New automatic increases in U.S. minimum wages, linked to inflation, are expected to take effect in a dozen states from January 1, 2023. And twice as many cities and counties, most of them linked to the growth of the Consumer Price Index.
It is in law. Cities and states included automatic inflation-based raises in their minimum wage laws intended to help workers keep up with the cost of living, even if a future legislature or city council didn’t decide to set a rate. higher salary.
Thus, according to an analysis by the Bloomberg Law platform, many of those states will announce in October or November what the new minimum wages will be, adjusted for inflation, and that they would be in force as of January 1.
Big increases in the minimum wage could provide a boost to low-wage workers. But they would put additional financial pressure on the employing companies.
Many analysts also agree that they could have limited impact in places where companies must already pay above the minimum wage to attract workers.
The national annual inflation rate stood at 8.5% in July, according to the latest CPI figures released by the US Bureau of Labor Statistics.
Some differences between states
The amount of raises can vary greatly due to some state and local wage laws requiring the use of consumer-centric CPI figures.
Denver’s mayor announced that the city’s minimum wage will rise to $17.29 an hour starting January 1. Compared to US$15.87 this year, which represents an increase of 8.9%. More than triple a typical increase based on inflation, such as the 2.7% and 1.9% increases for Colorado’s state minimum in 2021 and 2022, respectively.
Instead of figures for urban workers, or CPI-W, which Denver used. Some consider a national average of inflation for major US cities, while others focus on a local or regional inflation rate.
Seattle, Flagstaff (Arizona) and Mountain View (California) are among the cities that will announce increases based on inflation for January 1.
In the District of Columbia, where annual increases come in the middle of the year, the minimum wage rose to $16.10 on July 1, from $15.20. This represents an increase based on inflation of 5.9%.
Also, on July 1, Los Angeles raised its minimum wage to $16.04, an increase of 6.9%. On the other hand, San Francisco’s salary floor rose to US$16.99, an increase of 4.1%.
only from the states
For the foreseeable future, any changes to minimum wages will be derived from local state laws. Well, let’s remember that the federal minimum wage remains at $7.25 an hour, where it has been since 2009.
A $15 minimum wage proposal put forth by President Joe Biden and congressional Democrats failed to move forward in early 2021. The Senate ruled it did not meet their standards for inclusion as a budget reconciliation bill.
Various state and local laws include limits on increases based on inflation that can be applied in a single year. A feature that has already helped moderate minimum wage increases in California and Minnesota, as well as Chicago and other cities.
So far, only California and Minnesota have announced new state minimum wages for 2023, with most states announcing them closer to the end of the year. California caps annual increases at 3.5% and Minnesota at 2.5%.
However, the Californian law includes a detail for this year only that will force smaller employers to immediately catch up with the wage rate of large employers. They will increase to $15.50 on January 1. For businesses with 25 or fewer employees, this is an increase of $1.50 per hour from the current statewide minimum wage.