Twenty states will be raising their minimum wage to start the new year. Another four states have increases scheduled later in 2021. Business leaders across the country say minimum wage increases will boost consumer spending, strengthen local workforces and help build a shared economic recovery.
“The economy will get a shot in the arm when states raise their minimum wage to start the new year,” said Holly Sklar, CEO of Business for a Fair Minimum Wage. “Businesses depend on customers who make enough to buy what they are selling, from food to car repairs. Minimum wage increases will go right back into local economies, helping workers and businesses get through the pandemic and economic crisis. Let’s hope 2021 is also the year we raise the federal minimum wage, ending the longest period without an increase since 1938, when it was enacted to help our nation recover from the Great Depression.”
In November, Florida passed Amendment 2, raising the state minimum wage to $15 by 2026, with a 61% supermajority. Florida, the first state to pass a $15 minimum wage by ballot initiative, joins California, Connecticut, Illinois, Maryland, Massachusetts, New Jersey and New York, making eight states that are incrementally increasing their minimum wage to $15. Florida has two increases in 2021: a previously scheduled inflation adjustment on Jan. 1 and a Sept. 30 increase to $10 in the first step enacted under Amendment 2.
Scheduled increases for Dec. 31, 2020, and Jan. 1, 2021, include:
Arkansas increases to $11 on Jan. 1, 2021
California increases to $14 on Jan. 1, 2021 and $15 in 2022. Small businesses with 25 employees or fewer have an extra year to comply, reaching $15 in 2023. After the minimum wage reaches $15 for all employees, it will be adjusted annually for cost of living increases.
Illinois increases to $11 on Jan. 1, 2021, with future increases of $1 a year to reach $15 in 2025
Maryland increases to $11.75 on Jan. 1, 2021, with future increases to reach $15 in 2025. Small businesses with fewer than 15 employees reach $11.60 on Jan. 1, 2021, with future increases to reach $15 in 2026.
Massachusetts increases to $13.50 on Jan. 1, 2021, $14.25 in 2022, and $15 in 2023
Missouri increases to $10.30 on Jan. 1, 2021, $11.15 in 2022, $12 in 2023, and then is indexed for cost of living increases
New Jersey increases to $12 on Jan. 1, 2021, with future increases of $1 a year to reach $15 by 2024, and then indexed. Businesses with fewer than six employees increase to $11.10 on Jan. 1, 2021, and then rise more slowly to $15 in 2026.
New Mexico increases to $10.50 on Jan. 1, 2021, $11.50 in 2022 and $12 in 2023
Long Island and Westchester increase to $14 on Dec. 31, 2020 and $15 on Dec. 31, 2021.
The rest of New York State increases to $12.50 on Dec. 31, 2020. Annual increases will continue until the rate reaches $15. Starting in 2021, annual increases based on economic indices, including the Consumer Price Index, will be published by the Commissioner of Labor on or before Oct. 1.
New York City already has a $15 minimum wage.
States with indexing where annual cost of living adjustments will take effect Jan. 1 include:
Alaska increases to $10.34
Arizona increases to $12.15
Colorado increases to $12.32
Florida increases to $8.65. On Sept. 30, 2021, the minimum wage will increase to $10. After reaching $15 in 2026, Florida will resume indexing.
Maine increases to $12.15
Minnesota increases to $10.08 for employers with an annual gross revenue of at least $500,000 and $8.21 for employers with less than $500,000
Montana increases to $8.75
Ohio increases to $8.80
South Dakota increases to $9.45
Vermont increases to $11.75
Washington state increases to $13.69
The federal minimum wage has been stuck at $7.25 an hour since July 24, 2009 — the longest period in history without a raise. On July 18, 2019, the U.S. House of Representatives passed the Raise the Wage Act, which would increase the federal minimum wage to $15 by 2025, but the Senate has not acted and there will be new efforts to raise the minimum wage in 2021.