The Minimum Wage Just Went Up in These States. Is Yours One of Them?
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Twenty states, cities and counties increased their minimum wage on July 1.
Why it matters
Efforts to increase the federal minimum wage from $7.25 an hour have repeatedly failed in Congress.
On July 1, the first day of fiscal year 2023, numerous states, cities and counties increased the local minimum wage. Areas with the highest base pay include Hawaii, which raised its minimum wage from $15.20 to $16.10 an hour, and West Hollywood, where companies with more than 50 employees must pay them at least $16.50 an hour.
Despite soaring inflation, the federal minimum wage has remained stagnant at $7.25 since July 2009. Those in favor of raising it argue the current rate puts a family with one breadwinner below the poverty line. But critics say raising it to the proposed $15 an hour would force smaller companies out of business, hurt part-time and student workers, and reduce employment amid an already shaky economy.
Twenty states, cities and municipalities have boosted the minimum wage rate for hourly workers this year. California The statewide minimum wage increased to $15 an hour on Jan. 1, 2022, though companies with 25 employees or fewer can pay $14 an hour. As a result of ongoing inflation, Gov. Gavin Newsom announced the minimum wage statewide will increase to $15.50 an hour on Jan. 1, 2023.
Separately, several cities and counties increased their baseline wages starting July 1, 2022.
West Hollywood: $16.50 an hour for employers with more than 50 employees, or $16 an hour for employers with fewer than 50 employees. Hotel workers will earn $18.35 an hour.
Connecticut On July 1, the minimum wage in Connecticut increased from $13 to $14, as part of a progressive increase begun in 2019. The base pay will eventually reach $15 on June 1, 2023.
Hawaii On June 23, Gov. David Ige signed legislation raising Hawaii's minimum wage to $18 by 2028, currently the highest in the country. It's a gradual increase, from the current $10.10 per hour to $12 per hour, effective Oct. 1, 2022. From then it will increase to:
$14 per hour, effective Jan. 1, 2024
$16 per hour, effective Jan. 1, 2026
$18 per hour, effective Jan. 1, 2028
Hawaii has no annual inflation adjustments, so the state legislature would have to act to raise it further.
Illinois In some circumstances, state, county and city officials set different wage rates and workers are paid whichever is highest. In January, the Illinois minimum wage went up to $12 an hour, with a $7.20 minimum for tipped workers and a $9.25 minimum for workers under the age of 18.
Cook County -- which includes Chicago and Evanston -- went further on July 1, increasing its minimum wage to $13.35 and the minimum for tipped workers to $7.40 an hour. (Illinois' base pay is slated to hit $13 on Jan. 1, 2022, then $14 in 2024 and $15 in 2025.)
In Chicago, the minimum wage for businesses with four to 20 workers has risen from $14 to $14.50, while the base rate for companies with 21 or more workers has been bumped up from $15 an hour to $15.40.
Maryland Montgomery County, a bedroom community for Washington, DC, has upped its minimum wage on July 1.
Companies with 10 or fewer workers now must pay $14 an hour, up from $13.50.
Those with 11 to 50 workers must pay $14.50, up from $14 an hour.
Employers with more than 50 workers must pay $15.65 an hour, up from $15.
On July 1, Minneapolis increased its minimum wage for businesses with more than 100 workers from $14.25 to $15 an hour. Businesses with 100 or workers or less must increase their minimum wage from $12.50 to $13.50 an hour.
St. Paul has instituted incremental increases. As of July 1:
Employers with five or fewer workers are required to pay $10.75 an hour, up from $10. Companies with six to 100 workers must pay $12 an hour, up from $11.
Employers with between 101 to 10,000 workers must pay $13.50 an hour, up from $12.50.
Companies with more than 10,000 employees are now required to pay $15 an hour, up from $12.50 an hour.
Nevada The minimum wage for workers with health insurance has increased from $8.75 an hour to $9.50 an hour. Employees without health benefits have seen their base pay bump up from $9.75 to $10.50 an hour.
The minimum wage in Nevada will continue to increase in 75-cent increments until 2024, by which time the minimum wage will be $12, or $11 for employees with health care benefits.
Oregon The state's minimum wage went up on July 1, but by how much depends on where you work.
In the Portland metro area, the $14 minimum wage went up to $14.75 an hour. This also affects what the area calls the urban growth boundary, including parts of Clackamas, Multnomah and Washington counties.
The standard wage increased from $12.75 to $13.50 an hour in regions outside the urban growth boundary, including Benton, Clatsop, Columbia, Deschutes, Hood River, Jackson, Josephine, Lane, Lincoln, Linn, Marion, Polk, Tillamook, Wasco, Yamhill, and parts of Clackamas, Multnomah and Washington counties.
The wage increased from $12 to $12.50 an hour in non-urban counties including Baker, Coos, Crook, Curry, Douglas, Gilliam, Grant, Harney, Jefferson, Klamath, Lake, Malheur, Morrow, Sherman, Umatilla, Union, Wallowa and Wheeler.
These rates are in effect through June 30, 2023. After that, the state's baseline wage will be adjusted annually based on the Consumer Price Index.
In 2019, 1.6 million Americans, or about 1% of the US workforce, were paid the federal minimum wage or less, according to the Bureau of Labor Statistics.
More than half worked part-time, many were between the ages of 16 and 25, and more than 60% worked in the food service or hospitality industries, where tips often compensate for lower wages.
What is the case for raising the federal minimum wage?
Until 1968, the minimum wage kept pace with inflation and increased in step with productivity growth. If that was still the case, according to the Center for Economic and Policy Research, the minimum wage would be almost $21.50 an hour -- equal to an annual salary of roughly $44,000.
Currently, a minimum-wage earner takes home $15,080 a year, not far above the federal poverty limit of $12,800. While 30 states and the District of Columbia have minimum wages above the federal baseline, 20 states -- mostly in the South and Midwest -- still adhere to the $7.25 standard.
According to a March 2021 Monmouth University poll, 53% of Americans support increasing the minimum wage to $15 an hour and 45% oppose it, with 2% undecided.
What are the arguments against raising the federal minimum wage?
In February 2021, the U.S. Chamber of Commerce testified before Congress that entry-level jobs are needed "to start a worker's ascent up the career ladder."
"If they cannot get on the ladder because the minimum wage cuts off the first rung, they may be prevented from climbing their way up the ladder to bigger and better jobs," the chamber said.
The organization also argued that while $15 an hour "may seem low from the perspective of New York City or Washington, DC or San Francisco," it was out of line with entry-level earnings in the many other parts of the country that have lower costs of living.
A 2021 report by the Congressional Budget Office estimated that incrementally raising the federal minimum wage to $15 an hour by 2025 would benefit 17 million workers, but it would reduce employment by 1.4 million and increase the federal deficit by $54 billion over the next 10 years.