Meanwhile, the federal minimum wage hasn’t increased since 2009.
In 2020, 6.8 million workers who earn minimum wage will see a little more money in their checks. According to the Economic Policy Institute (EPI), 22 states will increase their rates starting Jan. 1.
Raises range from a $0.10 inflation adjustment in Florida to a $1.50 increase in Washington and New Mexico.
“When you raise the minimum wage, what you’re doing is basically giving more money to people who are very likely to go out and spend those dollars right away,” EPI senior economic analyst David Cooper told COURIER. “That person is probably going to go out and spend that dollar in their local community. When you raise the minimum wage, it tends to lead to more customers for businesses.”
Meanwhile, the federal minimum wage has remained stagnant at $7.25 an hour since its last increase in 2009.
“I can’t imagine how difficult it is for someone to try to make ends meet making $7.25 an hour,” Cooper said. At that pay rate, he explained, an individual is only making about $15,000 a year. As a result, many low-wage earners are forced to rely on public assistance programs such as Medicaid, housing assistance, and food initiatives like SNAP.
“We know from various research and metrics on cost of living that there is not a single place in the country where you can afford a decent quality of life making only $15,000 a year,” Cooper said.
Since the 1990s, the pace of wage increases has slowed and wages themselves have stagnated.
That’s why many states (and other localities) have taken it upon themselves to provide better pay for their workers. According to the National Conference of State Legislatures, 18 states began 2019 with higher minimum wages than the year before.
One way leaders are addressing the minimum wage is through legislation. Michiganders, for example, will see their rate increase from $9.45 to $9.65 in 2020, thanks to the Workforce Opportunity Wage Act of 2018.
“When we pay a livable wage, we celebrate the dignity of work and we get people off government assistance,” said Rep. Christine Greig (D-MI) in a speech at the Michigan House of Representatives in December 2018. “It gives them hope and a path to a stable financial future.”
The increase in 2020 is expected to impact 147,000 workers in the state, and is the latest of four yearly raises that started in 2018.
“When you raise the minimum wage, what you’re doing is basically giving more money to people who are very likely to go out and spend those dollars right away.”
New Jersey and Illinois have also enacted legislation that will increase minimum wages gradually to $15 an hour by 2024 and 2025, respectively. Meanwhile, Connecticut jumped ahead of the pack by passing a law to bring its rate up to $15 an hour by 2023.
In the last several election cycles, voters have also increased wages through ballot measures—oftentimes in response to their state lawmakers’ inaction.
For instance, Arizona voters approved a measure back in 2016 that raises their minimum wage annually. By EPI’s estimates, the new minimum wage of $12 an hour in 2020 will affect well over 500,000 workers and provide an influx of $653,915,000 in annual wages.
Even though the increase is only a dollar more than what it was in 2019, Cooper said, the people who benefit from the raise are more likely to use that money to support their local economy.
Pennsylvania, however, is an example of a state that hasn’t had any success in the fight to pay low-wage earners better. There, the minimum wage remains stagnant at the federally required $7.25 an hour.
Earlier this year, legislators passed a proposal that would gradually increase the state minimum to $9.50 by 2022. The initiative, however, gained little traction in the Republican-majority legislature.
At the federal level, the House also worked this year to move the minimum hourly amount a worker could earn up to $15 by passing the Raise the Wage Act; the vote was 231 to 199. The bill would amend the Fair Labor Standards Act of 1938 and increase the federal minimum wage gradually over the next seven years.
“That is a smart way to do it,” Cooper said. Raising the rate overnight would prove difficult for companies and businesses all over the nation, he explained. “It’s undoubtedly challenging when [a company’s] labor costs suddenly go up, particularly if they’ve been allowed to get by for a long time paying really low wages. But that doesn’t mean that businesses can’t adjust.”
A common argument used in debates over raising the minimum wage is that a higher rate will mean businesses will hire fewer people, and the economy would subsequently suffer.
“The problem is that the research increasingly does not support this position,” Cooper said. “There has been a huge amount of research looking at what happened when places raised their minimum wages, and that research has overwhelmingly shown that increases in minimum wages have no meaningful impact on jobs.”