On January 1, minimum hourly wages increased in 13 states, bringing the total number of states with higher minimum wages than required by the federal government to 21.
The federal minimum wage, last increased in July 2009, stands at $7.25 per hour.
Connecticut, New Jersey, New York, and Rhode Island passed laws in 2013 that called for the raise in the minimum wage to go into effect New Year’s Day. The additional nine states—Arizona, Colorado, Florida, Missouri, Montana, Ohio, Oregon, Vermont, and Washington—upped their minimum wages to comply with state laws requiring automatic annual cost of living increases. California will also increase its hourly minimum wage, slated to go into effect July 2014.
“All our employees make more than the minimum wage,” notes Jack Palladino, owner of Christopher’s, a casual pub in Huntington, New York that serves lunch and dinner along with drawing a big bar crowd. “However, minimum wages were traditionally meant for entry-level jobs for teenagers. It’s what you got for your first job and you worked your way up from there. It wasn’t meant to support a family of four. Increasing the minimum wage drives up costs, and eliminates jobs for entry-level workers. The money has to be up made somewhere.”
New Jersey workers are seeing the biggest bump, with minimum wages increasing $1 per hour to $8.25, a 13.79 percent jump. According to the National Employment Law Project, 11.5 percent of the state’s workforce are benefiting from the increase.
Colorado, New York, and Rhode Island boosted their minimum wage to $8.00, hourly increases of 22 cents, 75 cents, and 25 cents, respectively. Connecticut increased its hourly minimum by 45 cents, to $8.70. The remaining states hourly increases were 15 cents or less.
The state with the highest minimum wage in the U.S. is Washington, which increased its hourly minimum wage by 13 cents to $9.32. In November 2013, voters in the city of SeaTac, located just south of Seattle, passed a measure giving hospitality and car rental workers at the Seattle-Tacoma airport a $15 per hour minimum wage rate. However, on December 27, days before the new wage was to go into effect, a King County Superior Judge struck down the measure for the majority of the airport workers, stating that the airport is under the jurisdiction of the Port of Seattle. The measure’s proponents have filed an appeal.
San Francisco and San Jose increased their city’s minimum wage to $10.79 per hour and $10.15 per hour, respectively, in accordance with city statutes requiring annual inflation increases.
According to the National Restaurant Association, increases in the hourly minimum wage will have a negative impact on the restaurant industry, citing what happened in Oregon and Washington as cautionary tales.
Between 1996 and 2011, the number of eating and drinking establishments in Oregon jumped 42 percent, compared to a 27 percent gain in total U.S. establishments during the same period. Job growth lagged, however, with an increase of only 19 percent, compared to a U.S. total gain of 28 percent. In 2011, Oregon’s restaurants employed an average of 13.8 workers, down from 16.4 in 1996, before the state’s minimum wage began rising above the federal level, reports the NRA. In comparison, all restaurants in the U.S. employed an average of 16.9 workers in 2011, unchanged from the 1996 level.
Washington’s restaurant industry experienced a similar turn of events, notes the NRA. Between 1998 and 2011, eating and drinking establishments increased 28 percent. However, job growth during that time-frame increased 13 percent, compared to a 23 percent gain in total U.S. jobs for eating and beverage places during the same period, again due in large part to the state minimum wage. By 2011, Washington’s restaurants employed an average of 13.8 workers, or 1.9 fewer employees than they did before the state’s minimum wage began rising above the federal level.
Meanwhile, additional states and cities are expected to approve minimum wage increases throughout 2014. Legislators introduced proposals in Massachusetts, New Hampshire, Delaware, Maryland, Minnesota, and Hawaii, while efforts to place minimum wage increases on the November 2014 ballot are underway in South Dakota, Alaska, New Mexico, Idaho, Arkansas, and the District of Columbia. In Seattle and Chicago, local governments are exploring the impact of citywide minimum wage increases.
The federal government is also looking to raise the country’s minimum wage to $10.10 per hour, and to include annual adjustments to keep pace with the cost of living. The Fair Minimum Wage Act of 2013, supported by President Obama and introduced in the U.S. Senate and House of Representatives in 2013, would also gradually raise the minimum wage for tipped workers from its rate of $2.13 per hour to 70 percent of the full minimum wage.