Laborers in these particular regions have received a salary increase.
Laborers in these particular regions have received a salary increase.
Daily minimum wages escalated in 21 states yesterday, aimed at matching the ascending cost of living or achieving targets such as a $15 per hour minimum wage. The increases, ranging from 18 cents to $1.75 (looking at you, Delaware), are projected to influence over 9.2 million employees, uplifting their income collectively by $5.7 billion, according to the Economic Policy Institute.
In addition, around 40 urban areas and municipalities (mainly in California, Colorado, and Washington) escalated their minimum wages above their respective state benchmarks, as per EPI.
Sebastian Martinez Hickey, a state economic analyst for EPI, stated in a recent blog post that these additional earnings are vital for preserving workers' purchasing power amid inflation, yet the minimum wage might still be insufficient, especially if it hasn't been revised for years.
The inflation and the subsequent economic recovery further amplified the income gap between the rich and the poor. Consequently, labor activism has surged — together with campaigns for a $17 federal minimum wage.
The federal minimum wage remains stagnant at $7.25 per hour, an unchanged rate since 2009. Currently, 20 US states follow the federal minimum wage or blame below it, with Alabama, Louisiana, Mississippi, Oklahoma, and Tennessee failing to establish any wage threshold.
Although legislative attempts to boost the federal minimum wage faced setbacks, this past year witnessed the most significant minimum wage increase in recent American history on the state level.
California brought forth a sectoral minimum wage increment for fast-food workers on April 1, 2024, escalating their base wage by $4 to $20 per hour.
Consequently, there was pushback against the steep rise, shared with minimum wage hikes, alleging that the increases would lead to fewer jobs, increased prices, and business closures.
Preliminary research from Harvard University and the University of California Berkeley pointed out that the legislation positively impacted workers' welfare, with minimal adverse effects on employment, hours, and benefits.
Regardless, some restaurants have ceased operations or prompted increased use of technology and kiosks in their establishments. Data from the federal government indicates that job growth in limited-service restaurants in California has remained sluggish in recent months; however, growth in this sector has also waned nationally amidst a broader slowdown in hiring across the labor market.
As research on the California law proceeds, a recent survey from the University of Michigan found that minimum wage increases generally favor lower-wage workers with minimal negative consequences for independent businesses. These typically smaller and more fragile businesses offset the wage hikes with higher wages and enhanced productivity, as per findings by Nirupama Rao, an assistant professor of business administration, and co-author Max Risch.
“The outcry over the minimum wage is often exaggerated compared to the actual economic impact on the broad economy,” Rao told CNN. “Businesses counterbalance [minimum wage increases] with new revenues, but workers gain significantly larger incomes.”
And for these workers, wage enhancements can have a profound effect.
“We discover that earnings surge substantially four years after the minimum wage increase: The typical low-wage worker in a state that raised the minimum wage earns around $1,500 more annually compared to a similar worker in a state that didn't change the minimum wage,” she said. “This, without a doubt, is a considerable adjustment in earnings for a minimum wage worker.”
The increased minimum wages in various states are seen as essential for maintaining workers' purchasing power in the face of inflation, according to Sebastian Martinez Hickey. Amidst the economic recovery and inflation, businesses are facing pressure to revise their minimum wages, with some arguing that higher wages could lead to increased costs and potential job losses.