U.S. Markets closed

Where in the US the minimum wage will rise on Jan. 1—and why it matters

Tim Fernholz
Participants cheer at a home care and healthcare workers rally in support of a $15 minimum wage, Tuesday, Nov. 10, 2015, in New York. New York Gov. Andrew Cuomo is raising the minimum wage for about 10,000 state workers to $15 an hour over the next six years.

On Jan. 1, minimum wage hikes will go into effect in 13 US states and several major cities, making 2016 something of a national experiment to test the effects of higher wages for the lowest-paid workers.

Economists say that higher minimum wages are an effective tool against poverty and inequality, but taken too far, they can diminish employment opportunities. Currently, the federal minimum wage is $7.25 an hour; as of this year, the highest state minimum wage is $9.32 an hour. But California and Massachusetts will soon be offering some of the highest minimum wages in the nation, at $10 an hour—while a handful of cities will be setting a $13 hourly minimum.



What happens next in these places could determine whether employee advocates succeed in their efforts to consolidate their recent gains and expand their push for a $15 national minimum wage.

Here are the state-by-state changes going into effect on Jan. 1.



State Current Jan. 1 Increase
Alaska $8.75 $9.75 $1.00
Arkansas $7.50 $8.00 $0.50
California $9.00 $10.00 $1.00
Connecticut $9.15 $9.60 $0.45
Hawaii $7.75 $8.50 $0.75
Maryland $8.00 $8.75 $0.75
Massachusetts $9.00 $10.00 $1.00
Michigan $8.15 $8.50 $0.35
Nebraska $8.00 $9.00 $1.00
New York $8.75 $9.00 $0.25
Rhode Island $9.00 $9.60 $0.60
Vermont $9.15 $9.60 $0.45
West Virginia $8.00 $8.75 $0.75

Select cities will be pushing the minimum wage higher still. In Seattle, the minimum wage will rise to between $10.50 and $13, depending on the size of the company, as the city moves toward a $15 minimum wage expected to be fully implemented in 2021. In New York, fast food workers and government employees will see their minimum wage jump to $10.50 in New York City and $9.75 in the rest of the state. Come July 1, the cities of Los Angeles and San Francisco will increase their minimum wages to $10.50 and $13 an hour as they seek to eventually raise the floor on wages to $15 an hour.

The federal government estimates that about 3 million workers are paid minimum wage around the country; we can expect hundreds of thousands or more to be be affected by by next year’s increase. Critics and supporters alike will be watching to see what happens to jobs and poverty.

A 2014 study by the Congressional Budget Office found that a national minimum wage of $10.10 an hour would benefit some 16.5 million people, while leading to the elimination of 500,000 jobs due to cost-cutting offsets. The ultimate effect is still a $5 billion increase in total income for people below the poverty line, pulling some 900,000 of them over the threshold.

That is one reason why many worker advocates are urging politicians to support a national increase of $15. But Alan Krueger, the former Obama White House adviser and occasional Uber consultant who has led pioneering studies of minimum wage effects, worries that an increase to $15, while perhaps appropriate for high-priced urban areas, would be detrimental on a national level. He argues that increasing the federal floor to $12 over the next several years would be a wiser course.

Indeed, we have nearly been there before: In real terms, the minimum wage peaked around 1968, when the national minimum wage—$1.60 an hour—was worth $11.46 an hour in today’s dollars. Since then, nominal increases have been steadily eroded by inflation.

Between November 2014 and November of this year (the most recent month for which we have data) average hourly wages rose 4.3% for non-management employees, to $21.26, according to Bureau of Labor statistics data. That’s not bad, but you have to account for price inflation in the same period. At 1.1%, it reduces the average wage gain for workers to 3.2%.

While that’s still not bad news—it certainly belies my skepticism this time last year—the average worker made an inflation-adjusted $21.54 in 1973, a reminder that wage stagnation is a real thing.

 

Sign up for the Quartz Daily Brief, our free daily newsletter with the world’s most important and interesting news.

More stories from Quartz:


  • Business
    TheStreet.com

    Is the Stock Market Open on Martin Luther King Jr. Day?

