Twenty states are raising their minimum wages – some by pennies, others by a dollar or more – as part of previously planned efforts to adjust to cost-of-living gains or to meet goals such as a minimum wage of $ 15 an hour. .
In New Mexico, the minimum wage will increase to $ 10.50, an increase of $ 1.50 from the current wage of $ 9. And in California, the rate for employers with 26 employees or more will increase from $ 13 to $ 14. per hour, the highest national baseline in the country. In Minnesota, the profit is only 8 cents, at an hourly rate of $ 10.08 for large employers. (To scroll down to see a full list of the changes).
The federal minimum wage of $ 7.25 an hour has not dropped since 2009, and as of 2021, 20 U.S. states will continue to have a minimum wage equal to or below the federal level, making this their default baseline. The value of the federal minimum wage peaked in 1968 when it reached $ 1.60, which would be worth about $ 12 in 2020 dollars.
While some of the new state increases were in effect years earlier, they now have additional significance, as low-paid workers were hit particularly hard by the coronavirus pandemic.
“We have many low-paid service workers working through the Covid crisis, many of whom are in jobs with a greater risk of transmission,” said Ken Jacobs, chair of the Center for Labor Research and Education at the University of California-Berkeley. “This will be a very welcome boost for them. Moreover, many families are currently struggling in this crisis.”
Workers’ needs are greater during an economic downturn because, with so many unemployed people, they have little bargaining power and employers can keep wages low, said Ben Zipperer, an economist at the Economic Policy Institute, a progressive think tank.
According to federal data, minimum-wage workers are typically younger and primarily have jobs in the leisure and hospitality sectors. These service companies have been shaken during the pandemic as public health and security measures have led to restaurants, hotels and entertainment facilities being closed.
As the pandemic has continued, housing and food insecurity have increased and incomes have declined. And it is workers with lower wages who are the victims of the economic consequences.
Business interests are declining
At the same time, some legislators and business organizations have called for an interruption of planned minimum wage increases, citing the burden on small businesses already struggling.
In New York, members of the Senate Republican Conference had urged Governor Andrew Cuomo to halt the planned increases that would take effect Thursday.
“We don’t want our small businesses to make the difficult choice of firing employees or closing their doors as this will be the last straw in the financial vulnerability of the pandemic,” said Senate Republican leader Rob Ortt in a statement. statement in early December.
Cuomo’s government later released a report concluding that the state’s labor market recovery “is unlikely to be substantially harmed” by minimum wage increases, and that the pace and distribution of vaccines are likely to have a much greater impact on the labor market.
“New York is rolling out the minimum wage gradually over many years, not all at once,” Evercore ISI economist Ernie Tedeschi told CNN Business via email. “In addition, and this is the most important point, the schedule for minimum wage increases in New York has been known for years, and companies have been planning and expecting the increases all along.”
Starting Thursday, the state’s hourly minimum wage will be increased by 70 cents to $ 12.50 an hour. The minimum wage in the Long Island and Westchester County suburbs will also increase from $ 13 an hour to $ 14 an hour. (The minimum was already set at $ 15 in New York City).
Some states will have to wait
In Michigan, the pandemic is likely to weaken efforts to raise the state’s minimum wage. There, a state law prohibits scheduled minimum wage increases when the state’s annual unemployment rate exceeds 8.5%.
While the unemployment rate has recently improved in Michigan, it averaged 10.2% from January to October, so it is “highly unlikely” that the annual average falls below the 8.5% threshold, the state’s Bureau of Employment Relations said in a press release. The state’s minimum wage remains at $ 9.65 versus $ 9.87.
For the 20 states that will raise their minimum wages, the effects should ultimately be more positive than negative, EPI’s Zipperer said.
“Redistributing money to the lowest paid workers is a smart policy because they will spend it,” he said. “This will help with the consumer demand deficit that our economy is currently facing.”
And public support appears to be increasing for minimum wage increases. On election day, Florida voters passed a measure to raise the state’s minimum wage to $ 15 an hour by 2026 – up from $ 8.56 this year. A Public Agenda / USA Today / Ipsos poll published in September found that public support for a federal minimum wage hike was on the rise.
Most minimum wage increases have occurred at the state, city, or corporate level and include companies such as Target and Amazon paying $ 15 an hour.
President-elect Joe Biden wants to raise the federal minimum wage to $ 15 an hour, but it is unlikely he will receive filibuster-proof support in the Senate for that. However, he was able to raise the minimum wage to $ 15 an hour for federal contractors through an executive order.
