The quiet math of a frozen wage floor

Start with a number that hasn’t moved in more than 16 years: $7.25.  That’s the federal minimum wage, unchanged since 24 July 2009—a policy artifact still stamped into the American economy.  It is still binding Law in states that haven’t set higher wage floors, even as many states and cities have stepped around it with their own minimums. 

The country that minted $7.25 in 2009 isn’t the country living with it in 2025.  Prices have risen while wages have remained unchanged.  A CPI-based inflation conversion puts $7.25 in 2009 at roughly $10.95 in 2025 purchasing power—meaning today’s federal minimum buys dramatically less than it did when it was last increased.  This stagnation erodes long-term economic security, making it harder for workers to build stability and wealth. 

The proposal to raise the minimum wage to $17/hour by 2030 aims to restore dignity and stability, encouraging the belief that change is possible and necessary.  Understanding the policy debates surrounding this proposal can help readers evaluate its potential Impact on economic security and wage growth. 

The $20 line: not a luxury, not a living, a threshold

Policy fights often revolve around minimum wage levels—$10, $12, $15.  But everyday life often organizes itself around a different number: $20/hour.  It’s a line that feels like “almost enough” in less expensive regions and “nowhere close” in more expensive ones.  And it’s a line that captures a stunning share of the workforce.

Using Current Population Survey extracts, the Economic Policy Institute’s low-wage tracking shows that the low-wage population remains substantial even in a strong job market.  A state-by-state compilation (using EPI data as of July 2025) estimates that about 30% of workers—~45.2 million people—earn less than $20/hour. 

That “$20 and below” group isn’t just teenagers or first-time workers.  It includes adults who stock shelves, care for older people, clean offices after hours, prepare food, drive deliveries, and keep clinics and schools running, workers whose wages often aren’t enough to turn “work” into “stability,” which should inspire concern and a call for change.

Because labor is real, coping strategies are fundamental as well: second jobs, shared apartments, delayed medical care, deferred repairs, and constant monitoring of the calendar for upcoming bills.  The headlines refer to it as “low wage.” The lived experience is low margin. 

California: where $20 can still feel like subsistence

If you want to understand why $20/hour is often treated as a survival threshold, look to California, which is as large as a country, with costs that can absorb wages.

In July 2025, California’s household-survey employment estimate was approximately 18.762 million.  Using the exact EPI-based state breakdown, 24% of California workers fall under the $20/hour line.  This corresponds to approximately 4.5 million Californians in the “$20 and below” category when applied to total employment (18.762 million × 24% ≈ 4.50 million). 

Another way to count the same reality is to focus on paid workers.  PPIC reports that roughly 89% of California workers are wage/salary workers and 11% are self-employed.  Applying the same 24% threshold to wage/salary workers yields approximately 4.0 million paid workers earning under $20/hour—very close to the California count shown in the state ranking table. 

And then there’s housing—the gravity that makes even decent hourly pay feel weightless.  California renters face some of the nation’s highest cost burdens, and statewide measures indicate that a large share of households spend more than the conventional 30% of income on housing.  This can evoke frustration and a sense of urgency for systemic reforms.

In that context, $20/hour is not “good money.” It can be rent money, and sometimes not even enough of that.

How people live on low wages: the strategies you don’t see on a pay stub

The wage is a number.  Life is a system.  Low wages compel individuals to develop systems that can withstand uncertainty.

1) Stacking households

Roommates, multigenerational living, shared leases, sublets, couch rotations.  When housing costs rise faster than wages, households adapt by spreading fixed costs across more people.  PPIC notes that rental stress is widespread and closely tied to income constraints rather than rent levels alone—an “options” problem. 

2) Working more than one job

Multiple jobholding isn’t rare.  BLS annual averages indicate 8.431 million multiple jobholders in 2024, representing about 5.2% of the employed population.  For some, it’s ambition.  For many, it’s insurance against volatile hours, slow seasons, and surprise expenses—especially when one job won’t reliably cover the basics. 

3) Using the safety net while working

A persistent myth says public assistance is mainly for people who don’t work.  In reality, the safety net often functions as a wage supplement for people who do.  CBPP estimates ~15.7 million workers live in households that participated in SNAP in the last year (based on ACS analysis), highlighting how common “work + assistance” is in low-paying occupations.  The UC Berkeley Labor Center has documented how low-wage business models shift costs to taxpayers through programs such as Medicaid/CHIP and SNAP—what it calls the “public cost” of low wages. 

4) Deferring life

Dental work waits.  Car repairs wait.  Preventive care waits.  The refrigerator will be repaired “next month.” This is what budget fragility looks like: a household that can’t absorb a $400 surprise without a cascade.  Harvard’s housing report links rising housing costs to broader household financial stress; the rent doesn’t just take money—it takes resilience.

“Low-income” vs. “low-wage”: the definitions that change the story

Low-wage and low-income are related but not identical.

• Low wage is usually a wage-rate concept: how much a worker earns per hour (e.g., “under $20/hour”). 
• Low-income is typically a household-resource concept: how total resources compare with needs—often tied to poverty thresholds, local cost of living, and household size.   

