Posted December 21, 2023 - Economic Policy Institute
by Sebastian Martinez Hickey
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:
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『hich 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.
Figure A
Twenty-two states will increase their minimum wages on January 1: 2024 minimum wage increase, type of increase, number of affected workers, and wage impacts by state
State 2024 minimum wage 2024 tipped minimum wage Type of change Type of change indicator Size of increase Size of tipped minimum wage increase Number of workers affected Share of workforce affected Total increase in wage bill Change in full-time worker average annual wages Alabama Alaska $11.73 Inflation adjustment 1 $0.88 17,900 5.7% $13,212,000 $740 Arizona $14.35 $11.35 Inflation adjustment 1 $0.50 $0.50 535,000 17.0% $263,417,000 $492 Arkansas California $16.00 Inflation adjustment 1 $0.50 3,224,900 19.5% $2,100,910,000 $651 Colorado $14.42 $11.40 Inflation adjustment 1 $0.77 $0.77 307,400 11.4% $202,878,000 $660 Connecticut $15.69 $6.38 Inflation adjustment 1 $0.69 $0.00 256,800 16.5% $196,869,000 $805 Delaware $13.25 $2.23 Legislation 2 $1.50 $0.00 62,400 14.4% $77,912,000 $1,335 Washington D.C. Florida Georgia Hawaii $14.00 $12.75 Legislation 2 $2.00 $1.75 128,600 21.8% $177,449,000 $1,380 Idaho Illinois $14.00 $8.40 Legislation 2 $1.00 $0.60 734,800 13.4% $465,125,000 $633 Indiana Iowa Kansas Kentucky Louisiana Maine $14.15 $7.08 Inflation adjustment 1 $0.35 $0.18 83,100 15.2% $26,386,000 $318 Maryland $15.00 $3.63 Legislation 2 $1.75 $0.00 341,100 13.2% $413,929,000 $1,284 Massachusetts Michigan $10.33 $3.93 Legislation 2 $0.23 $0.09 260,800 6.1% $56,308,000 $216 Minnesota $10.85 Inflation adjustment 1 $0.26 70,800 2.7% $17,168,000 $243 Mississippi Missouri $12.30 $6.15 Ballot measure 3 $0.30 $0.15 345,100 12.4% $131,668,000 $381 Montana $10.30 Inflation adjustment 1 $0.35 36,400 7.8% $12,379,000 $340 Nebraska $12.00 $2.13 Ballot measure 3 $1.50 $0.00 91,000 9.5% $80,498,000 $933 Nevada New Hampshire New Jersey $15.13 $5.26 Legislation 2 $1.00 $0.00 749,500 19.1% $720,676,000 $1,019 New Mexico New York $15.00 $10.00 Legislation 2 $0.80 $0.55 1,717,600 19.8% $1,508,038,000 $878 North Carolina North Dakota Ohio $10.45 $5.25 Inflation adjustment 1 $0.35 $0.20 388,800 7.6% $117,061,000 $301 Oklahoma Oregon Pennsylvania Rhode Island $14.00 $3.89 Legislation 2 $1.00 $0.00 48,800 10.2% $31,447,000 $703 South Carolina South Dakota $11.20 $5.60 Inflation adjustment 1 $0.40 $0.20 38,300 9.1% $13,147,000 $343 Tennessee Texas Utah Vermont $13.67 $6.84 Inflation adjustment 1 $0.49 $0.25 30,400 10.3% $14,400,000 $473 Virginia Washington $16.28 Inflation adjustment 1 $0.54 453,300 13.2% $313,697,000 $692 West Virginia Wisconsin Wyoming Notes: “Legislation” indicates that the new rate was established by the legislature. “Ballot measure” indicates the new rate was set by a ballot initiative passed by voters. “Inflation adjustment” indicates that the new rate was established by a formula, reflecting the change in prices over the preceding year. New York's minimum wage value only reflects minimum for upstate New York. See Table 1 for New York City and Suffolk, Nassau, and Westchester minimum wage. Average annual wage increases are for full-time workers.
Source: EPI compilation of minimum wage data from state agency websites and state legislation. Estimated impacts produced by Economic Policy Institute Minimum Wage Simulation Model; see Technical Methodology by Dave Cooper, Zane Mokhiber, and Ben Zipperer.
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.
