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Minimum wage: The start of a new year brought word that the minimum wage for employees will increase.
Since the federal minimum wage has remained at $7.25 per hour since 2009, workers in more than half of all states have been demanding higher pay for years.
Although some states and towns have set their own rates in the past, several are currently planning to raise the wage in 2023.
26 states declared they would increase their minimum wages this year.
Wolters Kluwer Legal & Regulatory US payroll analysts say that in July, one more state will join the adjustment.
According to the Economics Policy Institute, the higher salaries would be implemented on January 1 in 23 states, including Washington, DC.
It will have an impact on 8 million workers.
The price increases will be between 23 cents to $1.50.
The major decision was made as households were struggling to keep up with soaring costs last summer, when inflation reached a 40-year high.
Research assistant at EPI Sebastian Martinez Hickey said:
“The fact that there’s high inflation really just underscores how necessary these minimum wage increases are for workers.”
“Even before the pandemic, there was no country in the United States where you could affordably live as a single adult at $15 an hour.”
The pandemic and the subsequent economic recovery period made clear the wealth gap in America is.
Working conditions and low pay have sparked labor movements and large firms’ efforts to raise the minimum wage over the past two years.
The pandemic also caused a persistent imbalance between the supply and demand for workers.
Employers struggled to find and keep employees for the most of the year due to a staffing shortage, driving up average annual hourly pay.
The majority of compensation was outpaced by rising costs, despite the fact that workers in competitive industries found their new wages to be higher than inflation.
Michael Reich, a professor of economics at the University of California, said:
“The story is different because wages have been increasing at the low-end, much faster than inflation and much faster than in middle- or high-wage jobs.”
“And that means that many workers, even in the $7.25 states, are already getting paid above the minimum wage.”
“Even though the minimum wage might go up by 7% in many states and cities, labor costs aren’t going to go up anywhere as much as they have in the past,” Reich added.
“Because they have already gone up. That also means that prices aren’t going to go up at [places like] restaurants.”
US President Joe Biden held campaigns to increase the minimum wage to $15 per hour.
He issued an executive order in 2022 that increased the pay for federal employees and contractors to that amount.
A significant national change would need to be approved by Congress, however.
Raising the rate was attempted, but it was not included in the 2021 Covid-19 relief legislation.
Kevin Werner, a research associate at the Urban Institute’s Income and Benefits Policy Center, said:
“As the gap between that and the federal minimum wage increases, it will be interesting to see if that can kind of spur more momentum for more states to increase their wages or try to get more momentum on the federal level.”
56 million workers would be impacted by the $15 per hour pay change, according to a September report from the Urban Institute.
The study simulated situations in which the new minimum wage resulted in either no job losses or two scenarios in which there were additional employment losses.
“Even in our highest job loss scenario, we still found that on average, the average worker was better off, and that poverty declined overall,” said Werner.
“Even though some individual people who lost their jobs may have been worse off, the net effect was still positive.”
The majority of employees impacted by a $15 minimum wage, according to Kevin Werner, are older than 25.
People of color and those in poverty are more likely to depend on the minimum wage.
Werner added that increasing the minimum wage nationwide would benefit those who are struggling.
According to Holly Sklar, CEO of Business for a Fair Minimum Wage, boosting the minimum wage can also spur demand from consumers.
Local economy will be able to rebound as a result.
“Putting needed raises in minimum wage workers’ pockets [is] really the most efficient way you can boost the economy,” said Sklar.
“Those are the people who have to go right back around and spend it.”
States implementing the minimum wage increase
- Delaware: $10.50 – $11.75
- Illinois: $12 – $13
- Maryland: $12.50 – $13.25
- Massachusetts: $14.25 – $15
- Michigan: $9.87 – $10.10
- Missouri: $11.15 – $12
- Nebraska: $9 – $10.50
- New Jersey: $13 – $14.13 (includes inflation adjustment)
- New York: $13.20 – $15 (in and around the city), $14.20 (upstate New York)
- Rhode Island: $12.25 – $13
- Virginia: $11 – $12
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States that will implement the increase later this year
- Connecticut: $14 – $15 (July 1 implementation)
- Florida: $11 – $12 (September)
- Nevada: $9.50 – $10.25 (firms with benefits), $10.50 – $11.25 (firms without benefits)
- Oregon: $13.50 (July 1 implementation)