Minimum Wages to Rise in 20 States on New Year’s Day

The minimum wage will rise in almost half of U.S. states Jan. 1 after local governments helped the lowest earners while efforts to approve a nationwide boost languish in Congress.

Twenty states from Hawaii to Connecticut will see increases in minimum hourly pay after voters approved ballot measures and legislatures enacted laws, according to the National Conference of State Legislatures. In nine of the states, the lowest pay will rise because of indexing to inflation.

“We’ll continue to see more action at the state level and at the local level,” said Ken Jacobs, chairman of the Center for Labor Research and Education at the University of California at Berkeley. “It is a very politically popular measure and so we would expect in 2016 that we should see more minimum-wage ballot initiatives.”

President Barack Obama has urged Congress to raise the federal minimum to $10.10 from $7.25 as the gap between the nation’s rich and poor widens. Republicans in Congress, who have blocked repeated attempts to advance such legislation, will likely stymie the issue when they take control in January.

While states have pressed onward, “it would sure help if Congress went ahead and did it as well,” Obama said in an October speech in Princeton, Indiana. “The states that have raised the minimum wage have had faster job growth than the states that haven’t.”

Winning Issue

As of Jan. 1, 29 states and the District of Columbia will have minimum wages above the federal level, which hasn’t risen since 2009, according to NCSL. Washington will be the state with the highest minimum, which will rise to $9.47.

Increases have been popular with voters. Since 1998, every statewide ballot measure to raise the minimum wage has passed, according to the NCSL. In November, voters in Alaska, Arkansas, Nebraska and South Dakota approved measures.

“Minimum wage is a cyclical issue,” said Jeanne Mejeur, a program principal at NCSL. “When the federal minimum wage has been stagnant for several years, states get involved.”

U.S. cities have also pressed ahead, with San Francisco and Seattle this year approving gradual increases to $15 and Chicago’s City Council this month agreeing to boost the minimum to $13 an hour by 2019, at the urging of Democratic Mayor Rahm Emanuel, Obama’s former chief of staff. In Los Angeles, Mayor Eric Garcetti’s proposal to boost the minimum wage to $13.25 an hour by 2017 is pending in the city council.

Difficult Decisions

Michelle Flores of San Francisco earns the minimum of $10.74 an hour working about 24 hours a week as a grocery store cashier.

“It is very, very hard to make a living here in the city,” she said. “Everything is so inflated because of several factors in the economy, like the tech industry moving into San Francisco.”

Flores, a 20-year-old junior studying labor relations and public policy at San Francisco State University, said she often has to consider whether to pay the round-trip bus fare to work.

“At the end of the day, $4.50 will make the difference between riding your bike or having milk at your house for cereal or breakfast,” she said.

With the 2015 increases, about 60 percent of U.S. workers will be covered by minimum-wage laws that are higher than the federal level, said David Cooper, senior economic analyst at the Washington-based Economic Policy Institute.

“We’re going to reach a point where the federal minimum wage is only applying to a handful of states,” Cooper said. “At that point, the members of Congress in those states would be hard-pressed to think that they should leave their workers behind.”

Bottom Lines

Retailers and restaurants say the increases lead to higher labor costs, forcing them to reduce hiring.

Labor expenses represent a third of a restaurant’s operations, with food and business costs composing the rest, said Scott DeFife, executive vice president for policy and government affairs at the National Restaurant Association, a Washington-based trade group.

“Significant, large and sudden increases do inhibit hiring,” DeFife said in a telephone interview. “Margins are low. Most restaurants are running on 3 to 5 percent profit margins.”

The U.S. Labor Department has said a higher wage would benefit all. The minimum is worth 20 percent less than in the 1980s, the agency said Dec. 18.

“An increase would erase decades of decline in the buying power of the minimum wage and 28 million Americans would receive a much-needed boost,” according to a blog on the department’s website. “Businesses would benefit, too, as these workers spend their extra earnings on goods and services.”

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