Workers in 20 states will receive a pay rise on January 1, when the minimum wage rises, due to cost-of-living adjustments and other scheduled increases. Later this year, four other states and Washington, DC, will increase their basic wages, which means low-wage workers in nearly half of the country could see higher wages next year.
Wage increases come as the federal minimum wage, which has not risen for more than 11 years, remains clogged at $ 7.25 an hour – the longest basic wage gap has passed without an increase since it began in 1938. At the same time, workers across the country are struggling amid an economic downturn caused by the coronavirus pandemic, which continues to spread unabated.
A higher minimum wage could help those workers regain their financial status, especially so-called essential workers, such as food officials and home health workers, whose jobs have helped keep the economy buzzing. during the crisis, but with its gains among the lowest. Critics argue that higher minimum wages can affect the labor market by creating depressing jobs – however, recent economic research has not found support for this demand. Instead, supporters say a higher minimum wage helps the economy by putting more money in the pockets of workers who tend to spend on local businesses and services.
Wage increases in 2021 “are an indication that people understand how much the federal federal wage maintains at $ 7.25,” said Holly Sklar, CEO of Business for a Fair Minimum Wage, a network of business owners and organizations advocating for a higher minimum wage.
Sklar added: “Consumer spending is driving our economy, and raising the minimum wage is a powerful way to stimulate the economy.”
Some companies say that higher salaries are paid in the long run by lowering turnover and creating greater job satisfaction.
“The direct costs of turnover are obvious – recruitment, interviews, training,” Kelly Vlahakis-Hanks, CEO of ECOS, which produces environmentally friendly cleaning products, told CBS MoneyWatch. “Indirect costs are less obvious, but they are significant and I think they are very underestimated.”
After her company increased its starting salary to $ 17 an hour in 2014, its voluntary turnover fell by 50% from 3% to 1.5%, she said. “We have employees who have been with our company for 20, even 30 years,” Vlahakis-Hanks added.
Lost purchasing power
Since the last federal minimum wage increase – to $ 7.25 per hour since July 24, 2009 – the cost of living has risen by more than 20%, while the price of essentials, such as housing and health care, has risen and faster. This has created financial pain for many low-wage workers, who are increasingly paying a larger share of their earnings for housing and other expenses.
About half of all tenants are “burdened,” which means they pay more than 30 percent of their housing income, according to the Harvard Joint Center for Housing Studies. After paying their rent, people earning less than $ 15,000 a year are left with about $ 410 a month in food, transportation, health care and other essentials, the study said.
The minimum wage “appeared to help us recover from the Great Depression,” Sklar said. “It has a dual purpose: to alleviate poverty for workers and increase consumer spending.”
Which states increase the minimum wage in 2021?
Michigan is expected to keep its minimum wage at $ 9.65 on January 1, according to the National Federation of Independent Affairs, a trade group. This is due to a law banning wage increases if the annual state unemployment rate for the previous calendar year is higher than 8.5%.
Until October, the unemployment rate in the state averaged 10.2%, which means it is unlikely to fall below 8.5% before the end of the year, the trade group said. Otherwise, Michigan would have increased its minimum wage to $ 9.87.
Below are the names and new pay rates of states that increase their minimum wage in 2021:
- Alaska, at $ 10.34 per hour on January 1st
- Arizona, at $ 12.15 per hour on January 1st
- Arkansas, at $ 11 an hour on January 1st
- California, at $ 14 on January 1st
- Colorado, at $ 12.32 on January 1st
- Connecticut, for $ 13 on August 1st
- Florida, at $ 8.65 on January 1st
- Illinois, at $ 11 on January 1st
- Tomorrow, up to $ 12.15
- Maryland, at $ 11.75 on January 1st
- Massachusetts, at $ 13.50 on January 1st
- Minnesota, at $ 10.08 for employers with an annual gross income of at least $ 500,000 and $ 8.21 for employers with less than $ 500,000, on January 1
- Missouri, at $ 10.30 on January 1st
- Montana, at $ 8.75 on January 1st
- Nevada, at $ 8.75 or $ 9.75 on July 1, with the highest effective rate for employers who do not provide health insurance to workers
- New Jersey, at $ 12 on January 1st
- New Mexico, for $ 10.50 on January 1st
- New York State at $ 12.50 on December 31, 2020, while Long Island and Westchester will increase to $ 14 on December 31, 2020
- Ohio, at $ 8.80 on January 1st
- Oregon, at $ 12 on July 1, although it will increase to $ 13.25 for the Portland region and to $ 11.50 in non-urban counties
- South Dakota at $ 9.45 on January 1st
- Vermont, at $ 11.75 on January 1st
- Virginia, at $ 9.50 on May 1st
- Washington State, at $ 13.69 on January 1
- Washington, DC to raise minimum wage by $ 15 an hour in July to adjust to changing cost of living in 12 months