One million workers get pay boost as 10 states adjust minimum wage

Nine states adjust minimum wage yearly to account for inflation and a tenth passed a new law raising minimum wage. Experts still debate minimum wage's impact on the economy.

Matt Gouras/AP
Kaylee Feight talks about the impact of a minimum wage increase on her job at Quiznos in Helena, Mont., in Dec. Montana's minimum wage workers are getting a small pay raise on New Year's Day when an automatic cost-of-living increase takes effect.

From Washington State to Florida, the new year is bringing a boost in the minimum wage for an estimated 1 million low-wage workers.

The changes are coming in nine states that adjust their base wages annually for inflation, and in Rhode Island, where legislation last year set a higher minimum. The federal minimum wage, which is set by Congress and which sets the pattern in a majority of US states, remains unchanged at $7.25.

Pay gains for the affected workers affected will be modest – an extra $190 to $510 per year for the average directly affected worker, according to the National Employment Law Project, a group that supports the idea of annual inflation-adjustment. But the upgrade is meaningful to workers who often earn about $16,000 in a year.

States where minimum pay is rising are Arizona, Colorado, Florida, Missouri, Montana, Ohio, Oregon, Rhode Island, Vermont, and Washington.

For years, the setting of minimum wages has been controversial. Critics say it artificially limits employment, while backers say it helps boost living standards for low-skill workers while not harming employment.

The issue remains fodder for debate among economists. Still, Vermont, with a minimum $8.60 an hour, has an even lower unemployment rate than next-door New Hampshire, where base pay is $7.25. Both states have unemployment rates below 6 percent of the work force, much lower than the national average.

The Jan. 1 minimum wage increases benefit 995,000 low-paid workers, says the the National Employment Law Project, citing research by the Economic Policy Institute. Most are directly affected (as their former pay was below the new minimum), while some 140,000 of those workers are receiving an indirect raise as pay scales are adjusted upward to reflect the new minimum.

More than two-thirds of the affected low-wage workers are over age 20 and work 20 hours a week or more.

Washington State has the nation's highest statewide minimum, now set at $9.19 an hour. That's about where the national minimum would be if it had kept pace with inflation since 1978.

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