Minimum Wage Increase in U.S. States

Millions of workers nationwide could be in line for a pay hike next year, with half of U.S. states planning to boost their minimum wages in 2024.

The increases will boost the baseline pay to at least $16 an hour in three states: California, New York and Washington. In 22 states, the new minimum wages will take effect on January 1. However, Nevada and Oregon's new rates will go into effect on July 1, while Florida's will increase on September 30.

By contrast, workers in 20 states will still be subject to the federal minimum wage, which has stood at $7.25 an hour since 2009, when it was last increased.

Raising the minimum wage could benefit low-wage workers at a time when many continue to struggle with higher costs due to inflation, even as it cools rapidly after hitting a 40-year high in 2022. Although price hikes are easing, the cost of groceries, rent, and other goods and services remains higher than prior to the pandemic.

About 1 in 4 U.S. workers earned less than $15 an hour in 2021, according to the Center for American Progress, a liberal think tank. People of color and women are overrepresented among those low-wage workers, it added.

Minimum Wage Increases Benefit Workers and Economy

According to Holly Sklar, CEO of Business for a Fair Minimum Wage, increasing the minimum wage is not only beneficial for workers but also for the overall economy. Sklar, who leads a group advocating for higher baseline wages, stated that low-wage workers who receive pay hikes contribute to consumer spending, which businesses rely on. She emphasized the importance of state increases in wages, as the federal minimum wage of $7.25 an hour continues to fall behind the cost of living.

Federal minimum wage in 2024

The recent increases in minimum wage create a larger gap between states that are raising their minimum wages and those that still rely on the federal baseline pay. In fact, workers in California, Connecticut, Maryland, New Jersey, New York, and Washington will now have guaranteed baseline pay that is more than twice the federal minimum wage.

Furthermore, some cities will also increase their minimum wage above the statewide level. For example, Denver will raise the city's minimum wage to $18.29 an hour starting on January 1, 2024, surpassing Colorado's rate of $14.42 an hour. However, there are still 20 states primarily located in the South and Midwest where the baseline wage remains at $7.25 an hour.