These states will increase their minimal wages in 2023
Labor activists hold a rally in support of a $15 national minimum wage on May 19, 2021 in Washington, DC
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As the calendar moves toward 2023, workers in more than half of all states have something to look forward to this year: a higher minimum wage.
This comes as the federal minimum wage is $7.25 an hour — the same rate since 2009.
But many states and cities have introduced their own rates, and most of them are poised to increase them in the new year.
A total of 26 states have announced that higher minimum wages will be introduced during 2023, with another state expected to see an adjustment in July, according to research by payroll experts at Wolters Kluwer Legal & Regulatory US
Meanwhile, 23 states and Washington, DC will introduce higher minimum wages on January 1, according to the Economic Policy Institute. These increases, which range from 23 cents to $1.50 an hour, will affect 8 million workers.
According to Wolters Kluwer, Washington is the state willing to pay the highest minimum wage rate at $15.74 an hour.
Workers under the age of 16 in this state will be paid $13.38 an hour, or 85% of the adult minimum wage, starting in 2023.
The minimum wage in Washington, DC will be $16.10 an hour.
Washington, DC and 13 states tie their minimum wages to the consumer price index, a state measure of the average change consumers pay for specific goods and services.
“There are some states across the country that are going to see pretty big jumps in the minimum wage over the past year due to higher inflation rates,” said Deirdre Kennedy, senior payroll analyst at Wolters Kluwer.
Other states will continue to introduce legislated increases. States not seeing minimum wage increases in 2023 still tie their base wage to the federal rate of $7.25 an hour.
How the federal minimum wage will affect workers
President Joe Biden has campaigned to raise the federal minimum wage to $15 an hour. He signed an executive order in 2022 raising it to that level for federal employees and contractors.
But a broader change to $15 an hour nationally would have to come through Congress. Efforts to raise the rate nationally failed to make it into the 2021 Covid-19 relief legislation.
“As the gap between that and the federal minimum wage widens, it will be interesting to see if that can provide more impetus for more states to increase their wages, or try to get more momentum at the federal level,” Werner said. Research Associate at the Income and Benefits Policy Center at the Urban Institute.
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Raising the national minimum wage to $15 an hour would affect 56 million workers, according to a report by the Urban Institute released in September.
The study modeled possible outcomes where a new $15 minimum wage resulted in either no job losses and two different scenarios in which prolonged job losses occurred.
“Even in our highest job loss scenario, we found that the average worker was better off on average, and overall poverty was down,” Werner said.
“Although some individual people who lost their jobs may have been worse off, the net effect was still positive,” he said.
There are a few states across the country that will see pretty big jumps in the minimum wage over the past year due to higher inflation rates.
Senior Payroll Analyst at Wolters Kluwer Legal & Regulatory US
According to Werner, the majority of workers who would be affected by a $15 minimum wage are over the age of 25. About a third are the sole breadwinners of their families.
Workers who depend on the minimum wage are also far more likely to be people of color and live in poverty. Consequently, raising the minimum wage nationally would help vulnerable people, Werner said.
Raising minimum wages can also help boost consumer demand and get money flowing into local economies, said Holly Sklar, CEO of Business for a Fair Minimum Wage, a national network of business organizations, owners and executives campaigning for higher minimum wages insert.
“Putting needed raises in the pockets of minimum-wage workers [is] really the most efficient way to boost the economy,” Sklar said. “These are the people who have to go right back around and spend it.”
With federal action to raise the minimum wage uncertain, some big-name companies have already taken action to raise their wage rates.
Costco has raised its minimum wage for US shop workers to $16 an hour, while Goal, Amazon and Walmart have all taken to paying hourly workers $15 an hour.
As the economy has opened up further following the Covid shutdown, competition for workers has prompted employers to offer higher wages and entry-level bonuses for workers at the lower end of the income spectrum, Werner noted.
“It’s giving low-income workers more leverage than before,” he said.