Minimum wage increases in 2020

As of Jan 1. 2020, over half of the US working force is enjoying higher minimum wages. While some remain unchanged, many states and municipalities have raised their minimum wage to as high as $15 per hour. The states that saw the highest increase were Illinois, New Mexico, Washington and New Jersey.

Now, across the country, the average minimum wage is $11.80. According to The New York Times, this year marks the highest minimum wages in US history, even after adjusting for inflation.

Here is some helpful information about the recent changes:

21 states are increasing their minimum wage

The average cost of living is gradually climbing. In response, states like Florida, Arizona and Montana have increased the required minimum wage for businesses under the Fair Labor Standards Act.

Workers in certain states will experience a bigger change than others. For example, the governments of New Mexico and Illinois raised their states' minimum wages by over 15%. Meanwhile, Oregon, Colorado and California saw a 10% – 15% increase. On the lowest end of the spectrum, the raise in Alaska, Florida, South Dakota and several others stayed under 5%.      

Some of the states that did not make any changes to their minimum wage include Texas, North Dakota, Georgia, Idaho, Wyoming, Pennsylvania and Kansas.

The federal minimum wage may increase as well

The federal minimum wage has been $7.25 an hour since 2009. This most directly applies to businesses in states that don't have a set minimum wage, so they defer to the federal government when it comes to paying their employees fairly. These states are:

  • Utah
  • Oklahoma
  • Louisiana
  • Mississippi
  • Alabama
  • Tennessee
  • Virginia
  • South Carolina

This last summer, the House of Representatives passed a bill to bring the federal minimum wage up to $15 by 2025. But until this bill gets approved by the Senate, the federal minimum wage will remain the same.

For the time being, certain states have taken matters into their own hands. Connecticut, for example, recently passed legislation to raise their minimum wage little by little each year, so that by 2023, they'll have reached the goal of $15 an hour.    

While raising the minimum wage appears to be beneficial, organizations have mixed opinions about it.

Not everyone is happy about the increase

A handful of conservative business groups, such as the National Restaurant Association, the National Federation of Independent Businesses and the National Retail Federation are opposed to the notion of doubling the federal minimum wage in the next five years. In fact, many members of these organizations immediately responded to the house's new bill with emails and phone calls, expressing concerns that the increase will result in the crippling of small businesses. These groups argue that, in an attempt to help hourly workers, the democrats who are putting this bill forward will actually do more harm than good.

According to the National Restaurant Association, raising the minimum wage will create less job opportunities in certain communities that their industry exists in. For instance, a restaurant manager might be less likely to hire new servers if they have to pay them $15 an hour. This might cause unemployed individuals, particularly those with fewer skills, to have a much harder time finding work than they do now.

Now that the minimum wage is at an all-time high, it'll be interesting to see what happens to unemployment in the next several years, especially among areas like Washington D.C., where it's already jumped up to $15 an hour. If those states on the higher end of the spectrum don't see a hike in unemployment, perhaps that'll provide enough motivation for the Senate to approve the House's recent bill.

Interested in learning about how these changes might affect your business? Connect with us at Triton today!

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