Table 1
23 states increased their minimum wages in late 2023 and January 1, 2024: 2023 and 2024 minimum wages, size of increase, and type of increase by state
State 2023 minimum wage 2023 tipped minimum wage 2024 minimum wage 2024 tipped minimum wage Minimum wage increase Tipped minimum wage increase Type of increase January 1 increases Alaska $10.85 – $11.73 – $0.88 – Inflation adjustment Arizona $13.85 $10.85 $14.35 $11.35 $0.50 $0.50 Inflation adjustment California $15.50 – $16.00 – $0.50 – Inflation adjustment Colorado $13.65 $10.63 $14.42 $11.40 $0.77 $0.77 Inflation adjustment Connecticut $15.00 $6.38 $15.69 $6.38 $0.69 $0.00 Inflation adjustment Delaware $11.75 $2.23 $13.25 $2.23 $1.50 $0.00 Legislation Hawaii $12.00 $11.00 $14.00 $12.75 $2.00 $1.75 Legislation Illinois $13.00 $7.80 $14.00 $8.40 $1.00 $0.60 Legislation Maine $13.80 $6.90 $14.15 $7.08 $0.35 $0.18 Inflation adjustment Maryland $13.25 $3.63 $15.00 $3.63 $1.75 $0.00 Legislation Michigan $10.10 $3.84 $10.33 $3.93 $0.23 $0.09 Legislation Minnesota $10.59 – $10.85 – $0.26 – Inflation adjustment Missouri $12.00 $6.00 $12.30 $6.15 $0.30 $0.15 Ballot measure Montana $9.95 – $10.30 – $0.35 – Inflation adjustment Nebraska $10.50 $2.13 $12.00 $2.13 $1.50 $0.00 Ballot measure New Jersey $14.13 $5.26 $15.13 $5.26 $1.00 $0.00 Legislation New York (remainder of state) $14.20 $9.45 $15.00 $10.00 $0.80 $0.55 Legislation New York (NYC, Long Island, and Westchester) $15.00 $10.00 $16.00 $10.65 $1.00 $0.65 Legislation Ohio $10.10 $5.05 $10.45 $5.25 $0.35 $0.20 Inflation adjustment Rhode Island $13.00 $3.89 $14.00 $3.89 $1.00 $0.00 Legislation South Dakota $10.80 $5.40 $11.20 $5.60 $0.40 $0.20 Inflation adjustment Vermont $13.18 $6.59 $13.67 $6.84 $0.49 $0.25 Inflation adjustment Washington $15.74 – $16.28 – $0.54 – Inflation adjustment September 2023 increases Florida $11.00 $7.98 $12.00 $8.98 $1.00 $1.00 Ballot measure Notes: “Legislation” indicates that the new rate was established by the legislature. “Ballot measure” indicates the new rate was set by a ballot initiative passed by voters. “Inflation adjustment” indicates that the new rate was established by a formula, reflecting the change in prices over the preceding year. New York has separate minimum wages by region of the state.
Source: EPI compilation of minimum wage data from state agency websites and state legislation.
Table 2
More than 9.9 million workers will receive raises because of January 1 minimum wage increases: Number and share of workers affected, number and share of children affected, annual, hourly and total wage impacts by state
State Estimated affected workers Share of workforce affected Estimated number of children living in households affected by increase Share of children affected by increase Total increase in wage bill Average increase in annual earnings Average change in hourly wages Alaska 17,900 5.7% 13,100 7.1% $13,212,000 $740 $0.45 Arizona 535,000 17.0% 347,900 21.3% $263,417,000 $492 $0.30 California 3,224,900 19.5% 2,225,000 25.9% $2,100,910,000 $651 $0.38 Colorado 307,400 11.4% 156,800 14.4% $202,878,000 $660 $0.43 Connecticut 256,800 16.5% 144,600 19.5% $196,869,000 $805 $0.51 Delaware 62,400 14.4% 36600 18.0% $77,912,000 $1,335 $0.91 Hawaii 128,600 21.8% 86,500 28.4% $177,449,000 $1,380 $0.89 Illinois 734,800 13.4% 410,300 17.4% $465,125,000 $633 $0.41 Maine 83,100 15.2% 42,200 16.8% $26,386,000 $318 $0.21 Maryland 341,100 13.2% 211,600 15.8% $413,929,000 $1,284 $0.80 Michigan 260,800 6.1% 158,000 8.8% $56,308,000 $216 $0.16 Minnesota 70,800 2.7% 54,800 4.2% $17,168,000 $243 $0.19 Missouri 345,100 12.4% 223,900 16.2% $131,668,000 $381 $0.25 Montana 36,400 7.8% 24,200 10.6% $12,379,000 $340 $0.25 Nebraska 91,000 9.5% 71,500 15.1% $80,498,000 $933 $0.72 New Jersey 749,500 19.1% 427,800 21.8% $720,676,000 $1,019 $0.60 New York 1,717,600 19.8% 342,800 22.4% $1,508,038,000 $878 $0.52 Ohio 388,800 7.6% 269,200 11.7% $117,061,000 $301 $0.23 Rhode Island 48,800 10.2% 25,400 12.3% $31,447,000 $703 $0.50 South Dakota 38,300 9.1% 26,000 12.1% $13,147,000 $343 $0.25 Vermont 30,400 10.3% 14,200 12.2% $14,400,000 $473 $0.33 Washington 453,300 13.2% 285,500 17.4% $313,697,000 $692 $0.41 January increases total 9,922,600 14.7% 5,597,900 18.8% $6,954,573,000 $710 $0.43 September 2023 increases Florida 1,256,300 13.4% 632,200 16.2% $1,058,057,000 $842 $0.52 Notes: Average increase in annual earnings is for full-time workers.
