Over the past year, historically strong wage growth hasn’t kept pace with skyrocketing inflation, leaving millions of low- to middle-income Americans struggling to pay their bills.
Starting New Year’s Day, the lowest-paid workers will make up a good chunk of that lost ground.
Twenty-one states and 41 cities and counties are poised to raise their minimum wages on or about Jan. 1, according to a report provided exclusively to USA TODAY by the National Employment Law Project (NELP), a worker advocacy group.
Two states, Massachusetts and Washington, will reach a $15 hourly pay floor for the first time, joining California and much of New York.
Since some governments will act later in the year, a total 27 states and 59 cities and counties – a record 86 jurisdictions – will increase their base pay sometime in 2023, according to NELP.
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“The movement to raise wages continues to gain momentum,” said Yannet Lathrop, NELP’s senior researcher and policy analyst.
How does inflation affect the minimum wage?
Typically, the annual minimum wage hikes dole out the largest increases to workers in states or localities taking a step in a planned series of bumps over several years.
Other states nudge up their pay floors by small amounts, perhaps 20 cents to 50 cents an hour, because they’re indexed to annual inflation, which has averaged 1% to 2% for most of the past dozen years.
But inflation as measured by the Consumer Price Index (CPI) began to soar in spring 2021 as the U.S. economy reopened after the pandemic, reaching a 40-year high of 9.1% this past June before easing to a still elevated 7.1% in November.
As a result, many of the 11 states and 31 cities and counties enacting CPI-triggered minimum wage hikes around New Year’s Day will be handing workers significant pay increases.
The minimum wage will climb from $12.80 to $13.85 in Arizona; from $12.56 to $13.65 in Colorado; and from $12.75 to $13.80 in Maine, all gains of more than 8% based on the CPI increase in those regions.
In Seattle, base pay will jump from $17.27 to $18.69 for most workers, highest among localities, because of inflation indexing.
Rather than providing workers a financial windfall, the increases will simply allow them to keep up with surging prices, Lathrop says.
“It will help workers at least maintain a minimum living standard,” Lathrop says. “It will prevent people from having to make tough decisions,” such as whether to buy food or medicine.
Other states are providing a healthy raise as part of a several-step increase in the minimum wage. The pay floor will rise from $10.50 to $11.75 in Delaware; from $12 to $13 in Illinois; and from $11 to $12 in Virginia.
Nebraska, a Republican-controlled state, hasn’t lifted its minimum wage since 2014, Lathrop notes. But on New Year’s Day, the Cornhusker State will hike its base pay from $9 to $10.50 in the first of a series of steps that will bring it to $15 by 2026. Voters approved a ballot initiative last month.
Minimum wage in every state: Somewhere between $5.15 and $16 an hour: What is your state’s minimum wage?
What states have a $15 minimum wage?
More states are joining the rapidly spreading $15-an-hour club. On Jan. 1, pay floors will increase to $15 from $14.25 in Massachusetts and to $15.74 from $14.49 in Washington State. In July, Connecticut will expand the contingent to five states as its pay floor rises to $15 from $14.
By 2026, another eight states will join the $15 faction – Delaware, Florida, Illinois, Maryland, New Jersey, Rhode Island, Virginia and Nebraska. Hawaii will get there by 2028. That’s a total 14 states with about 41% of the U.S. workforce at or heading to $15 an hour.
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