As of this week, it has been 16 years since the minimum wage was increased. Failure to increase this threshold has left working Kentuckians with a wage floor less than half of what it once was and driven it below the poverty line for a full-time worker. In purchasing power, the current minimum wage of $7.25 an hour is at a 75 year low. For the dozens of states, including Kentucky, that have failed to take their own action to boost the minimum wage beyond $7.25, workers have suffered the consequences. Inaction has left tens of thousands of people across the commonwealth earning poverty wages even as the price of housing, food and other necessities has skyrocketed.
Congress established the minimum wage in 1937 following the Great Depression to ensure “a fair day’s pay for a fair day’s work.” It was meant to ensure a floor through which no worker could fall. But since that time, the floor has collapsed through inflation and inaction, with Kentucky workers who are tipped, disabled, incarcerated or living in expensive areas falling even further behind.
Minimum wage is so low it no longer broadly lifts wages
The last time the minimum wage was increased was in July 2009, when the federal minimum wage increased from $6.55 an hour to $7.25. If the minimum wage had kept up with inflation from its high point in 1968, Kentuckians would be earning at least $14.70 per hour. As it stands, the minimum wage is less than half that amount, and has lost 50% of its purchasing power since the last time it was increased. Today’s minimum wage is now at its lowest inflation-adjusted point since December 1949, the month before it rose from $5.47 to $10.29 in 2025 dollars.
With the minimum wage so low, employers can no longer find workers willing to work for it. According to 2024 data from the Bureau of Labor Statistics there 1.1 million hourly workers in Kentucky, none of which work at the minimum wage, though 19,000 work in sub-minimum wage jobs (such as people who are incarcerated or people with disabilities working under a special employer certificate). One of the reasons why workers are unwilling to take jobs that pay the minimum wage is because, as of 2025, the minimum wage falls below the poverty level for a full-time worker for the first time.
If a minimum wage policy is working, many more workers will make the minimum wage because that shows it is effective in lifting paychecks toward the levels workers need to live. Markets alone are not working to adequately raise wages, as the data shows many Kentucky workers are making too little to support a basic family budget. If Kentucky were to raise the minimum wage to $17 an hour over time, 478,000 Kentucky workers would see an increase in their wages, leaving one in four workers (and nearly half of hourly-paid workers) better off. Raising the minimum wage wouldn’t just help those at the bottom of the wage scale. Employers would need to provide raises to prevent “wage compression” for those who currently earn slight above the new minimum wage.
Kentucky has the ability to raise the minimum wage above the federal level. Since 2014, 28 states and Washington DC have done just that, raising their minimums to as high as $16.66. In fact, in 2007, Kentucky set its own minimum wage, but made it no higher than the federal minimum of $7.25 by 2009. An attempt was made in 2016 to raise it again when a bill filed by the Speaker of the House to raise it to $10.10. But that bill and others since have failed, and Kentucky has been stuck with a stagnant federal minimum wage.
Recent actions by Congress exacerbate a withering minimum wage
With the minimum wage so low, working Kentuckians are increasingly turning to public supports for needs like health care and food. But moving forward, eligibility for these programs will be restricted, and funding either cut or shifted to the state budget. Low-wage workers, including those who would benefit from an increased minimum wage, will be especially vulnerable to the cuts enacted by the One Big Beautiful Bill Act (OBBBA) — particularly the work reporting requirements — because of the inconsistent work schedules and incomes of these workers.
At the same time, the tax changes will primarily benefit the wealthiest earners (with an average annual tax cut of $46,420 in Kentucky) and leave out the poorest (who will see a $70 cut, annually). Specifically, the Child Tax Credit expansion will leave out 285,000 Kentucky kids from the maximum benefit, and 6,000 kids altogether. And while the OBBBA includes a time-limited tax exemption for wages earned by tips or overtime, doing so incentivizes employers to reduce standard wages to shift more toward tips, and the tax benefit of exempting tips is miniscule compared to an increase in the minimum wage.
The General Assembly doesn’t allow local governments in Kentucky to raise their minimum wage
There are dozens of cities and counties across the country that have opted for a higher minimum wage than what their state or the federal government have set – some exceeding $20 an hour. These areas typically have higher costs of living than the state as a whole, pressuring local governments to support their constituents and local economies by raising the wage floor.
In 2014 and 2015, Louisville and Lexington raised their minimum wages to $9 and $10.10, respectively, to be phased in over several years. In 2016, however, after a lawsuit by the Kentucky Retailers Association, the Supreme Court of Kentucky struck down those ordinances but allows the General Assembly to act to permit localities to establish a higher minimum wage. So far, lawmakers have not chosen to do that despite several filed bills and interest among local lawmakers.
Kentucky needs a higher minimum wage
July 2019 marked the longest period the U.S. – and Kentucky – has gone without a minimum wage increase since its inception. We are now six years past that point. Recent modest wage gains resulting from a tight national labor market have been the exception to decades of stagnant income growth, and those gains have now been largely offset by the recent increase in the cost of living.
Kentucky lawmakers can, and should, ensure there is a wage floor that provides for family well-being by substantially raising the minimum wage and ending the practices of subminimum wages for tipped and disabled workers (as was Federally proposed under the Biden administration). Additionally, the state should reverse course on preempting local governments from being able to address the higher cost of living through a local minimum wage. We have known these solutions for too long without acting on them – it’s past time we gave Kentucky a raise.
