The federal minimum wage in 2005 was $5.15 per hour. This rate applied to all covered, nonexempt workers under the Fair Labor Standards Act. It had been set at that level since September 1, 1997, and would not increase again until July 24, 2007, making it one of the longest stretches without a federal minimum wage increase in U.S. history.
A Decade Without a Raise
The $5.15 rate held steady for nearly ten years, from 1997 to 2007. During that time, inflation steadily eroded the wage’s purchasing power. A worker earning $5.15 in 2005 could buy considerably less than a worker earning the same amount in 1997. At 40 hours per week, $5.15 translated to about $206 per week before taxes, or roughly $10,700 per year for a full-time worker with no time off.
When the federal rate finally did go up in July 2007, it rose in three steps: to $5.85, then $6.55 in 2008, and $7.25 in 2009, where it remains today.
States That Paid More in 2005
More than a dozen states and the District of Columbia set their own minimum wages above $5.15 in 2005. When a state minimum wage is higher than the federal rate, employers in that state must pay the higher amount. Rates ranged from $6.00 to $7.35 depending on the state, with several on the West Coast and in New England clustered near the top of that range.
Workers in states that matched or had no minimum wage law of their own were covered by the federal $5.15 floor. For many workers across the country, especially in the South and parts of the Midwest, $5.15 was the legal minimum their employer had to pay.
What $5.15 Was Worth
Adjusted for inflation, $5.15 in 2005 is equivalent to roughly $8.10 to $8.30 in today’s dollars, depending on the inflation measure used. That means the 2005 minimum wage had less buying power than today’s $7.25 federal minimum, which itself is often criticized as insufficient. The long freeze from 1997 to 2007 meant that minimum wage workers in 2005 were near the low point of the wage’s real value over the past several decades.
For context, the federal minimum wage hit its inflation-adjusted peak in 1968, when the $1.60 rate carried purchasing power equivalent to over $13 in today’s dollars. By 2005, the real value had fallen well below that high-water mark.