Thanks to the adjustment of the cost of living and the increase in other plans, when the minimum wage increases, workers in 20 states in the United States will receive a raise on January 1. Later this year, the other four states and Washington, D.C. will raise their base salaries, which means that almost half of the nation’s low-wage workers may see higher salaries next year.
At the time of the salary increase, the federal minimum wage has not risen for more than 11 years, and it is still trapped at the minimum wage of $7.25 per hour-the longest span that the baseline wage has not increased since 1938. At that time, during the economic recession caused by the coronavirus pandemic, workers across the country were struggling, and the pandemic continued to spread.
A higher minimum wage can help those workers recover their financial health, especially so-called basic workers such as grocery store clerks and home health assistants. Their jobs help the economy to prosper in the crisis, but their income is at the lowest level. Critics claim that a higher minimum wage may hurt the labor market by inhibiting job creation, but recent economic research has not found a means to support this claim. Proponents say that instead, a higher minimum wage helps the economy by putting more money into the pockets of workers who tend to use it for local businesses and services.
Holly Sklar, CEO of a fair minimum wage advocated by a network of business owners and organizations, said that the wage increase in 2021
Sklar added: “Consumer spending drives our economy, and raising the minimum wage is a powerful way to promote economic development.”
Some companies say that higher wages can provide long-term returns by reducing turnover and increasing job satisfaction.
“The direct costs of turnover are obvious-recruitment, interviews, training,” Kelly Vlahakis-Hanks, CEO of ECOS, which produces eco-cleaning products, told CBS MoneyWatch. “Indirect costs are not so obvious, but they are considerable. I think this is underestimated.”
She pointed out that after her company raised its starting salary to $17 per hour in 2014, its voluntary turnover fell from 3% to 50% to 1.5%. Vlahakis-Hanks added: “We have employees who have worked in our company for 20 or even 30 years.”
Lose purchasing power
Since the last federal minimum wage increase (to $7.25 per hour since July 24, 2009), the cost of living has risen by more than 20%, while the prices of necessities such as housing and healthcare have risen even faster. This has caused economic pain for many low-wage workers, who increasingly spend a large part of their income on housing and other expenses.
According to the Harvard Joint Center for Housing Research, about half of tenants “pay the cost,” which means they spend more than 30% of their income on housing. The study pointed out that after paying rent, people with an annual income of less than $15,000 are left with about $410 a month for food, transportation, health care and other necessities.
Scola pointed out that the minimum wage is “to help us recover from the Great Depression.” “It has a dual purpose: to reduce worker poverty and increase consumer spending.”
Which states are raising the minimum wage in 2021?
The National Federation of Independent Businesses, a trade organization, predicts that Michigan will maintain its minimum wage at $9.65 on January 1. This is because there is a law that prohibits the state from raising wages if the annual unemployment rate in the previous calendar year was higher than 8.5%.
The trade organization pointed out that by October, the state’s unemployment rate averaged 10.2%, which means that it is unlikely to fall below 8.5% before the end of the year. Otherwise, Michigan will raise its minimum wage to $9.87.
The following are the names and new wage rates of states that will raise the minimum wage in 2021:
- Alaska, reaching $10.34 per hour on January 1
- Arizona, $12.15 per hour on January 1
- Arkansas, reduced to $11 per hour on January 1
- California, rose to $14 on January 1
- Colorado, rose to $12.32 on January 1
- Connecticut, dropped to $13 on August 1
- Florida, rose to $8.65 on January 1
- Illinois, rose to $11 on January 1
- Maine, to $12.15
- Maryland, rose to $11.75 on January 1
- Massachusetts, rose to $13.50 on January 1
- In Minnesota, employers with an annual gross income of at least US$500,000 on January 1st are $10.08, and employers with an annual income of less than US$500,000 are $8.21
- Missouri, rose to $10.30 on January 1
- Montana, rose to $8.75 on January 1
- Nevada, which rose to $8.75 or $9.75 on July 1, effective for employers who do not provide workers with medical insurance
- New Jersey, rose to $12 on January 1
- New Mexico, rose to $10.50 on January 1
- New York State will increase to $12.50 on December 31, 2020, while Long Island and Westchester will increase to $14 on December 31, 2020
- Ohio, reached $8.80 on January 1
- In Oregon, it rose to $12 on July 1, but it rose to $13.25 in the Portland area and $11.50 in non-urban counties.
- South Dakota, rose to $9.45 on January 1
- Vermont, rose to $11.75 on January 1
- Virginia, fell to $9.50 on May 1
- Washington State, rose to $13.69 on January 1
- Washington, DC will raise its minimum wage of $15 an hour in July to accommodate changes in the cost of living in the past 12 months