakota | $7.25 |
| Northern Mariana Islands | $7.25 |
| Ohio | $10.45 |
| Oklahoma | $7.25 |
| Montana | $10.30 |
| Nebraska | $12 |
| Nevada | $11.25 |
| New Hampshire | $7.25 |
| New Jersey | $15.13 |
| Oregon | $14.20 |
| Rhode Island | $14 |
| South Dakota | $11.20 |
There have been different views regarding this issue. This position, on the other hand, discerns some practicality in Trump’s thinking which, it seems, portrays his style of advancing his policies with gradualism instead of radicalism.
Critics, however, contend that this supplementary increase does not address the issue adequately. Workers paying rising rents with increased medical bills and with inflation surely deserve more.
Impact of a Minimum Wage Increase on Workers
Many people in the Country with a wage of $7.25 would benefit from an increase in the wage range between $10 and $12 an hour. Someone whose basic wage is $7.25 an hour would require so much more than ten dollars an hour to improve his standard of living.
1. Better Financial Stability
With greater pay, workers can afford basic things like food, housing, and even transport. Many families with low socioeconomic status can survive barely and even a slight increase may help them to an even greater extent.
2. Promotes Less Income Gap
An increase in wages may help close the gap between the high-earning employees and the low-earning employees which in effect could promote a worker’s overall morale and assist in relieving some social tensions regarding the economy.
3. Health and Education Benefits
For starters, employment bringing in low income and a higher income decreases the dependence on assistance while increasing the health outcomes of one’s education. This would aid the government to save costs further down the road as well.
But there are issues. The critics believe that organisations may try to avoid hiring altogether or reduce the hours hired to balance higher wages which in other contexts would be unfavourable for workers.
Effects on Small Businesses and Economy
The American economy not only runs on big corporations and institutions but also millions of small businesses that operate in every nook and corner of the country. There are pros and cons specifically for these businesses in increasing the minimum wage.
1. Increased Costs for Employers
More employees hired and minimum wages increased means that the payroll will increase as well. However, for small businesses in particular this could create a body of problems as they operate on thin margins.
To adjust, some of them may simply raise prices for customers, reduce the hours of some workers, or lay off employees altogether.
2. Improved Productivity and Employee Loyalty:
On the other hand, better pay for employees can lead to increased motivation and even productivity. Strong retention for employees at a business would mean that the training cost for new employees could be kept to a minimum and the turnover rate of employees to the business would also be better.
3. Revitalised Local Economies:
The more workers are compensated, the more they spend resources within their domicile. This increased consumption can be the support that many small local businesses need to grow their sales and as a result the wider economy.
There exists a middle ground between helping employees and small business preservation. Approaches such as tax deductions for small employers or gradual wage increases can alleviate these problems.
State-Level Increases Vs Federal-Level Increases
Federal minimum wage sets the floor but a number of states and municipalities have set their own higher ones. For instance, in regions of California and New York, many residents will benefit from the continued wage increases many businesses have started enforcing. As the rates are looking to go over 15 dollars per hour shortly.
1. Advantages of Flexibility that States Enjoy
Flexibility at the state level allows the governments to cater to the cost of living in that area. What applies to a place like San Francisco with its expensive living costs might not apply to rural areas with cheaper living costs.
2. Issues of Variability
But this approach also brings about variance. Workers living in states where the minimum wage is lower than their home state always feel disenfranchised. While businesses operating in the states where the wage is high struggle to compete effectively.
The Trump administration has acknowledged these differences and has clearly stated that any federal reforms should seek to ameliorate state policies without being too extreme, as so to not undermine necessity.
Political Debate Around Minimum Wage Increase
The minimum wage occupation dispute has always been political with a clear party bias. Democrats are mostly in favor of having higher wages while Republicans are usually more cautious and even stringent. Under Trump 2.0, this dispute retains intense divisions.
1. Democrat Advocates for $15 Minimum Wage
A good number of Democrats argue that 10 or even 12 dollars an hour is not enough wage. They envision that a fifteen-dollar minimum wage would enable, in the main, workers to have enough to eat in the most expensive places.
2. Republican Concentration on Sustainability
Republicans, insist on considering the interests of the business first and foremost, especially from an inflationary shock. They maintain the position that increases in wages need to be phased in, with the assistance in the minimization of the burden of additional employment costs of taxes provided concomitantly.
President Trump’s position comes across as a compromise, in that it permits a certain increase in wages while encouraging the states to do more when they consider it necessary.
Conclusion
The 2025 wage revision in the third term of President Trump is meant to tackle a growing worrying trend of stagnation and slow growth in pay while at the same time managing the economy. This moderate wage increase will be adequate to change missionaries’ living standards or trigger attempts to find solutions that still remain to be seen.
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In the meantime, workers and employers should brace themselves for the impending changes, not just the wage increase, but such changes as those brought about by the changing economic environment.
PV Martinez holds an MBA in Finance from the University of Michigan. When not analyzing numbers, PV enjoys playing football and spending time singing his favorite tunes.