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Citizens in Half of U.S. States to See Minimum Wage Increases in 2021


Wolters Kluwer experts advise that the greatest impacts will be seen in California, Washington and Florida

Published on December 15, 2020

Many states across the country are just days away from implementing changes to their minimum wage laws, according to payroll experts at Wolters Kluwer Legal & Regulatory U.S. With the clock ticking for businesses and payroll professionals to implement these changes, Wolters Kluwer has prepared a comprehensive analysis of legislative updates in 25 states that will raise the minimum wage in 2021, with 21 of those states enacting the increases on January 1.

Key takeaways from the analysis of 2021 minimum wage changes include:

  • As of January 1, the City of Emeryville, CA will have the highest minimum wage rate in the country, at $16.84 per hour, followed by Seattle at $16.69, while the highest state rate will be California’s at $14.00 per hour. New York and Oregon, which both have regional minimum wage rates, will see their highest wages reach $15.00 in New York City and $14.00 in the Portland Metro Area effective July 1, 2021. A few states’ wages remain on the lower end of the spectrum, with some state minimums coming in below the federal wage rate, and others with a lower incremental increase. The lowest minimum wage rates of $5.15 are in Georgia and Wyoming. However, most employers and employees are subject to the higher federal minimum wage rate of $7.25 per hour.
  • In response to the challenges that the COVID-19 pandemic has brought to the health care industry, New Jersey has established a minimum wage for direct-care workers employed by long-term health-care facilities. As of September 16, 2020, the minimum wage for these workers is $3.00 higher than the state minimum wage.
  • Some of the new rates in states such as California, Colorado, Maine, Washington are the result of previously approved incremental increases to reach a specific amount that is considered to be a “living wage.” Other States’ increases reflect an annual cost-of-living adjustment, which accounts for the changes in states like Alaska, Florida, Minnesota, and Montana.

“Those states following the step-up approach tend to have higher minimum wage rates than those taking a cost-of-living adjustment approach,” said Barbara O’Dell, JD, an Employment Law analyst at Wolters Kluwer Legal & Regulatory U.S. “The trend towards regional minimum wages, such as those in New York and Oregon, also reflect lawmakers’ recognition that costs of living are higher in large metro areas than they are in other parts of the state.”

“With the change in the presidential administration coming in January, we are closely monitoring for potential changes in the federal minimum wage rate which has remained at $7.25 an hour since July of 2009. The incoming Biden administration has expressed interest in increasing the federal minimum wage, but whether legislation to increase it would pass is an open question.”

Please see Wolters Kluwer Legal & Regulatory U.S. analysis on state minimum wage changes coming in 2021 below:

Alaska

$10.34 per hour, up fifteen cents from $10.19 per hour, based on a 1.4% increase in the cost of living. Wage rates are adjusted annually based on inflation. School bus drivers are to be paid two times the minimum wage.

Arizona

$12.15 per hour, up from $12.00 per hour. In addition, employees are entitled to paid sick leave, at the rate of one hour of paid sick time for every 30 hours worked, but with limits based on the size of the employer.

Arkansas

$11.00, up from $10.00 per hour.

California

$14.00 per hour, for businesses with 26 or more employees; $13.00 for smaller employers. On April 4, 2016, California Governor Edmund G. Brown Jr. signed legislation to gradually raise the state minimum wage with annual increases to reach $15.00 by 2022 for businesses with 26 or more employees and by 2023 for smaller employers. The plan also allows for the Governor to “pause” wage hikes, to be determined by September 1 of each year for the next year, if negative economic or budgetary conditions emerge (S.B. 3, L. 2016).

Colorado

$12.32 per hour, up from $12.00 per hour.

Connecticut

$12 per hour, scheduled to increase to $13.00 on August 1, 2021. The minimum wage is scheduled to reach $15.00 per hour in 2023.

Florida

$8.65 per hour, up 9 cents, based on a 1.07% increase in the cost of living. Tipped employees must be paid $5.63 per hour, also up 9 cents from the 2020 rate. Wage rates are adjusted annually based on inflation. A constitutional amendment approved by voters in the November 3, 2020 General Election will increase the minimum wage to $10.00 on September 30, 2021 and to $15.00 by 2026.

