Paychecks in 2014 should get bigger for many minimum wage earners. Although Congress and the Obama administration are still at odds over a call by Democrats to raise the federal figure to $10.10 an hour, 14 states have authorized increases to start next year.
Pressure from public campaigns to address income inequality and low-wage work are credited for the increases, although none of the minimum wage levels planned come close to the $15 an hour some advocates have stated as their goal.
State minimum wages will run from $7.50 an hour in Missouri to $9.32 in Washington State. That compares to the current federal minimum wage of $7.25 per hour.
California has among the biggest jumps with an increase from $8 to $9 starting in July. New Jersey is hiking minimum rates from $7.25 to $8.25. Arizona and Montana are raising minimum rates from $7.80 to just $7.90.
Many of these states will raise the minimum wage for tipped employees to levels ranging from $2.89 in Rhode Island to $5.69 in Connecticut. Neither Washington nor California allow employers to pay lower amounts to tipped employees. New Jersey and Rhode Island will keep their current levels of $2.13 (the federal level) and $2.89, respectively.
The question now is whether, given how infrequently minimum wage levels increase, will the incremental gains result in a significant improvement in workers’ financial lives? Or will it ultimately leave them further behind as wage gains continue to fail to keep up with inflation?
Minimum wages tend to change infrequently and the jumps rarely truly keep pace with accumulated inflation. The last federal increase was in 2007, when the rate went up from $5.15 to $7.25 an hour over a two-year period.
Using an inflation calculator and the 1975 minimum wage of $2.10, to keep place with the 333.2 percent cumulative rate of inflation, the current minimum wage would need to be $9.10. But that doesn’t take into account such things as healthcare and higher education, which have far outpaced the rate of inflation.
In other words, a federal minimum wage of $10.10 an hour would actually give workers a tiny bit of the real economic growth of the last 40 years, but they’d largely be no better off than in the past.