With the federal minimum wage of $7.25 an hour (unchanged for 13 years and counting), states across the country continue to take matters into their own hands.
The latest to join the party is Nebraska, where voters approved an initiative in the November election to gradually increase the minimum wage there to $15 an hour by 2026. The first step in that state’s process takes effect in just a few days. with a push for corn shellers. at $10.50 per hour on January 1.
Nebraska joins 27 states plus Washington, DC, which also have increases scheduled for 2023 as part of initiatives to increase their minimum wages passed in recent years. As 2023 begins, low-wage workers living in remote states like Alaska, Illinois, Delaware, and New Mexico and more will see an increase.
The increases are the fruit of years of efforts by activists, and one group, called Business for a Fair Minimum Wage, argues that the increases also make business sense by boosting consumer spending and improving employee morale.
“To me, these employees are an asset and an investment in our business,” said Dave Titterington, owner of Nebraska poultry supply stores and a coalition member. The group noted that over 300 Nebraska businesses joined their effort this year.
Titterington added during a Yahoo Finance Live interview on Tuesday that she has consistently paid above minimum wage in her business and “our retention rate is extremely high,” which, she said, more than makes up for the increased payroll costs.
In total, Delaware, Illinois, Maryland, Massachusetts, Michigan, Missouri, Nebraska, New Jersey, New Mexico, New York, Rhode Island, and Virginia all have minimum wage increases scheduled for December 31 or January 1.
The states are joined by Alaska, Arizona, California, Colorado, Maine, Minnesota, Montana, Ohio, South Dakota, Vermont and Washington state, whose annual cost-of-living adjustments will take effect on January 1, 2023.
Four more states and the District of Columbia have increases scheduled for the end of 2023, according to Business for a Fair Minimal Wage.
Changes that ‘will bite hard in certain industries’
The mosaic of efforts has many detractors. Critics have long argued that these increases actually hurt the very workers they purport to help because they often cause companies to find ways to simply eliminate minimum wage jobs instead of paying more per hour.
A 2019 Congressional Budget Office report found that a national minimum wage of $15 an hour would increase the wages of 17 million people, but would also cause about 1.3 million people to lose their jobs.
“We are realizing that there are many other ways that companies can adapt,” said Ryan Bourne of the Cato Institute, noting growing evidence that employers often cut benefits or unpaid benefits when these new laws come in. in force and increase wages.
But even for some critics of minimum wage laws such as Bournethe current piecemeal system might be a preferable outcome to Washington’s action.
“To the extent that we’re going to have minimum wage laws, it makes more economic sense for them to be set relatively locally,” he said, quickly adding that increases in Nebraska and other states “will hit certain industries hard,” as fast foods and amusement parks.
Changes that may ‘force small business owners to reevaluate their business’
But even as some states continue to climb, a swath of others have not, creating vastly different environments for low-wage workers depending on where they live.
For one, a dozen states, including Nebraska, have passed laws instituting a $15-per-hour minimum wage over the next few years. On the other hand, 20 states maintain the federal minimum wage of $7.25 per hour.
The $15 hourly wage has long been an important symbolic line for activists. And while that doesn’t seem likely to happen at the federal level any time soon, there are three states (Massachusetts, California, and Washington state) that will have minimum wages above that level by 2023. There are also a large number of cities and countiesincluding the District of Columbia, which have passed their own minimum wage increases above $15 per hour.
In general, states and cities with a higher cost of living have led the way in minimum wages, which many say is more reflective of local conditions.
In Nebraska, Titterington acknowledged that looming wage increases in his state may “force small business owners to reevaluate their businesses,” but he hopes companies will opt to pay higher wages.
Happier employees, he said, “are one of our best forms of advertising.”
Ben Werschkul is a Washington correspondent for Yahoo Finance.