Millions of American workers got automatic raises on New Year’s Day. According to a report from the National Employment Law Project, 21 states and 35 cities and counties started off 2022 by hiking their minimum wage.
In two of those states — New York and California — and in 31 cities and counties, the minimum wage rose to $15 per hour or more for some or all workers as of Jan. 1. And by the end of 2022, 44 cities and counties will have minimum wages that exceed $15 per hour for at least some workers, the report says.
Those 44 places are:
- Arizona: Flagstaff
- California: Alameda, Belmont, Berkeley, Burlingame, Cupertino, Daly City, East Palo Alto, El Cerrito, Emeryville, Fremont, Half Moon Bay, Hayward, Los Altos, Los Angeles, Los Angeles County, Malibu, Menlo Park, Milpitas, Mountain View, Novato, Oakland, Palo Alto, Pasadena, Petaluma, Redwood, Richmond, San Carlos, San Francisco, San Jose, San Mateo, Santa Clara, Santa Monica, Santa Rosa, Sonoma, South San Francisco, Sunnyvale, West Hollywood
- Colorado: Denver
- Washington, D.C.
- Illinois: Chicago
- Maryland: Montgomery County
- Washington: SeaTac, Seattle
In eight states including New York, Massachusetts and Illinois, the minimum wage hikes were part of scheduled increases with an end goal of $15 per hour. Minimum wage increases in eight other states, including Arizona, Maine and Ohio, were triggered as part of automatic cost of living adjustments that are tied to inflation.
According to recent analysis from researchers at Wolters Kluwer Legal & Regulatory U.S., an information services company, the highest minimum wage in the country can now be found in West Hollywood, California, where a $17.64 minimum wage for hotel workers went into effect over the weekend.
Where the minimum wage is still $7.25
The federal minimum wage has been stagnant at $7.25 an hour since 2009, and the last 12 and a half years have been the longest period in U.S. history without a national increase for the wage floor. Last summer, an analysis from the Economic Policy Institute found that the minimum wage had lost 21% of its value since the last hike in July of 2009. That means workers making the federal minimum effectively earned 21% less than they did 12 years prior — and 34% less than they did in 1968, after adjusting for inflation.
With inflation rising to record highs above 6%, workers employed at the low rate of $7.25 per hour are not only earning less than they used to — they’re also paying significantly more for everyday essentials like groceries and gas. (In order to keep pace with rising prices, today's workers should be seeking pay raises of at least 5%.)
Twenty states still have minimum wages set at the $7.25 threshold, or have no minimum wage laws at all, according to data from the Department of Labor. Democratic lawmakers and the Biden Administration unsuccessfully tried to raise the national minimum wage as part of federal stimulus legislation last year. The states with a $7.25 wage floor are:
- North Carolina
- North Dakota
- New Hampshire
- South Carolina
Employers raise job pay to stay competitive
Even in states where the minimum wage is low, many companies have hiked pay to attract and retain employees amid an ongoing labor shortage. Craft store Hobby Lobby raised its starting wage for full-time workers to $18.50 an hour, effective January 1. Costco raised its starting wage from $16 to $17 in October. Drugstore giants Walgreens and CVS have both announced plans to pay workers a base wage of at least $15 an hour before the end of 2022, and Amazon recently announced it would hike its average starting pay to $18 (though the company’s base wage will remain at $15 an hour).
Of course, it’s not just hourly workers who are due for raises this year. Recent data from a Conference Board survey showed that companies are budgeting an average of 3.9% of their payroll budgets for wage increases in 2022, which is the highest those budgets have been since 2008. That means many American workers are on track for their biggest raises in more than a decade.