On January 1, 2024, the Minimum wage is set to increase and take effect in 22 states. For example, Washington already has the highest state-level rate in 2023 and plans to raise its minimum wage from $15.74 to $16.28 in January. Meanwhile, Florida's rate is set to increase from $12 to $13 in September.
What's Driving the Hikes?
Various factors drive these increases, provided the unemployment rate stays below 8.5% the preceding year and is adjusted based on inflation in other states.
Inflation started at 6.4% and has gradually decreased to 3.1% in November, peaking in July at a 22-year high, and continues to exceed the Federal Reserve's 2% goal, causing inflation as 22% of small business owners' top concern according to a National Federation of Independent Business survey.
According to economist Yelena Maleyev at KPMG, raising the minimum wage widely might increase consumer spending and contribute to the strong U.S. economic growth this year, but it's not a quick fix. She points out that lower-income workers have faced rising costs for food, shelter, and energy since the pandemic started, and their finances are still stretched, even with a salary increase. Maleyev mentions that while the wage increases will help cover expenses, factors like high interest rates, the resumption of student loan repayments, and persistently high prices will likely prevent a significant uptick in spending from this income group, unlike during the stimulus checks in the earlier Covid times.
These wage increases might create challenges for employers on the labor front. 8% of small-business owners consider labor costs their top concern, though this slightly decreased in November. While average hourly earnings have eased, a minimum wage hike could raise labor costs for certain workers and trigger wider company pay raises. It's uncertain how this will unfold; paying more may help employers find workers quickly, but it could also reduce profits unless the increased costs are passed on to consumers. While some companies may raise prices, others might consider investing in labor-saving technologies like robotics or artificial intelligence. Notably, the federal minimum wage of $7.25 per hour has remained the same in 20 states since 2009.
READ ALSO: Historic Wage Surge for November Hires, Suggesting a Tight Labor Market According to N.Y. Fed Report
States Raising the Minimum Wage in 2024
Below are the states that are raising their minimum wages in 2024. Most states will implement the baseline wage increase in January, while Florida, Nevada, and Oregon will implement it later in 2024.
Alaska: $11.73
Arizona: $14.35
California: $16
Colorado: $14.42
Connecticut: $15.69
Delaware: $13.25
Florida: $13
Hawaii: $14
Illinois: $14
Maine: $14.15
Maryland: $15
Michigan: $10.33
Minnesota: $10.85 for large employers and $8.85 for small employers
Missouri: $12.30
Montana: $10.30
Nebraska: $12
Nevada: $12
New Jersey: $15.13
New York: $15 (except for New York City, Westchester, and Long Island -- $16)
Ohio: $10.45
Oregon: $14.20, plus inflation adjustment on July 1
Rhode Island: $14
South Dakota: $11.20
Vermont: $13.67
Washington: $16.28
