Thursday, October 21, 2021

Six states have passed laws increasing the minimum wage this year

In 2010, when the recession was just beginning to wane, President Obama didn’t mince words about the need to raise the federal minimum wage: “Right now, 23 million Americans … face the reality of working full-time and still not being able to get by.”

Three years later, with the economy now solidly back in gear, Obama seems a bit less on track. “We really can’t afford any more of this delay,” he said last month in an address to a group of fast-food workers calling for a $15 per hour wage, the equivalent of more than $31,000 a year. In his State of the Union address, he urged Congress to raise the federal minimum wage from $7.25 to $9. That message did not go over well with Republicans who control the House. And after years of inaction, they seem committed to blocking any increase in the federal minimum wage.

In the meantime, some states are doing their part by raising the minimum wage even higher. Here are some of the states where the minimum wage has risen in the past year, with most of those increases coming in the past few months:

California: $10, an increase from $9 on July 1.

Massachusetts: $11, an increase from $10.

Washington state: $11, an increase from $10.50 on June 1.

Connecticut: $10.10, an increase from $9.60 on Oct. 1.

Massachusetts, Washington and Connecticut all require employers to offer health insurance benefits at a cost of $10 an hour or more, so their minimum wages reflect those earnings levels. (Oregon had already instituted a similar law in 2007, but its legislature decided last year not to hold up the start of this year.)

Of the remaining states, 12 now have minimum wages above $10 per hour. Only New Jersey does not take effect until this year, when it will increase to $8.60 from $8.25.

The District of Columbia does not have a minimum wage, but it’s always going to be a full $.50 more than the federal minimum wage, because it was set up that way under a 1967 city law.

As was the case in the past two years, states are offering a rare treat to fast-food workers in the form of cost-of-living increases. In 2012, an increase was mandated for fast-food workers in California, as well as the cities of Boston, Seattle, San Francisco and Seattle-Tacoma. San Francisco’s costs of living increased 3.7 percent between December 2013 and December 2014, while the Consumer Price Index increased 2.9 percent in the same period.

Of course, nothing is certain. A better measure of the wage growth for fast-food workers may be that chains such as McDonald’s, Wendy’s and Jack in the Box, which make up some 90 percent of all fast-food workers, lowered their minimum hourly pay to $7.50 in 2014. But raising the minimum wage in California as well as New York should still translate into more income for those workers. And it shouldn’t be forgotten that much of the cost of these state-mandated increases in the minimum wage has come from increases in local taxes.

In fact, when it comes to state and local government regulations that affect employers’ cost of doing business, the largest increase has been California’s increased value-added tax, a tax on services that charges a higher rate on the services of certain industries than on commodities. The tax went from 9.5 percent on services to 10 percent beginning in October 2013.

For 2014, the state’s gross receipts tax, which was also originally set up to fund the construction of roads and other infrastructure, saw a similar increase. The tax now goes from 1.125 percent to 1.125 percent for personal incomes exceeding $7,500. Businesses which paid gross receipts taxes in 2013 will still be paying the tax in 2014 at a rate of 1.125 percent.

Updated on May 22 at 11:30 a.m. to include some recent state-level minimum wage increases.

Latest article