States Increase Minimum Wage in 2021

Jan 11, 2021Financial Literacy, News

With the start of 2021, twenty states have increased their minimum hourly wage, which supporters say will aid in poverty reduction and offer essential pay increases for low-income, poverty workers. They will also help many frontline workers during the COVID-19 pandemic. 

“Minimum wage increases income levels, reduces poverty, so I think it’s pretty clear that it improves conditions in the lower end of the wage distribution,” Daniel Kuehn, a research associate at the Urban Institute, told The Hill

As the largest jump, New Mexico added $1.50 to its hourly wage, bringing it to $10.50. Arkansas, California, Illinois, and New Jersey each raised their minimum wages by $1. Changes in several other states are scheduled to take effect on July 1.

In addition to statewide raises, individual localities are also boosting their minimum wages. Burlingame, California and Flagstaff, Arizona are both increasing their wages from $13 to $15 an hour. In some areas, the increases are dependent on business size. Kuehn stated that varying wages allows governments to factor in cost-of-living conditions.

While the federal minimum wage has been at $7.25 since 2009, the goal of a $15/hr wage has recently become a standard progressive policy. In July 2019, House Democrats passed a bill that would slowly raise the federal minimum wage to $15 through 2025, but it was never taken up by the Senate.

“The basic premise is that anybody in this country working a single full-time job should be bringing home enough money to sustain themselves and then some,” said Jon Ossoff, the Democratic candidate who recently defeated incumbent Senator David Purdue in Georgia’s runoff elections last week.

Some argue that minimum wage increases could slow job growth and raise labor costs, especially during the COVID-19 economic crisis. Michael Saltsman, managing director at the Employment Policy Institute, asserted that boosting anti-poverty programs, like the Earned Income Tax Credit, would be more beneficial than increased wages, because it shifts the responsibility from businesses to taxpayers.

However, Kuehn noted that there is little research that suggests that minimum wage increases have major effects on employment and employers. “It certainly doesn’t make businesses’ lives easier, but businesses aren’t struggling right now because of wage costs. They’re hurting because of the pandemic,” he said.

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