In kicking off the New Year, Washington has become the first state with a minimum wage of more than $9 an hour, as it joined seven other states in similar measures that index their minimum wage rates to inflation. Including workers in all industries, Washington’s minimum wage increased 37 cents to a record high of $9.04 an hour (the rate for workers who are 14 or 15 years old is $7.68), which went into effect the first day of the New Year.
According to data from the Census Bureau, more than a million low-wage U.S. workers will see their hourly wages rise, including workers in Arizona, Colorado, Florida, Montana, Ohio, Oregon, Vermont, and Washington. Based on a typical 2,000-hour work year, the wage hike will generate annual salaries for minimum-wage workers of between $15,280 and $18,080, depending on the state.
A total of 10 states currently tie their minimum wage to inflation, eight of which made adjustments for an effective date of January 1; Missouri opted to wait on a rate change and Nevada plans to make adjustments later this year. The increases per state range from $0.28 an hour in Colorado to $0.37 in Washington, and new minimum wages in the eight states now range between $7.65 and $9.04 an hour.
Nearly one-fifth of those “directly affected” by the new provisions reside in Washington State, according to data from the Economic Policy Institute (EPI), a liberal-leaning research group based in Washington, D.C. Additionally, nearly 400,000 workers will be “indirectly affected” by the increase — meaning, those whose current wages are slightly above the new minimum — and will potentially see a wage increase due to employers adjusting their overall pay structures.
“Some people look at these numbers and say, ‘How much of a difference can an extra 37 cents an hour make?’” asserted Doug Hall, director of the EPI’s Economic Analysis and Research Network. “But the truth is that for folks who are making that small an amount of money, it makes a lot of difference.” For instance, Hall notes, in Florida, the 36-cent-per-hour hike means an extra $720 a year in pretax compensation, much of which will remain untouched by the government if workers claim the earned income tax credit.
Supporters of the new labor stipulations argue that the states’ measures bolster the ranks of the working poor in an economy where nearly one-in-six citizens live below the poverty line. Moreover, proponents contend that a “fair” minimum wage preserves the buying power of vulnerable workers, particularly women and minority groups. According to EPI’s analysis, more than half of the workers who will benefit from the new wage increases will be women, some of whom are raising children on their own.
While proponents of the minimum wage hail the new rates, many critics say mandated base wages only worsen to the plight of the working poor, because regulatory labor controls oftentimes inhibit job creation, especially jobs that do not demand much experience or specialization. “Higher minimum wages reduce demand for less skilled employees,” stated Michael Saltsman, a fellow at the Employment Policies Institute, a conservative research organization.