Minimum Wages Increase in 25 States in 2021

According to a study by Wolters Kluwer Legal & Regulatory 25 states will raise their minimum wage in 2021, with 21 of those states enacting the increases on New Year’s day.

By the beginning of the New Year, New York and Oregon, which both have regional minimum wage rates, will see the highest wages reaching $15.00 in New York City and $14.00 in the Portland Metro Area effective July 1, 2021.

At the end of the spectrum, 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.

Increasing the minimum wage is expected to pose more challenges for small businesses already grappling with the effects of the pandemic. According to Small Business Index issued by the Chamber of Commerce, half (50%) of small businesses see their operations continuing for a year or less before having to permanently close. In some extreme cases businesses already hard hit by the pandemic will have to choose between raising wages or terminating staff.

During this quarter more small businesses plan to reduce staff in this quarter (14%) up from 9% last quarter reaching levels not seen since the beginning of the pandemic in late April (13%). Only 27% of businesses plan to increase their number of employees in the next year.

Additional Findings

To support the healthcare 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.
The city of Emeryville, California will have the highest minimum wage in the country, at $16.84 per hour.
Seattle is the city with the second highest with a minimum wage of $16.69, while the highest state rate will be California’s at $14.00 per hour.
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’.
While other States’ increases reflect an annual cost-of-living adjustment, which accounts for the changes in states like Alaska, Florida, Minnesota, and Montana.

The federal minimum wage has remained at $7.25 since July of 2009, its longest time without an increase since its inception in 1938. However states are free to raise the price floor.

Minimum Wage 2021

To keep up with the rules in terms of your staff, here’s a rundown of where the 25 states currently stand.

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.

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.

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.

Illinois

$11.00 per hour, up from $10.00.

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.

Massachusetts

$13.50 per hour, an increase of 75 cents.

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.

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.

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.

New Mexico

$10.50 per hour, up from $9.00.

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.

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.

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.

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.