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Twenty states raised their minimum wages on New Year’s Day: Federal action is still needed

On January 1, minimum wages went up in 20 states. The increases range from an $0.08 inflation adjustment in Minnesota to a $1.50 per hour raise in New Mexico, the equivalent of an annual increase ranging from $166 to $3,120 for a full-time, full-year…




On January 1, minimum wages went up in 20 states. The increases range from an $0.08 inflation adjustment in Minnesota to a $1.50 per hour raise in New Mexico, the equivalent of an annual increase ranging from $166 to $3,120 for a full-time, full-year minimum wage worker. The updates can be viewed in EPI’s interactive Minimum Wage Tracker and in Figure A and Table 1 below.

In prior years, we have estimated the number of workers who would directly benefit from these increases, as well as the total dollar amount and average wage increase for affected workers in each state. Unfortunately, current circumstances make it difficult to accurately produce estimates of this year’s increases. The COVID-19 pandemic has devastated labor markets throughout the country, with a large share of the job losses occurring in low-wage sectors, such as leisure and hospitality, where minimum wage hikes typically affect large shares of workers. Because conditions in these industries are so different from what they were in the period reflected in our model’s underlying data, we cannot use it to make estimations about effects happening right at this moment.

Even so, we know that minimum wage increases are as crucial as ever in the current context—to protect low-wage workers from exploitation and continue toward the goal of a living wage for all workers. From a macroeconomic perspective, it’s smart policy: Low-wage households—who disproportionately benefit from increases to the minimum wage—are highly likely to quickly spend the extra dollars they receive, boosting consumer demand as we move into recovery.

Figure A
State minimum wage increases

The January 1 increases in nine states—California, Illinois, Maryland, Massachusetts, Michigan, New Jersey, New Mexico, New York, and Vermont—are the result of legislation passed by state lawmakers to raise their state’s wage floors.

In two states—Arkansas and Missouri—the January 1 raises result from ballot measures passed by the state’s voters.

In nine states, the changes are the result of automatic annual inflation adjustments. Alaska, Arizona, Colorado, Maine, Minnesota, Montana, Ohio, South Dakota, and Washington all have provisions in their state minimum wage laws that require the wage be adjusted annually to reflect changes in prices over the preceding year. Doing so ensures that the minimum wage never declines in purchasing power, and workers paid the minimum wage can afford the same amount of goods and services year after year. Eight other states and the District of Columbia have enacted similar automatic adjustment provisions in their minimum wage laws that will begin after their minimum wages reach a higher statutory level in the coming years.

Table 1
Table 1

In addition to the increases that took effect in 20 states on January 1, five other states (Connecticut, Florida, Nevada, Oregon, Virginia) and the District of Columbia have minimum wage increases scheduled to occur later in 2021.

Local minimum wage increases

Currently, 44 localities—cities and counties—have minimum wages that are higher than their state minimum wage. These range from $12.10 in Santa Fe, New Mexico, to $16.84 in Emeryville, California.

Of these, 22 raised their minimum wages on January 1.i Table 2 shows these New Year’s Day increases.

Table 2
Table 2

Thirteen more of these 44 cities and counties are slated to raise their minimum wages later in 2021: Berkeley, Emeryville, Fremont, Milpitas, San Francisco, and Santa Rosa, California; Chicago and Cook County, Illinois; Montgomery County, Maryland; Minneapolis, Minnesota; Portland Urban Growth Boundary, Oregon; and Santa Fe City and Santa Fe County, New Mexico.

Current minimum wages and information about upcoming wage increases for all states and localities can be viewed in EPI’s Minimum Wage Tracker.

The federal minimum wage and the Raise the Wage Act

The federal minimum wage has been stuck at $7.25 for more than a decade. Since it was last raised in July 2009, the minimum wage’s purchasing power has declined by more than 17%, leaving millions of workers and their families with paychecks that may no longer afford the things they need.

In response to federal inaction, an increasing number of states have raised their own minimum wage above the federal level. So far, 29 states have a minimum wage that is higher than the federal minimum wage. These range from $8.56 in Florida to $14 in California. The District of Columbia has a $15 minimum wage. In the 21 remaining states, the federal minimum wage applies (although one of these states, Virginia, is set to raise its minimum wage to $9.50 in May 2021, with subsequent increases taking the state minimum to $15 in 2026). These measures have helped millions of low-wage workers see larger paychecks, as research shows that wage growth for low-wage workers has been markedly faster in states that have raised their minimums.

Nine states—California, Connecticut, Florida, Illinois, Maryland, Massachusetts, New Jersey, New York, and Virginia—have passed legislation or ballot measures that will eventually bring their state minimum wages to $15 an hour.

With a new Congress recently sworn in, a change in Senate control, and a new president soon to be inaugurated, prospects for a federal minimum wage increase look more promising than they have in a long time. In July 2019, the U.S. House of Representatives passed the “Raise the Wage Act of 2019,” a bill that would raise the federal minimum wage to $15 by 2025. However, the Act stalled in the Senate. But with Democrats winning control of the Senate and the presidency, the 117th Congress may finally achieve a policy goal that economic and racial justice advocates have been demanding for over 50 years. As economic research continues to show that higher minimum wages work precisely as they’re intended—lifting pay for low-wage workers with little, if any, impact on their job prospects—there is no excuse for lawmakers not to finally agree to that demand.


i. This includes Nassau, Suffolk, and Westchester Counties in New York, grouped together as one locality in Table 2. These counties have minimum wages higher than upstate as a result of state law, not individual county-level ordinances.

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