16.02 Explanatory: Minimum Wage is the lowest hourly wage rate an employer can legally pay their employees. It is set by the government and applies to all employers, regardless of size. There are several types of minimum wage, including federal minimum wage, state minimum wage, and local minimum wage. Federal minimum wage is the legally mandated minimum wage rate set by the US federal government, while state and local minimum wage is set by individual states and localities. The current federal minimum wage is $7.25 an hour, and some states and localities have set higher rates than the federal rate. In some areas, employers must pay their employees a wage equal to or higher than the minimum wage.