Workers in 20 countries will receive a salary increase on January 1 when the minimum wage rises, thanks to cost-of-living adjustments and other scheduled increases. Later in the year, four more states and Washington, DC will increase their base salaries, meaning low-wage workers in nearly half of the country could see higher salaries next year.
The salary increases come because the federal minimum wage, which has not risen for more than 11 years, stands at $ 7.25 per hour – the longest time the base wage has gone without an increase since it began in 1938. time workers are struggling across the country amid an economic recession caused by the coronavirus pandemic, which continues to spread relentlessly.
A higher minimum wage can help workers regain their financial position, especially so-called essential workers, such as groceries and medical assistants, whose jobs have rocked the economy during the crisis, but with the lowest earnings. Critics claim that higher minimum wages could hurt the labor market by creating job losses, but recent economic research has not yet found support for this. Advocates say rather that a higher minimum wage helps the economy by pocketing more money from workers who tend to spend it on local businesses and services.
Wage increases in 2021 ‘are an indication that people understand how much the federal minimum wage of $ 7.25 keeps people in poverty,’ says Holly Sklar, CEO of Business for a Fair Minimum Wage, a network of business- owners and organizations campaigning for a higher minimum wage.
Sklar added: “Consumer spending is driving our economy, and raising the minimum wage is a powerful way to boost the economy.”
Some businesses believe that higher wages will pay off in the long run by reducing turnover and creating higher job satisfaction.
“The direct cost of turnover is obvious – recruitment, interviewing, training,” Kelly Vlahakis-Hanks, CEO of ECOS, which manufactures organic cleaning products, told CBS MoneyWatch. “The indirect cost is less obvious, but it’s significant, and I think it’s underestimated.”
After her company raised its starting salary to $ 17 per hour in 2014, its voluntary turnover decreased by 50% from 3% to 1.5%. “We have employees who have been with our company for 20, even 30 years,” Vlahakis-Hanks added.
Lost purchasing power
Since the last federal minimum wage increase – to $ 7.25 per hour, as of July 24, 2009 – the cost of living has risen by more than 20%, while the price of necessities such as housing and health care has risen even faster. This has caused financial pain for many low-paid workers, who are increasingly paying a larger share of their income on housing and other expenses.
About half of all tenants are ‘cost burdens’, meaning they pay more than 30% of their housing income, according to Harvard’s Joint Center for Housing Studies. After paying their rent, people earning less than $ 15,000 a year left about $ 410 a month for food, transportation, health care and other necessities, the study noted.
The minimum wage ‘arose to help us recover from the Great Depression’, Sklar noted. “It has a dual purpose: to alleviate poverty for workers and promote consumer spending.”
Which states will increase the minimum wage in 2021?
According to the National Federation of Independent Businesses, a trading group, Michigan will keep its minimum wage at $ 9.65 on January 1st. This is due to a law banning wage increases if the state’s annual unemployment rate for the preceding calendar year is higher than 8.5%.
By October, the state’s unemployment rate averaged 10.2%, meaning it was unlikely to fall below 8.5% before the end of the year, the trade group noted. Otherwise, Michigan would have raised its minimum wage to $ 9.87.
Below are the names and new salary rates of states that will increase their minimum wage in 2021:
- Alaska, up to $ 10.34 per hour on January 1
- Arizona, January 1 at $ 12.15 per hour
- Arkansas, up to $ 11 per hour on January 1
- California, up to $ 14 on January 1
- Colorado, on January 1 to $ 12.32
- Connecticut, on August 1 to $ 13
- Florida, on January 1 to $ 8.65
- Illinois, January 1 to $ 11
- Maine, up to $ 12.15
- Maryland, on Jan. 1 to $ 11.75
- Massachusetts, up to $ 13.50 on January 1
- Minnesota, up to $ 10.08 for employers with an annual gross income of at least $ 500,000 and $ 8.21 for employers with less than $ 500,000, on January 1
- Missouri, up to $ 10.30 on January 1st
- Montana, Jan. 1 at $ 8.75
- Nevada, on July 1, either $ 8.75 or $ 9.75, with the higher rate that applies to employers who do not offer health insurance to workers.
- New Jersey, January 1 to $ 12
- New Mexico, January 1 to $ 10.50
- New York, on December 31, 2020 to $ 12.50, while Long Island and Westchester will rise to $ 14 on December 31, 2020.
- Ohio, January 1 to $ 8.80
- Oregon, on July 1 to $ 12, although it will rise to $ 13.25 for the Portland region and to $ 11.50 in non-urban counties.
- South Dakota, January 1 to $ 9.45
- Vermont, on Jan. 1 at $ 11.75
- Virginia, May 1 $ 9.50
- Washington, January 1 to $ 13.69
- Washington, DC will raise its minimum wage by $ 15 per hour in July to accommodate the change in the cost of living for the previous 12 months