    Martin Luther King Jr. Day was first signed into law in 1983, and first officially observed as a holiday in 1986. Generally observed on the third Monday of January (close to or on King's actual birthday, January 15), MLK Day celebrates the life and legacy of one of America's most well-known and influential activists, who fought for racial and economic justice across the country. Martin Luther King Jr. Day, falling on January 20 this year, is a federal holiday, and not every worker in the country necessarily gets a day off of work for it (45% of employers gave workers the day off in 2019).

  • Business
    Barrons.com

    Is the Stock Market Open Today? Here Are the Hours for Martin Luther King Jr. Day.

    Martin Luther King Jr. Day, the federal holiday that honors the civil rights movement figure who gave the famous “I Have a Dream” speech during the March on Washington for Jobs and Freedom in 1963. The holiday is always the third Monday of January, around the time of King's Jan. 15 birthday. Is the stock market open on MLK Day 2020?

  • What's the Average 401(k) Balance by Age?
    Business
    Investopedia

    What's the Average 401(k) Balance by Age?

    It can be hard to determine exactly how much you'll need for your own post-career days, but finding out how others are planning—or not—can offer a benchmark for setting goals and milestones. k) Plan Balances by Generation The good news is that Americans have been making an effort to save more. According to Fidelity Investments, the financial services firm that administers more than $7.4 trillion in assets, the average 401(k) plan balance reached $106,000 in the second quarter of 2019.

  • Business
    Bloomberg

    Peter Schiff Says He’s Lost His Bitcoin After Wallet Freeze-Out

    Cryptocurrency skeptic Peter Schiff said he can't access his Bitcoin holdings after his digital wallet stopped accepting his password. I just lost all the Bitcoin I have ever owned,” Schiff, chief global strategist at Alliance Global Partners, said in a series of posts on his unverified Twitter account. My wallet got corrupted somehow and my password is no longer valid.

  • 42% of people say this is why they aren't investing in the stock market
    Business
    Yahoo Finance

    42% of people say this is why they aren't investing in the stock market

    A recent JPMorgan Chase survey of about 1,200 investors and non-investors says it boils down to liquidity. The survey found that 42% of those who weren't investing yet were staying out of the stock market because they believed they didn't have enough money to invest. Kelli Keough, digital wealth management head at JPMorgan Chase, tells Yahoo Finance's “The First Trade” non-investors, those who are not in the stock market, say it's a struggle to save enough money to invest.

  • Prince Harry Says He and Meghan Markle Hoped to Continue Royal Duties, but 'That Wasn’t Possible'
    News
    Meredith Videos

    Prince Harry Says He and Meghan Markle Hoped to Continue Royal Duties, but 'That Wasn’t Possible'

    Prince Harry said Sunday that he felt “great sadness” but found “no other option” to cutting almost all of his and his wife Meghan's royal ties in the hopes of achieving a more peaceful life.

  • Man who made a killing during financial crisis says that, at some point, the stock market will slow down — but, till then, ‘I love riding a horse that’s running’
    Business
    MarketWatch

    Man who made a killing during financial crisis says that, at some point, the stock market will slow down — but, till then, ‘I love riding a horse that’s running’

    The U.S. stock market has enjoyed a nearly uninterrupted assault on records, highlighted by the Dow Jones Industrial Average (DJIA) closing at a milestone above 29,000 for the first time and the S&P 500 (SPX) achieving its own landmark close above the psychological round-number at 3,300, while investors in the Nasdaq Composite Index (COMP) may have their sights trained on 10,000.

  • What interest rates dating back to 1311 tell us about today’s global economy
    Business
    Quartz

    What interest rates dating back to 1311 tell us about today’s global economy

    Interest rates sure are weird these days. Five central banks currently hold policy rates negative; several are dabbling with unconventional bond-buying. The one bank that tried to raise them, the Federal Reserve, found itself back cutting rates within a year.

  • Avoid Paying Taxes on Social Security Income
    Business
    Investopedia

    Avoid Paying Taxes on Social Security Income

    With no inflation adjustment having been made to these benchmarks since 1983, they're now exceeded by most taxpayers who receive Social Security benefits and have other sources of income, too. A number of strategies, both before and after you retire, can limit the amount of tax you pay on Social Security benefits. Reducing your taxable income during the years in which you're drawing Social Security can have other benefits, too, such as lowering your Medicare premiums, which vary by income.

