Understand the Minimum Compensation System in the USA in 2025 and Discover Why New York and D.C. Lead

How many Brazilians dream of working in the United States without, however, understanding how the American salary structure works? The truth is that the North American minimum wage system operates very differently from the Brazilian model. While Brazil maintains a single national minimum wage for the entire country, the US adopts a decentralized approach where the federal government sets a base floor, but states, counties, and even municipalities can establish their own ranges — resulting in variations from US$ 7.25 to US$ 17.50 per hour.

Regional Disparities: The Minimum Wage Map by Region

The decentralized structure of the US creates a fascinating scenario of regional wage inequality. The federal minimum remains frozen at US$ 7.25 since 2009, but this does not reflect the reality faced by workers. Progressive states have already adopted minimums between US$ 11 and US$ 16 per hour, while major urban centers like New York, Los Angeles, and Seattle have implemented even higher levels.

State Highlights

New York leads with differentiated values: the state rate is set at US$ 15.50 per hour, but in Manhattan and surrounding areas it can reach US$ 16.50. California adopts US$ 16.50 as the general minimum, with special rules for overtime (1.5x after 8 hours daily, 2x after 12 hours). Washington offers US$ 16.66 — reflecting its high cost of living index. Meanwhile, the District of Columbia stands out with the highest value in the country: an impressive US$ 17.50 per hour.

On the other end, Georgia and Wyoming allow values of US$ 5.15, although in practice the federal minimum of US$ 7.25 prevails for most jobs.

From Hours to Months: How American Compensation Is Calculated

Unlike Brazil, where we naturally talk about “monthly salary,” the American system works by the hour. This is a crucial distinction for those planning to move there.

To convert hourly earnings into monthly income, use the basic formula: Hourly rate × 40 hours per week × 4 weeks = Monthly Income

Applying to the federal minimum: 7.25 × 40 × 4 = US$ 1,160 per month

Taking the District of Columbia as an example: 17.50 × 40 × 4 = US$ 2,800 per month. This difference of over US$ 1,600 reveals how location drastically impacts the worker’s financial power.

Conversion to Reais: What Is the Real Value?

Many Brazilians ask how much this represents in reais. Considering the approximate exchange rate of US$ 1 = R$ 5.20 in 2025:

• Federal minimum per hour: US$ 7.25 ≈ R$ 37.70
• Weekly income (40 hours): US$ 290 ≈ R$ 1,508
• Monthly income: US$ 1,160 ≈ R$ 6,032

In cities like Washington D.C.: US$ 2,800 per month corresponds to approximately R$ 14,560.

Brazil vs. USA: A Comparison Beyond Numbers

In 2025, the Brazilian minimum wage is set at R$ 1,518 per month. A direct conversion suggests that the American minimum (around R$ 6,032) is significantly higher — almost four times more. However, this superficial analysis masks a more complex reality.

The Purchasing Power Factor

A salary of US$ 1,160 in the US is widely recognized as insufficient to cover basic expenses in virtually all states. Average rents hover around US$ 1,626 per month, and expenses with food, transportation, and utilities reach US$ 1,185. The numbers don’t add up.

In Brazil, although R$ 1,518 is also limited for covering costs in large centers, the purchasing power parity presents important nuances. A dollar in the US buys less in terms of goods and services than the equivalent in reais in Brazil — meaning that the nominal difference in reais does not translate linearly into a higher quality of life.

Salary Setting Structure

Another structural distinction: Brazil adopts a centralized model, with the federal government annually defining a single national minimum wage. The US operates a hybrid system where the federal minimum coexists with state and municipal minimums, creating a large disparity that depends fundamentally on the work region.

Who Receives the Minimum Wage?

The US minimum wage applies to:

• Workers aged 14 and over
• Employed under regular contracts
• Who are not apprentices or formal interns
• Whose tips do not constitute the majority of income

The most common professions subject to the minimum include restaurant attendants, cashiers, stockers, cleaning aides, and supermarket employees. An important caveat: professionals who receive tips (like waiters) often earn a reduced base salary, supplemented by customer contributions.

Is It Possible to Live on the Minimum Wage in the United States?

The honest answer is: for most, no. with the federal minimum.

Working 40 hours a week at the federal minimum (US$ 1,160/month), the worker faces approximate expenses of:

• Rent: US$ 1,626
• Expenses without rent (food, transportation, utilities): US$ 1,185
• Total: US$ 2,811

With an income of only US$ 1,160, there is a monthly deficit of US$ 1,651. States with higher minimums, like California and New York, offer higher pay, but paradoxically have the most expensive rents in the country — perpetuating the financial challenge.

The Overall Picture: A System in Transition

The US minimum wage system represents a complex and fragmented system. While the federal value has remained stagnant since 2009, states and cities continue approving significant adjustments to keep pace with inflation and local costs. This dynamic creates a country where the economic experience varies drastically depending on the geographic location.

For Brazilians considering moving or working in the US, researching not only the specific state minimum but also the actual cost of living in the region is essential — turning the decision into an informed and strategic choice, not just based on isolated numbers.