Dive Brief:

• More than 20 states saw minimum wage increases as 2021 began, according to a report by the Congressional Review Service (CRS).
• In New York, for example, the statewide minimum increased to $12.50 per hour on Dec. 31, per CRS. Fast food employees outside of New York City saw an increase to $14.50 per hour that day and will see an increase to $15 per hour beginning July 1, 2021. Fast food workers located in the city had their minimum wage increased to $15 per hour beginning Dec. 31. New York is one of five states that also will roll out minimum wage increases later this year, along with Connecticut, Nevada, Oregon and Virginia.
• Wages also increased in 32 cities and counties on or around Jan. 1, according to a report by the National Employment Law Project. Twenty-seven of these localities pushed their minimums past $15 per hour. Eighteen cities and counties will make additional increases later in the year, 13 of which will have minimum wages set above $15 per hour.

Dive Insight:

The number of states that implemented minimum wage increases this year increased slightly from the same mark at the beginning of 2020. Washington, D.C., became one of the first non-city jurisdictions to implement a $15 minimum wage last year, effective July 1, 2020. The changes reflect continued momentum for wage increases at the state and local level, particularly among major U.S. cities.

Outside of legal mandates, certain large employers have also voluntarily hiked minimum wages, sometimes after facing public scrutiny. Notably, Amazon raised its minimum wage in late 2018 following pressure from politicians and media outlets. A similar dynamic occurred at Google, which increased its minimum wage to $15 an hour for U.S. vendor and temporary workers and began offering such workers certain benefits.

Even employers outside the tech industry have committed to a $15 minimum wage. For example, restaurant chain &pizza committed to doing so by 2022.

The drive for higher wages also surfaced in the country's most recent election cycle. 

President-elect Joe Biden backs a $15 federal minimum wage, a significant increase from the current $7.25 that has been in place since 2009. Florida voters approved a ballot measure to increase the state's minimum wage annually by $1 per hour until reaching $15 on Sept. 30, 2026, and move to annual adjustments accounting for inflation beginning in 2027.

While some employers have supported the movement to bring the minimum wage in line with current cost-of-living estimates, others have long voiced opposition to the push for a $15 minimum wage. When New York City implemented a $15 minimum in 2018, some local business owners said the law forced them to cut staff, eliminate work shifts and raise prices, The Wall Street Journal reported, while others supported the changes driving more money to potential customers.

Estimates on incremental wage increases vary in their assessment of how such increases impact labor markets. In 2019, the Congressional Budget Office (CBO) released a study of a hypothetical plan to increase the federal minimum wage to $15 an hour via six annual increments beginning Jan. 1, 2020. Researchers indicated a "two-thirds chance" that such a plan would result in a change of employment of between zero and a net reduction of 3.7 million workers. But such a change would also provide a 5.3% increase in real income to families living below the federal poverty line, moving an estimated 1.3 million people above the poverty line.

One analyst criticized the CBO study for overestimating the potential costs of the plan while indicating potential issues with the office's methodology. Other analyses found opposite of the CBO when analyzing minimum wage increases. A 2017 study of Seattle's gradual wage increase by the University of California, Berkeley, found that the law did not affect food service employment in the city.

Employers ultimately weigh a number of factors when setting pay, including the availability of skilled talent for a given role and the overall health of the labor market, sources previously told HR Dive. Employers also may need to balance compensation with employee benefits packages, particularly as organizations pursue more personalized benefits offerings ranging from student loan reimbursement to pet insurance, among others.