Wolters Kluwer Analysis: More than Half of U.S. States to Increase Minimum Wage in 2023
Several states across the country are days away from implementing increases in minimum wage, according to payroll experts at Wolters Kluwer Legal & Regulatory U.S. So far, a total of 26 states have announced raises in minimum wage in 2023, and at least one state is likely to see an increase in July. To support employers, labor attorneys, and employees across the country, Wolters Kluwer has prepared a comprehensive analysis of legislative updates to outline the states that will raise their minimum wage in the coming years.
“The biggest factor in the minimum wage adjustments for 2023 is the high rate of inflation seen in the last year,” said Deirdre Kennedy, senior payroll analyst at Wolters Kluwer Legal & Regulatory U.S. “Different states are setting their own rules – including a cap on the percentage the minimum wage can increase – given the intense impact that inflation can have.”
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Key takeaways from the analysis of upcoming minimum wage changes include:
- The highest state rate is in Washington, at $15.74 per hour while the District of Columbia’s minimum wage is $16.10.
- Thirteen states, the District of Columbia, and numerous cities and counties tie their minimum wage rate to the Consumer Price Index (CPI), resulting in a significant increase in pay for hourly employees in those areas. Some states have implemented a cap on the percentage that the minimum wage can increase to protect against big jumps in the minimum wage in times of high inflation. More states will begin inflation-based increases in future years after concluding schedules of fixed-rate increases.
- Several states will continue with their scheduled increases to the minimum wage, with both Delaware and Maryland seeing an increase of $1.25, reaching $11.75 and $13.25 (for large employers) respectively. Massachusetts’ minimum wage is $15.00 as of January 1 and Connecticut’s will reach $15.00 on June 1. More states are still on track to reach a minimum wage of $15 per hour within the next few years, including New Jersey by 2024; Delaware, Illinois, Maryland (large employers), and Rhode Island by 2025; and Florida and Maryland (small employers) by 2026.
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- Michigan may see two increases to its minimum wage in the first two months of 2023. A scheduled increase from the current $9.87 to $10.10 will go into effect January 1. The laws that established the scheduled increase were struck down by the Michigan Court of Claims, however, returning the minimum wage to that established by two prior voter-initiated laws which would have brought the minimum wage to $12.00 in 2022 and tied future increases to inflation. The court has delayed the effective date of its ruling to February 19, 2023, at which time the minimum wage will increase to $13.03 per hour should an appeal of the court’s ruling fail.
- Two states and the District of Columbia saw ballot measures affecting minimum wage pass in the November midterm elections. Nebraska voters supported Initiative 433, which increases the state’s minimum wage to $15 per hour, up from $9 per hour, by 2026. The minimum wage will adjust annually based on inflation after 2026. Voters in Nevada approved a measure raising the minimum wage to $12 per hour in 2024. The measure also removes the existing provision that sets different rates for the minimum wage based on whether the employer offers certain health benefits to employees. In D.C., voters approved Initiative 82, a ballot measure that eliminates the tip credit by 2027. At that time, tipped employees’ wages will align with wages for non-tipped employees.
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