Under the Fair Labor Standards Act (FLSA), workers in the United States must be paid at least a minimum wage — currently set at $7.25 an hour. While states and municipalities have the power to establish higher wages — for example, Washington is $9.32 and San Francisco is $10.74 — the federal minimum wage creates a base level for most employees. The only exceptions to the rule are certain tipped employees, full-time students, youth workers and disabled workers.
According to the Bureau of Labor Statistics, 1.6 million hourly workers earned the federal minimum wage in 2012, with nearly 2 million more earning less than the minimum because they fell under one of the above exemptions. More than half of minimum wage employees work in the leisure and hospitality industry, followed by retail, education and health services.