  • America Is Awash With Natural Gas and It’s About to Get Worse
    Business
    Bloomberg

    America Is Awash With Natural Gas and It’s About to Get Worse

    One chilly day in October, President Donald Trump boarded Air Force One and flew to Pennsylvania to hail one of the state's most important industries -- not coal, but natural gas. Trump spoke at an industry event of the “astonishing increase” in shale gas production. The Appalachian region has spearheaded a historic expansion, turning the U.S. into the world's biggest producer while slashing prices for consumers and sounding the death-knell for domestic coal.

  • 3 Top-Notch “Strong Buy” Stocks Under $3
    Business
    TipRanks

    3 Top-Notch “Strong Buy” Stocks Under $3

    If you're on a budget, yet in a risk-tolerant mood, it's worth taking a look at penny stocks – companies whose shares sell for less than $5 apiece. Here you get a lot more for your money; For example, buying a single share of Amazon will set you back $1,865, but if you wanted to spend the equivalent amount on a stock worth $3, you could load up on 621 shares of company x. Is it worth it though?

  • Business
    Barrons.com

    A Contrarian Value Investor Bought Up AT&T Stock, Sold Apple, Microsoft and Amazon

    Contrarian value investor Tocqueville Asset Management in aggregate made some big changes to its overall investments in well-known large-cap stocks. Tocqueville bought substantially more (T) stock (ticker: T) in the fourth quarter, while slashing positions in (AAPL)(AAPL), (MSFT)(MSFT), and (AMZN) stock (AMZN). The firm disclosed the stock trades, among others, in a form it filed with the Securities and Exchange Commission.

  • Dramatic video, truck crashes offroad near trooper
    U.S.
    Associated Press Videos

    Dramatic video, truck crashes offroad near trooper

    Officials in the US state of Iowa are urging people to use caution and stay indoors if possible as blizzard conditions continued to wreak havoc in northern and central parts of the state on Saturday. Jan.

  • Tesla moves a step closer to opening first European factory with German property deal
    World
    Reuters

    Tesla moves a step closer to opening first European factory with German property deal

    U.S. electric car pioneer Tesla has agreed to buy a property on the outskirts of Berlin, bringing it a step closer to opening its first European factory, local authorities said on Sunday. The U.S. carmaker last November announced plans to build a giant factory in Gruenheide, in the eastern German state of Brandenburg, giving it the coveted "Made in Germany" label just as local rivals prepare to launch competing models. Tesla's board of directors approved a purchase agreement with the state of Brandenburg on Saturday to acquire a 300-hectare property, Brandenburg government spokesman Florian Engels said in a statement.

  • Should Your Required Minimum Distribution Be in Cash?
    Business
    Investopedia

    Should Your Required Minimum Distribution Be in Cash?

    Should you take your RMD by getting the cash or transferring the stock to another account? According to Michael J. Garry, managing member and chief compliance officer at Yardley Wealth Management, it doesn't matter for tax purposes. "There is usually little, if any, tax efficiency added by taking in-kind distributions instead of cash.

  • Top Tips to Reduce Required Minimum Distributions
    Business
    Investopedia

    Top Tips to Reduce Required Minimum Distributions

    Holders of individual retirement accounts (IRAs), 401(k)s, and other qualified retirement accounts are required to take distributions from those accounts beginning at age 72. These required minimum distributions (RMDs) force the account holder to take a taxable distribution based on the account balance at the end of the prior year and their age. The logic behind requiring distributions is that the government wants to collect taxes for all of that tax-deferred growth (as well as the original tax-deferral) and that the investor will likely be in a lower tax bracket during retirement.

  • Business
    Oilprice.com

    Is This The End For Big Oil Dividends?

    The largest publicly-traded oil companies in the world have been “living beyond their means” for years. Since 2010, the five largest oil majors have spent vastly more than they have generated when including shareholder payouts. ExxonMobil, BP, Chevron, Total, and Royal Dutch Shell have dished out a combined $536 billion in dividends and share buybacks since 2010, a figure that far exceeds the $329 billion in free cash flow over the same period, according to a new report from the Institute for Energy Economics and Financial Analysis (IEEFA).

  • Bearish Bets: 2 Well-Known Stocks You Should Consider Shorting This Week
    Business
    TheStreet.com

    Bearish Bets: 2 Well-Known Stocks You Should Consider Shorting This Week

    Using recent actions and grades from TheStreet's Quant Ratings and layering on technical analysis of the charts of those stocks, Trifecta Stocks identifies five names each week that look bearish. While we will not be weighing in with fundamental analysis we hope this piece will give investors interested in stocks on the way down a good starting point to do further homework on the names. Nektar Therapeutics Inc. recently was downgraded to Sell with a D rating by TheStreet's Quant Ratings.

