Millions of low-wage workers all around the country got a welcome gift for the new year: an increase in the minimum wage.
On the first day of January, 23 states and Washington, D.C., increased their minimum wages — the result of specific laws and ballot referendums mandating the change or increases sparked by the rise in the cost of living. But it’s a different story at the federal level, where the minimum wage of of $7.25 has not changed for more than a decade.
A federal minimum wage increase has been just out of reach for years thanks to the 60-vote hurdle in the U.S. Senate and large-scale Republican opposition. Both Barack Obama and President Biden have called for minimum wage hikes, and a few Republicans have put forward proposals as well. These efforts have been foiled by Senate rules mandating they reach a 60-vote threshold and then by opposition from Republicans and some conservative Democrats
That leaves states and localities. These state minimum wage increases are spotty — some states forgo any increases — and are sometimes a patchwork across states. Sometimes states take into account economic disparities either within a state or among different types of businesses when deciding how to implement a higher minimum wage. At the state level, they’re increased by legislators, voters, or statutory adjustments. But that patchwork has one common thread: The minimum wage across the country is rising.
In some cases, there are phase-ins and adjustments for the higher minimum wages. In California, the minimum wage was lower for smaller businesses from 2017 to 2022. In New York, the minimum wage is $14.20 for workers outside the expensive New York City area as opposed to $15 for workers in the metropolitan area. States sometimes do this in order to allay concerns from employers in low-wage regions of a state who claim that a higher minimum wage would stymie hiring. In more than a dozen cities in California, cities chose to increase the minimum wage of their own volition; sometimes that happens in wealthy and more liberal parts of a state.
The movement to increase minimum wage — what works and where
These state-level increases are the fruit of labor groups organizing and campaigning to get laws enacted that raise the minimum wage, often with the shared goal of reaching a $15 minimum wage across the country as well as automatic increases designed to keep up with inflation.
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The movement to raise the minimum wage has embraced a variety of strategies. The most effective strategy in conservative-leaning states has been ballot measures. Missouri, Nebraska, and Florida, for example, are very heavily red states that have recently increased their minimum wages thanks to ballot measures.
The largest increase this year was in Nebraska, where the minimum wage jumped from $9 to $10.50 per hour thanks to a ballot initiative passed with support of a coalition of progressive groups, including labor unions. The measures stipulate that the wage will continue to increase annually until it hits $15 in 2026, after which workers are guaranteed inflation-adjusted increases.
In more liberal states, advocates for a higher minimum wage get a friendlier hearing in state legislatures. In 2016, California passed a $15 minimum wage that will have gone into full effect only this year. The new minimum of $15.50 puts the state’s minimum wage up by just over a third in seven years. California’s increase came through a combination of legislation and adjusting for inflation. The Economic Policy Institute estimates that 3.2 million workers in California, almost a fifth of the state’s workforce, will see an increase in their wages, making up over a third of all workers nationally who will be affected by hikes in the minimum wage this year.
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Who benefits the most from wage hikes?
Thanks to inflation and a smaller workforce than before covid, paychecks have been rising, putting many workers above not just the federal minimum wage but the $15 wage that labor and progressive groups have campaigned for at both the state and federal level.
Workers at the bottom of the wage scale have seen faster growth, according to the Federal Reserve Bank of Atlanta, with the lowest paid quarter of workers seeing their wages go up by 7 percent in the last year. Walmart, which has over 1.5 million employees in the United States, raised its lowest wage to $12 an hour last year, while Amazon has a $15 minimum wage and frequently pays more in its warehouses. According to the Bureau of Labor Statistics, average hourly earnings have risen 4.6 percent in the last year to almost $33.
The forces pushing up statutory minimum wages and the wages actually paid by employers are the same. Following covid, there’s been both an extreme level of worker displacement and price inflation. When a large number of workers are changing jobs, they can bargain for the higher wages they need to help keep up with the rising cost of living.
“It is a good thing that in the last two years we’ve seen large wage growth for workers in the bottom of the wage distribution; it’s wage growth we haven’t seen for more than a generation,” EPI’s Sebastian Hickey told Grid. “Twenty-two million workers are paid less than $15 per hour and there was nowhere in the country where a single adult could live and afford basic expenses at $15 an hour.”
Thanks to Dave Tepps for copy editing this article.
