The corks have been popped, the calendar pages turned and a day that promised fresh starts also brought with it some pay bumps for millions of Americans.
Hourly minimum wages increased in 21 states on Wednesday, as part of ongoing efforts to have pay keep up with the rising cost of living or to meet milestones such as a $15-an-hour minimum wage. The increases — which range from 18 cents to $1.75 (hello, Delaware) — are expected to affect more than 9.2 million workers, raising their pay by a combined $5.7 billion, according to the Economic Policy Institute.
Additionally, about four dozen cities and municipalities (mostly in California, Colorado and Washington) hiked their minimum wages further above their respective state floors, according to EPI.
“These additional earnings are critical for ensuring workers don’t lose ground due to rising prices, but the minimum wage level may still be too low, especially if the minimum wage was indexed years ago and not revisited since,” Sebastian Martinez Hickey, a state economic analyst for the EPI, wrote in a recent blog post on the topic.
And that’s especially true after a period of rampant inflation that caused the cost of living to soar even higher.
The pandemic and the economic recovery that followed further exacerbated the chasm between the haves and the have-nots. In turn, labor movement activity has swelled — as have pushes for a $17 federal minimum wage.
The federal minimum wage continues to sit at $7.25 an hour, a rate that hasn’t budged since 2009. As of now, 20 US states have a minimum wage at or below the federal level, with a handful — Alabama, Louisiana, Mississippi, Oklahoma and Tennessee — not adopting any type of wage floor.
While congressional efforts to hike the federal minimum wage stalled out, this past year did see the largest-ever minimum wage increase in recent US history on the state level.
California, on April 1, 2024, implemented a sectoral minimum wage hike for fast food workers in the state, raising their base pay by $4 to $20 an hour.
And with the sharp increase came some vocal pushback often seen with minimum wage hikes and claims that increases would result in fewer jobs, higher prices and business closures.
Some of the early-stage research from Harvard University and the University of California Berkeley showed that the new law benefited workers’ well-being while having minimal negative effects on staffing, hours and benefits.
Still, some restaurants have announced closures or further accelerated the use of technology and kiosks in their restaurants. Federal data shows that job growth in limited-service restaurants in California has been fairly flat in recent months; however, growth in that sector has also dropped off nationally amid a broader slowdown in hiring across the labor market.
While research related to the California law will remain ongoing, a recent study from the University of Michigan found that minimum wage hikes generally benefit lower-wage workers with minimal impacts to independent businesses. Those typically smaller (and often more vulnerable businesses) were found to offset the wage increases with higher wages as well as higher levels of productivity, according to findings from Nirupama Rao, assistant professor of business administration, and co-author Max Risch.
“The hue and cry over the minimum wage is often disproportionate to the actual economic impact — in terms of how the economy broadly is impacted,” Rao told CNN. “Firms offset [minimum wage increases] with new revenues, but workers get substantially larger incomes.”
And, for those workers, wage boosts can have an immeasurable effect.
“What we find is that earnings go up significantly four years after the minimum wage increase: The typical low-earning workers are earning roughly $1,500 more per year than a similar worker in a state that did not change the minimum wage,” she said. “This goes without saying but $1,500 to a minimum wage worker is a very large change in their earnings.”