  • 3 “Strong Buy” Biotech Stocks That Can Inject a Healthy Dose of Upside
    Business
    TipRanks

    3 “Strong Buy” Biotech Stocks That Can Inject a Healthy Dose of Upside

    To watch Selvaraju's track record, click here) The Street appears equally confident in IMMU's future potential; 4 Buy ratings add up to a Strong Buy consensus rating. With an average price target of $28, the analysts believe Immunomedics can add 47% to its share price over the coming year. See Immunomedics stock analysis on TipRanks) Revance Therapeutics (RVNC) After a disappointing 2019, which saw Revance's share price drop by more than 18%, the neuromodulator-focused biotech has started 2020 with a bang; Revance stock is up by 38% year-to-date.

  • Everyone should be worried about Social Security and 401(k) plans — including the presidential candidates
    Business
    MarketWatch

    Everyone should be worried about Social Security and 401(k) plans — including the presidential candidates

    Democratic candidates have voiced their opinions on climate change, universal health care and the current president for months, but Tuesday marked the seventh and last debate before primary voting begins — and they still haven't talked much about Americans' future financial security. Social Security is faltering, Americans aren't saving enough, some companies' pensions are going bankrupt and there's little clarity over other complex topics within retirement and aging, such as how to get the best advice from financial professionals and what benefits will be available for them in old age. Some presidential hopefuls have mentioned retirement and old age on the campaign trail.

  • Business
    Benzinga

    Barron's Picks And Pans: Apple, Boeing, Disney, Tesla And More

    Barron's Roundtable panelist Rupal Bhansali's makes a case that Apple Inc. NYSE: AAPL) is disadvantaged on many fronts and trying to play catch-up in "Time to Short Apple, Says Rupal Bhansali. Yes, Short Apple."

  • ‘I’m 22 with $70,000 in savings and investments, but I’m addicted to checking my brokerage accounts multiple times a day’
    Business
    MarketWatch

    ‘I’m 22 with $70,000 in savings and investments, but I’m addicted to checking my brokerage accounts multiple times a day’

    I do not want to live like that. I am addicted. I check my brokerage accounts multiple times a day and my mood is greatly affected by how the markets are doing.

  • Is There Now An Opportunity In Cisco Systems, Inc. (NASDAQ:CSCO)?
    Business
    Simply Wall St.

    Is There Now An Opportunity In Cisco Systems, Inc. (NASDAQ:CSCO)?

    Today I will analyse the most recent data on Cisco Systems's outlook and valuation to see if the opportunity still exists. Is Cisco Systems still cheap? According to my valuation model, Cisco Systems seems to be fairly priced at around 3.7% below my intrinsic value, which means if you buy Cisco Systems today, you'd be paying a reasonable price for it.

  • Business
    Oilprice.com

    China’s Cheap Electric Vehicles Could Disrupt Global Markets

    While Western automakers race to capture market share in the world's biggest electric car market, China, hundreds of Chinese electric vehicle (EV) makers have sprung up in recent years to snag a piece of the EV pie too. Government support to the Chinese EV industry and China's ambitions to have new energy vehicles (NEVs) sales account for a quarter of car sales in 2025 means that the Chinese authorities want the EV industry in the country to flourish—and some think this ambitious target would require both Western and Chinese EV makers. Western analysts, however, warn that a Chinese EV oversupply could lead to cut-price exports of China's electric cars, potentially distorting and pressuring the auto industries in other countries, and potentially setting the stage for the next U.S.-China trade war front—electric vehicles.

  • The odds aren’t in stock-market investors favor, says billionaire Howard Marks
    Business
    MarketWatch

    The odds aren’t in stock-market investors favor, says billionaire Howard Marks

    Legendary investor Howard Marks likes to analyze probabilities and he's determined that when it comes to the stock market, chances of healthy, future returns are falling, he said in an interview with Bloomberg Television. In the Tuesday interview, Marks equated buying financial assets to games of chance like poker or Black Jack, where results are determined by “skill, luck, and hidden information.” He made a similar comparison in a quarterly report to investors.