Half of the US states will increase their minimal wages in 2021

People gather to ask McDonald’s Corporation to raise workers wages to a minimum wage of $ 15 and to demand union rights on May 23, 2019 in Fort Lauderdale, Florida.

Joe Raedle | Getty Images

The move towards a minimum wage of $ 15 gained ground in 2020 with the electoral victory of President-elect Joe Biden and another state voting for an eventual floor of $ 15.

Next year, half of the US states will raise their minimum wage from 21 in 2020. All but five of these states – Connecticut, Florida, Nevada, Oregon, and Virginia – will raise their hourly minimum on Friday.

And the federal minimum wage, which hasn’t increased in more than a decade, may finally get a boost that affects millions of workers, from restaurant chefs to janitors. Biden has pledged to raise it to $ 15 an hour and remove the minimum wage, which is the low base salary for employees who get most of their compensation from tips. He also said he would index the minimum wage to keep it in line with inflation. All three measures are in line with a draft law that the House passed in 2019.

Critics say a higher minimum wage harms small businesses and results in job losses – and would put even more pressure on during an economic crisis caused by the coronavirus pandemic. However, this year’s events have also created new awareness of the important roles of hourly workers as well as their low wages. Analysis by the Snagajob job found that three-quarters of hourly workers in the US were better off sticking to unemployment benefits than finding a new position when the federal allowance was $ 300 per week.

“I’m not sure if the pandemic itself will affect the likelihood of the minimum wage increase as this is a fundamentally political decision,” said Daniel Zhao, chief economist at the Glassdoor site. “I think the pressure has increased in recent years.”

Whether Biden gets the chance to raise the minimum wage likely depends on the election results in Georgia, where both Senate seats are up for grabs on Tuesday.

There is growing evidence that voters on both sides of the aisle support a minimum wage of $ 15. In November, Florida became the eighth state to opt for a gradual wage floor thanks to a referendum approved by 60% of voters in an election that Donald Trump won.

Even if a new federal minimum wage is not passed, other Florida states are likely to follow suit. Zhao said activists have focused most of their attention on changing the wage floor at the local level, which is an easier goal than a new nationwide mandate.

According to Mathieu Stevenson, CEO of Snagajob, the states are also investigating the areas where a minimum wage of $ 15 was exceeded years ago to understand the full impact. Seattle was the first US city to raise the wage floor to this rate in 2014 after a coordinated push by fast food workers. Other cities, including San Francisco, New York, and Washington, have followed.

“What we keep hearing on the ground is that people have been looking for the early results from DC and other markets that have introduced the $ 15 minimum wage,” said Stevenson. “When people are more comfortable with the results and the impact on the economy, we will continue to see it at the state level.”

More companies have raised their internal wage floors to keep up with the competition and help with sales. Bank of America and Amazon are among those employers who have already paid their workers more than $ 15 an hour.

The widespread unemployment caused by the pandemic abruptly halted hourly wage growth in 2019, but some of the country’s largest companies announced higher minimum wages as they tried to hire new employees.

After Starbucks raised barista wages by 10%, he said it would raise its minimum wage to $ 15 an hour over the next three years. Walmart, the country’s largest private employer, increased its hourly rate for delicatessen and bakery workers from $ 11 to $ 15, while hourly managerial positions now get $ 18-21 an hour.

Zhao predicts that the soaring wage growth of 2019 could return in the second half of 2021 when unemployed people struggle to find new jobs or decide not to work. He cited growing concerns about women dropping out of work for childcare during the pandemic.

“It is an open question how difficult it will be to get these workers into the labor force,” Zhao said. “If it is very difficult to get these workers back it would put pressure on wages, especially for lower-income workers and low-wage industries like the hospitality industry.”

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