Source: Economic Policy Institute Minimum Wage Simulation Model; see Technical Methodology by Dave Cooper, Zane Mokhiber, and Ben Zipperer.
Table 3
38 cities and counties will increase their minimum wages on January 1: Minimum wage increases, tipped minimum wage increases, and type of increase by locality
Locality State 2023 minimum 2024 minimum Regular increase 2023 tipped minimum 2024 tipped minimum Tipped increase Type of increase Flagstaff Arizona $16.80 $17.40 $0.60 $14.80 $15.90 $1.10 Inflation adjustment Belmont California $16.75 $17.35 $0.60 – – – Inflation adjustment Burlingame California $16.47 $17.03 $0.56 – – – Inflation adjustment Cupertino California $17.20 $17.75 $0.55 – – – Inflation adjustment Daly City California $16.07 $16.62 $0.55 – – – Inflation adjustment East Palo Alto California $16.50 $17.10 $0.60 – – – Inflation adjustment El Cerrito California $17.35 $17.92 $0.57 – – – Inflation adjustment Foster City California $16.50 $17.00 $0.50 – – – Inflation adjustment Half Moon Bay California $16.45 $17.01 $0.56 – – – Inflation adjustment Hayward California $16.34 $16.90 $0.56 – – – Inflation adjustment Los Altos California $17.20 $17.75 $0.55 – – – Inflation adjustment Menlo Park California $16.20 $16.70 $0.50 – – – Inflation adjustment Mountain View California $18.15 $18.75 $0.60 – – – Inflation adjustment Novato California $16.32 $16.86 $0.54 – – – Inflation adjustment Oakland California $15.97 $16.50 $0.53 – – – Inflation adjustment Palo Alto California $17.25 $17.80 $0.55 – – – Inflation adjustment Petaluma California $17.06 $17.45 $0.39 – – – Inflation adjustment Redwood City California $17.00 $17.70 $0.70 – – – Inflation adjustment Richmond California $16.17 $17.20 $1.03 – – – Inflation adjustment San Carlos California $16.32 $16.87 $0.55 – – – Inflation adjustment San Diego California $16.30 $16.85 $0.55 – – – Inflation adjustment San Jose California $17.00 $17.55 $0.55 – – – Inflation adjustment San Mateo California $16.75 $17.06 $0.31 – – – Inflation adjustment Santa Clara California $17.20 $17.75 $0.55 – – – Inflation adjustment Santa Rosa California $17.25 $17.45 $0.20 – – – Inflation adjustment Sonoma California $17.00 $17.60 $0.60 – – – Inflation adjustment South San Francisco California $16.70 $17.25 $0.55 – – – Inflation adjustment Sunnyvale California $17.95 $18.55 $0.60 – – – Inflation adjustment Boulder County Colorado $13.65 $15.69 $2.04 $10.63 $12.67 $2.04 County ordinance Denver Colorado $17.29 $18.29 $1.00 $14.27 $15.27 $1.00 Inflation adjustment Edgewater Colorado $13.65 $15.02 $1.37 $10.63 $12.00 $1.37 City ordinance Portland Maine $14.00 $15.00 $1.00 $7.00 $7.50 $0.50 Ballot measure Minneapolis Minnesota $15.19 $15.57 $0.38 $15.19 $15.57 $0.38 Inflation adjustment St. Paul Minnesota $15.19 $15.57 $0.38 $15.19 $15.57 $0.38 Inflation adjustment Las Cruces New Mexico $12.00 $12.36 $0.36 $4.78 $4.95 $0.17 Inflation adjustment SeaTac Washington $19.06 $19.71 $0.65 – – – Inflation adjustment Seattle Washington $18.69 $19.97 $1.28 – – – Inflation adjustment Tukwila Washington $18.99 $20.29 $1.30 – – – Inflation adjustment Note: “Ballot measure” indicates the new rate was set by a ballot initiative passed by voters. “City ordinance” indicates that the new rate was set by the city council. “Inflation adjustment” indicates that the new rate was established by a formula, reflecting the change in prices over the preceding year.
Source: EPI compilation of minimum wage data from state agency websites and state legislation.
Notes
1. The District of Columbia’s minimum wage is $17.00 an hour.
2. The 20 states using the federal minimum wage and West Virginia, which last increased its minimum wage to $8.75 in 2015.
3. Alaska, California, Minnesota, Montana, Nevada, Oregon, and Washington.