Economic Policy Institute At the start of the new year, minimum wages will go up in 22 states, lifting pay for 6.8 million workers across the country. In Vermont, the automatic inflation adjustment of 19 cents to $10.96 will affect 16,200, who will see an average increase of $240, or a total of nearly $4 million.i Across the US, workers affected by the increases will earn an extra $8.2 billion over the course of 2020 as a result of the changes. The increases range from a $0.10 inflation adjustment in Florida to $1.50 per hour raises in New Mexico and Washington. Affected workers who work year-round will see their annual pay go up between $150 and $1,700, on average, depending on the size of the minimum wage increase in their state.
The map and table below describe the increases in each state. Note that these estimates do not account for changes in local minimum wages separate from state law.ii There are 22 cities and counties with higher minimum wages taking effect on January 1, all of which can be found in EPI’s Minimum Wage Tracker. The estimates also do not include any “indirectly affected workers” making just above the new minimum wage who may receive raises as employers adjust their overall pay scales.
In seven states, the changes are the result of automatic annual inflation adjustments. Alaska, Florida, Minnesota, Montana, Ohio, South Dakota, and Vermont 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. 10 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.
The increases in nine states—California, Delaware, Illinois, Maryland, Massachusetts, Michigan, New Jersey, New Mexico, and New York—are the result of legislation passed by state lawmakers to raise their state’s wage floors. Lawmakers in six of these states—California, Illinois, Maryland, Massachusetts, New Jersey, and New York—enacted legislation that will eventually bring their state minimum wages to $15 an hour. For 2020, minimum wages in these states will range between $11.00 and $13.00.
In six states—Arizona, Arkansas, Colorado, Maine, Missouri, and Washington—the January 1 raises result from ballot measures passed by the state’s voters. In the last several election cycles, voters have increasingly passed higher minimum wages, often in the face of inaction by their state legislatures. In fact, voters in Missouri passed a higher state minimum wage at the ballot box after state lawmakers nullified city minimum wage ordinances that have been enacted by local governments in Kansas City and St. Louis.
The practice of state legislature undoing or “preempting” local governments from establishing their own minimum wages, or other local labor laws, has expanded dramatically since 2013. Notably, in Colorado this past year, state lawmakers went in the opposite direction: they repealed the state’s minimum wage preemption law that had been in effect since 1999, clearing the way for cities and counties in the state to establish their own wage floors. Consequently, in November, Denver’s city council enacted the first city-level minimum wage in Colorado, establishing a wage floor of $12.85 effective January 1, 2020. Denver’s minimum wage will rise to $15.87 in 2022 and be automatically adjusted for inflation each year thereafter.
Table 1
In addition to the increases taking effect with the new year, three other states—Connecticut, Nevada, and Oregon—and the District of Columbia have minimum wage increases scheduled to occur later in 2020. This means that half of all states in the country are raising pay for their lowest-paid workers, while half have chosen to let their minimum wages erode.
As more states pursue higher minimum wages, some members of Congress are following their lead. In July, 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. EPI estimates that the bill would lift pay for over 33 million workers; however, the U.S. Senate has not taken up the bill for debate. The longer that Congress waits to approve any federal increase, the more the value of the federal minimum wage erodes as prices rise. Since the federal minimum wage was last raised in July, 2009, the minimum wage’s buying power has declined by 17 percent.
By neglecting to update wage standards, lawmakers in the U.S. Senate and in the 25 states without minimum wage changes are doing a disservice to their constituents. Research shows that wage growth for low-wage workers has been markedly faster in states that have raised their minimums, particularly for women. Moreover, as minimum wages sit unchanged, the buying power of a minimum wage paycheck declines, which can lead many workers and their families to rely on public assistance programs in order to make ends meet. 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 in some states to continue to deny higher pay to millions of the country’s lowest-paid workers.
i. This includes New York, where the minimum wage changes take effect on December 31.
ii. For example, New York’s state minimum wage law establishes three different minimum wages: one for New York City, another for Nassau, Suffolk, and Westchester counties, and one for the remaining upstate counties. These estimates account for these increases. However, they do not account for impacts resulting from cities and counties establishing their own minimum wages higher than the state minimum wage, such as in St. Paul, MN or Seattle, WA.
Source: EPI 12.18.2019