Portside

On January 1, 22 states will increase their minimum wages, raising pay for an estimated 9.9 million workers. In total, workers will receive $6.95 billion in additional wages from state minimum wage increases. In addition, 38 cities and counties will increase their minimum wages on January 1 above their state’s wage floors, adding to the number of workers likely to see increased earnings. In the absence of federal action, states and localities continue to take the lead in advancing fairer wage floors via legislation, ballot measures, and automatic inflation adjustments.

The minimum wage continues to be a vital policy for creating a more equitable economy. According to our analysis:

• Women make up more than half (57.9%) of workers getting an increase on January 1.
• The minimum wage increases will also disproportionately benefit Black and Hispanic workers. Black workers make up 9.0% of the wage-earning workforce in the states with increases, but are 11.1% of the affected workers. Similarly, Hispanic workers are 19.6% of the workforce in these states, but 37.9% of the workers receiving wage increases.
• These increases will also bring important benefits to working families. More than a quarter (25.8%) of affected workers are parents, or more than 2.5 million people. In total, 5.6 million children live in households where an individual will receive a minimum wage increase.
• The increases will provide critical support to workers and families in need. Almost one in five (19.7%) workers getting a raise have incomes below the poverty line, and nearly half (47.4%) have incomes below twice the poverty line.
• More than half (51%) of workers getting minimum wage increases are in California, Hawaii, and New York, all high cost-of-living states.

As Figure A and Table 1 show, the size of wage increases varies widely across states. Hawaii is the state with the largest increase, growing by $2.00 to $14.00 an hour, which translates to a $1,380 boost in annual wages for the average full-time, year-round affected worker (see Table 2). Michigan is the state with the smallest increase, going from $10.10 to $10.33—which translates to an additional $216 annually for the average full-time worker. However, a case before the Michigan Supreme Court could decide that Michigan low-wage workers are entitled to a more significant increase.

In January, the minimum wages in Maryland, New Jersey, and upstate New York will reach or exceed $15 an hour for the first time, joining California, Connecticut, Massachusetts, Washington, and the rest of New York as states at or above $15 an hour.1 There are also seven more states that have passed legislation or ballot measures to reach or surpass $15 an hour in the coming years (Delaware, Florida, Hawaii, Illinois, Nebraska, Rhode Island, and Virginia). Washington state will have the highest state minimum wage at the beginning of the year as it increases from $15.74 to $16.28 due to an inflation adjustment.

Despite continued progress by many states across the country to increase their wage floors, there are still 17.6 million workers earning less than $15 an hour. Almost half of workers (47.8%) earning less than $15 an hour are in one of the 20 states that still uses the federal minimum wage of $7.25 an hour.

It’s important to note that fewer workers are directly affected by minimum wage increases because the tight post-pandemic labor market has led to the strongest wage growth for low-wage workers in decades, even after accounting for rising prices. Low unemployment has meant that employers have had to pay higher wages to attract and retain workers. Nevertheless, higher state minimum wages are still important for securing the gains low-wage workers are attaining during this remarkable period of wage growth. Minimum wage increases are also vital to many workers who are more vulnerable to exploitation, whether it’s because of immigration status, disability, or place of work.

Although inflation has decreased greatly in the last year, price increases since 2020 have eroded the purchasing power of the federal minimum wage and the minimum wages of the 21 states that have made no adjustments to their state minimums.2 For instance, the federal minimum wage of $7.25 had the same purchasing power in February 2020 as $8.61 in November 2023. Many states have minimum wage policies that proactively address this issue by indexing their wage floors to price increases. Twelve of the 22 states with increases on January 1 automatically adjust their minimum wage for inflation every year.

Lawmakers in some states that recently passed minimum wage legislation are recognizing that inflation has eaten into the value of the targets they had previously set. Maryland lawmakers passed legislation in 2019 setting the state on the path to $15 an hour, but this year chose to accelerate the increase by a year. Meanwhile, New York state, which implemented legislation in 2016 to reach $15 an hour, passed a new policy that will see New York City, Long Island, and Westchester County increase their minimum wages to $17 an hour in 2026. The remainder of the state will increase to $16 an hour during the same period. As in Maryland and New York, federal minimum wage advocates are adjusting their targets to compensate for increases in the cost of living in the last few years. The latest federal minimum wage bill targets $17 an hour by 2028, a recognition that $15 an hour will no longer meet the needs of low-wage workers.

Inflation adjustments are also relevant for local minimum wages, where the majority of increases are due to automatic adjustments. Table 3 shows that 35 cities and counties are making inflation adjustments to their minimum wages, mostly in California. Tukwila, WA, will have the highest minimum wage in the country in 2024 at $20.29 an hour. Localities are carrying the baton on minimum wage policy in other ways as well. Chicago passed an ordinance to phase out the harmful subminimum wage for tipped workers by 2028. Chicago joins seven states3, the District of Columbia, and Flagstaff, AZ, as jurisdictions that have or will eliminate this carve-out that allows employers of tipped workers to pay as little as $2.13 per hour.

Also of note is Boulder County, CO, which this year passed an ordinance increasing the minimum wage to $25 an hour by 2030. Advocates targeted this level due to research on the “self-sufficiency standard” in the county, an estimate of the income necessary for a family to cover its basic needs. According to EPI’s Family Budget Calculator, a two-parent, two-child household in Boulder County needs $108,881 a year to cover a modest living standard. This translates to roughly $26 an hour if both adults are working full time, underscoring how difficult it is for low-wage workers to find a way to live sustainably. A $25 minimum wage might seem high, but the truth is that Boulder County is unlikely to be the highest minimum wage in the country in 2030 because of steps other localities have taken to index their minimum wages to inflation. Strong minimum wage policy can only benefit localities seeking a thriving and equitable local economy.

The minimum wage continues to be a powerful tool for fostering economic equity and ensuring a dignified standard of living for workers across the nation. The proactive steps many states and localities took to index their minimum wages to inflation has helped protect the purchasing power of low-wage workers during the recent period of inflation. However, policy reforms are still necessary to overcome federal inaction and the persistence of unjust minimum wage carve-outs like the tipped minimum wage.