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Many States Will Have New Minimum Wage in 2021

As 2020 comes to a close, many changes are on the horizon for the New Year. 

One such change will come on the compensation front in 20 different states, as low-wage workers are set to receive a pay bump beginning Friday. Some of the increases are simply the result of cost-of-living adjustments, while others are in line with previously scheduled efforts to reach a certain minimum wage threshold.

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Florida most recently passed an initiative to raise the state's minimum wage from $8.56 an hour to $15 incrementally by 2026. The state’s voters approved the minimum wage ballot initiative by just over 61% on Election Day. By doing so, Florida joined seven other states in voting to increase its minimum wage to $15 an hour at some future point. For 2021, the state’s new minimum wage will increase by 9 cents to $8.65 an hour.

In New Mexico, the minimum wage will increase to $10.50, up $1.50 from the current $9 wage. And in California, the rate for employers with 26 workers or more will rise from $13 to $14 an hour, the highest state-wide baseline in the country. In Minnesota, the gain is just 8 cents, to a $10.08 hourly rate for large employers.

The following is the complete list of states that will have a higher minimum wage in 2021:

  • Alaska - $10.34 (up 15 cents)
  • Arizona - $12.15 (up 15 cents)
  • Arkansas - $11 (up $1)
  • California - $14 (up $1)
  • Colorado - $12.32 (up 32 cents)
  • Florida - $8.65 (up 9 cents)
  • Illinois - $11 (up $1)
  • Maine - $12.15 (up 15 cents)
  • Maryland - $11.75 (up 75 cents)
  • Massachusetts - $13.50 (up 75 cents)
  • Minnesota - $10.08 (up 8 cents)
  • Missouri - $10.30 (up 8 cents)
  • Montana - $8.75 (up 10 cents)
  • New Jersey - $12 (up $1)
  • New Mexico - $10.50 (up $1.50)
  • New York - $12.50 (up 70 cents)
  • Ohio - $8.80 (up 10 cents)
  • South Dakota - $9.45 (up 15 cents)
  • Vermont - $11.75 (up 79 cents)
  • Washington - $13.69 (up 19 cents)

The pandemic will likely stall efforts to increase the state minimum wage in Michigan. There, a state law prohibits scheduled minimum wage increases when the state's annual unemployment rate is above 8.5%.

Although the jobless rate has recently improved in Michigan, it averaged 10.2% from January through October, so it's "highly unlikely" the annual average will drop below the 8.5% threshold, the state's Bureau of Employment Relations said in a press release. The state's minimum wage will stay at $9.65 versus rising to $9.87.

The federal minimum wage of $7.25 per hour hasn't budged since 2009, and as of 2021, 20 U.S. states will continue to have a minimum wage either equal to or below the federal level, making that their default baseline. The value of the federal minimum wage peaked in 1968 when it was $1.60, which would be worth about $12 in 2020 dollars, according the U.S. Bureau of Labor Statistics’ inflation calculator.

President-elect Joe Biden has indicated he wants to raise the federal minimum wage to $15 an hour, but it’s unlikely he’ll have the support of the Senate to achieve it. Biden could, however, increase the minimum wage to $15 an hour for federal contractors via an executive order.


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