This difference matters because two workers earning $19/hour can have radically different realities: one may be a student living at home; another may be a single parent paying market rent.  The BLS has warned that there is no single agreed-upon definition of “low-wage work,” and that shifting the cutoff changes who you capture—and what policies would help. 

For California specifically, UC Berkeley’s Labor Center has used a “low-wage threshold” near $19/hour (in 2022 dollars) in its tools—suggesting that the $20 line isn’t arbitrary; it’s close to what researchers identify as a low-wage boundary in the state. 

The schooling question—reframed

“What kind of students were in school that led to living on subsistence?” It’s an understandable question—and it’s also a trap.  It implies a simple pipeline: weak students → low wages.  The real pipeline is more complex: constraints, opportunities, local labor markets, and cost of living.

Brookings’ work on the low-wage workforce emphasizes that low-wage workers are a diverse population, including many in prime working age and many supporting families, suggesting that low pay is not confined to “kids” or “bad students.” The BLS similarly notes that “low-wage work” lacks a single definition precisely because the population is heterogeneous, with different demographic and economic profiles depending on where you set the threshold. 

A more revealing set of questions is:

• What did school ask of them while life asked more?  (work, caregiving, instability)
• What pathways did the school offer?  (career tech, apprenticeships, dual enrollment, counseling)
• What jobs existed where they lived when they graduated?  (industry mix, bargaining power)

This isn’t about absolving anyone.  It’s about accuracy.  People don’t “fail” into low wages as much as systems, markets, geography, and time sort them.

What kind of educational institution produces “entry-level forever”?

Here, the story sharpens.  Institutions don’t “deliver” people to low wages in a straight line—but specific institutional patterns make low-wage persistence more likely.

1) Weak links between education and paid, work-based learning

When education is disconnected from employers and job ladders, students graduate with credits but without leverage.  Brookings highlights how education and enrollment status shape the prospects of low-wage worker groups—signaling that pathways matter as much as schooling itself. 

2) Programs with unclear labor-market payoff

Community colleges can be ladders—when programs align with demand and credentials signal fundamental skills.  Research on community college returns shows that outcomes vary by credential type and field; some pathways produce substantial earnings gains, whereas others yield substantially more minor wage impacts.  In California, evidence suggests that even non-completing “skills-builder” trajectories can raise earnings in specific career and technical fields—meaning the payoff depends on the content and connections, not just the diploma. 

3) Foundational skills gaps that block advancement

Adult literacy and numeracy are not merely academic abstractions; they are gatekeepers to training, promotion, and credential completion.  NCES’s PIAAC materials outline how adult skills are measured and why they matter for workforce functioning.  When foundational skills are weak, even motivated workers can be excluded from higher-paying tracks. 

Why low wages persist, even when jobs are plentiful

A strong labor market can reduce unemployment without eliminating low pay.  EPI’s tracking points to structural factors: wage floors that fail to keep pace with living costs and bargaining power that has weakened over time.  Meanwhile, the BLS household survey indicates a significant, employed population nationally, yet persistent underemployment indicators (such as part-time employment for economic reasons) remain prevalent—fueling income volatility even among the employed. 

Add housing to the equation, and the squeeze intensifies.  Harvard’s 2025 report describes rising housing costs and insurance/tax pressures as amplifiers of financial stress, while California sources show just how widespread housing cost burden can be.

So the story of low wages is rarely “no jobs.” It’s “jobs that don’t convert into stability.”

The headline inside the headline

America can generate jobs without providing sufficient economic security for those who hold them.

That’s why the frozen federal wage floor still matters.  It’s why $20/hour has become a psychological benchmark.  It’s why California can have millions employed and millions still one surprise away from trouble. 

And it’s why the question isn’t only “How much should wages rise?”

It’s also:

How do we rebuild the ladder—skills, scheduling, housing, and mobility—so work buys more than survival? 

Frozen Wage, Rising Prices.  The federal minimum wage has remained at $7.25 since 2009, but inflation has steadily eroded its purchasing power.  By 2025, maintaining the same purchasing power as in 2009 would require roughly $10.95/hour—about a $3.70/hour gap between the legal minimum wage and the cost-of-living reality. 

Federal vs. Inflation vs. California Minimum Wage (2009–2025)

·       California statewide minimum wage line (green), plus a dashed green line showing the lower “25 or fewer employees” schedule during 2017–2022 (when the Law phased in differently by employer size).

·       Federal minimum wage remains flat at $7.25 since 24 July 2009 (blue).

·       Inflation-equivalent line (orange) shows what hourly pay would need to be to match the purchasing power of $7.25 in 2009, reaching about $10.95 by 2025.

Key takeaways 

• By 2025, California’s statewide minimum wage is $16.50/hour, more than double the federal floor.
• Even if you only adjust the federal wage for inflation (not “living wage,” just 2009 purchasing power), the federal floor still trails the inflation-equivalent level by roughly $3.70/hour in 2025. 
• California’s baseline wage is not the whole story: specific sectors have higher wage floors (e.g., fast food and some health care settings).