Illinois

$11.00 per hour, up from $10.00. The minimum wage is scheduled to reach $15.00 in 2025.

Maine

$12.15 per hour, up from $12.00.

Maryland

In 2021, the minimum wage is $11.75 for large employers and $11.60 for small employers, increasing at different increments to reach $15.00 in 2025 for large employers and in 2026 for small employers.

Massachusetts

$13.50 per hour, an increase of 75 cents. The minimum wage is scheduled to reach $15.00 by 2023.

Michigan

$9.87, up from $9.65 per hour.

Minnesota

$10.08 per hour (up from $10.00) for employees of large employers with an annual gross volume of sales not less than $500,000. Small employers must pay employees a minimum wage of at least $8.21 per hour (up from $8.15).

Missouri

$10.30, up from $9.45 per hour. The minimum wage will increase by 85 cents per hour each year until 2023, when the state minimum wage will reach $12.00 per hour.

Montana

$8.75 per hour, up 10 cents, based on a 1.31% change in the cost of living and rounded to the nearest 5 cents. Wage rates are adjusted annually based on inflation.

Nevada

$9.00 per hour for employees who do not receive health benefits, to increase to $9.75 on July 1, 2021. $8.00 per hour for employees who do receive health benefits applies, to increase to $8.75 on July 1, 2020.

New Jersey

$12.00 per hour for most employees, up from $11.00 per hour. $11.10 per hour for those in seasonal employment, who work on a farm for an hourly or piece-rate wage, or who work for an employer with fewer than six employees. The minimum wage is scheduled to reach $15.00 for most employees in 2024, and for those in seasonal employment, who work on a farm for an hourly or piece-rate wage, or who work for an employer with fewer than six employees in 2026. The minimum wage for direct-care workers in long-term health care facilities is $3.00 higher than the state minimum wage (A 4482, enacted September 16, 2020).

New Mexico

$10.50 per hour, up from $9.00. The minimum wage will increase to $12.00 by 2023.

New York

Tiered/Rates vary by region: $15.00 per hour in New York City; $14.00 per hour in Nassau, Suffolk and Westchester counties (then $1.00 each year after, reaching $15.00 on December 31, 2021); $11.80 per hour in remainder of the state.

The piece rate for Agricultural workers must be equivalent to the basic minimum wage, unless a youth rate certificate is issued (wage rate then must be equivalent to the youth rate). Existing wage orders are to be adjusted to reflect the wage increases. The minimum wage for workers in fast food establishments is $15 per hour in New York City and $14.50 per hour in the rest of the state. The minimum wage at all airports (LaGuardia, JFK and Newark Liberty International) is $17.00, and will reach $19.00 in 2023.

Ohio

$8.80 per hour, up 10 cents from $8.70 per hour, based on a 1.4% increase in the cost of living. Wage rates are adjusted annually based on inflation. The minimum wage rate applies to employees of businesses with annual gross receipts of $323,000 per year (changed from $319,000 in 2020). For employees at smaller companies and for 14- and 15-year-olds, the state minimum wage is $7.25 per hour, which is tied to the federal rate.

Oregon

The state minimum wage is tiered, with the highest rate in the Metro Portland area at $13.25 per hour ($14.00 effective July 1, 2021), the lowest in rural (non-Urban) areas at $11.50 per hour ($12.00 effective July 1, 2021), and a minimum wage of $12.00 per hour ($12.75 effective July 1, 2021) in the rest of the state. Scheduled increases per S.B. 1532, L. 2016.

Pennsylvania

$7.25 per hour, but $13.50 for employees under Governor’s jurisdiction, up from $13.00.

South Dakota

$9.45 per hour, up 15 cents from $9.30 per hour. Wage rates are adjusted annually based on inflation.

Vermont

$11.75 per hour. This is a 79-cent scheduled increase over the $10.96 per hour 2020 rate.

Washington

$13.69 per hour, for employees who have reached the age of 18, based on a 1.39% increase in the cost of living.

Workers under 16 years old can be paid 85% of the adult minimum wage, or $11.64 per hour, in 2021.

The initiative also guarantees paid sick time to workers, allowing workers to accrue one hour of paid sick leave for every 40 hours worked.

Finance Reporter