Activists appeal for a $15 minimum wage near the Capitol in Washington in 2021.
J. Scott Applewhite/AP
Minimum-wage workers in 21 states will see a bigger paycheck come the new year. They’re among the many thousands of laws changing as a new year begins.
Those wage increases will impact an estimated9.2 million workers and raise pay by a total of $5.7 billion, according to the Economic Policy Institute, a think tank that publishes economic research and examined the expected 2025 wage increases.
An additional 48 cities and counties will raise their minimum wages above their state wage floors starting Tuesday.
California, which is increasing the minimum wage from $16 to $16.50, is one of the 14 states adjusting the minimum to increase for inflation. The average full-time minimum-wage worker in these states will make around $420 more annually, according to EPI.
Five states are bumping up the statewide minimum wage through previously adopted legislation, and two states — Nebraska and Montana — are making changes after voters passed ballot measures.
With these continued increases, EPI found that 19 states and Washington, D.C., will have at least a $15 minimum wage by 2027.
Meanwhile the federal minimum wage of $7.25 has not increased in 15 years and the spending power of one dollar is not what it used to be — putting workers in a tough spot as prices for groceries and housing have risen over time.
Research shows that a full-time minimum wage worker earning $7.25 an hour makes just $20 more than the poverty guidelines for a single-person household. Add kids or needing to care for other family members, and that worker falls below poverty levels. Drexel University’s Center for Hunger-Free Communities found in 2021 that “a true living wage” that supports an individual’s basic food and housing needs would be between $20 and $26 or more per hour depending on the state.
Dollar bills are shown in New York. The Economic Policy Institute says the Jan. 1 minimum wage increases show that the “minimum wage continues to be a powerful tool for combating racial and gender wage disparities.”
Mark Lennihan/AP
Who are most impacted by increases?
Among those most directly benefiting from these wage increases are women and Black and Hispanic workers.
“The January 1 increases show that the minimum wage continues to be a powerful tool for combating racial and gender wage disparities, supporting working families, and reducing poverty,” EPI said in its report.
Women make up almost 60% of workers seeing a raise, according to EPI’s analysis. A little over 11% of workers seeing higher paychecks are Black, and nearly 40% are Hispanic.
College student Jimena Sanchez (right), who studies children’s development, works as a part-time cashier earning minimum wage at a family store in Los Angeles on Oct. 11.
Damian Dovarganes/AP
But the minimum-wage level may still be too low to keep up with rising prices and home costs, according to EPI. That’s especially the case if a locality’s minimum wage was tied to inflation years ago and has not been reexamined since. EPI pointed to Ohio, a state that last passed a significant increase to its minimum wage in 2007, and that will see it increase this year from $10.45 to $10.70 because of an inflation adjustment.
High food and housing costs were issues top of mind for voters in the 2024 election. Many polls and experts pointed to voters’ unhappiness with the economy as a big reason for President-elect Donald Trump’s reelection — despite experts, including Federal Reserve Chairman Jerome Powell, indicating that the U.S. economy was on good footing as 2024 came to a close.
