A minimum wage sets the lowest legal hourly rate an employer may pay. The federal floor applies nationally, and states and cities may set higher ones. The central empirical dispute is how much employment responds when the floor rises.
The federal minimum has been raised periodically by Congress rather than adjusted automatically, so its real value falls between increases as prices rise. Many states and localities now set higher floors, producing wide geographic variation.
Separate rules apply to tipped workers, who may be paid a lower base wage if tips bring total earnings to the minimum. Whether to eliminate this tipped credit is a distinct debate with its own coalitions.
Decades of research have produced genuinely conflicting findings. Studies of moderate increases in strong labor markets often find small employment effects; studies of large increases relative to local wages more often find measurable job or hours reductions. Both sets of findings are taken seriously by economists.