Half of all U.S. states raising minimum wage in 2021 – here is the list

The move to increase the minimum wage gained significant ground in 2020 on the state level. 

Twenty-five states will raise the minimum wage in 2021, with 21 of those states enacting the increases on January 1, according to payroll experts at Wolters Kluwer Legal & Regulatory U.S.

The firm noted that some of the hikes 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." Other states' increases reflect an annual cost-of-living adjustment, which accounts for the changes in states like Alaska, Florida, Minnesota, and Montana.

"Those states following the step-up approach tend to have higher minimum wage rates than those taking a cost-of-living adjustment approach," said Barbara O'Dell, JD, an employment law analyst at Wolters Kluwer Legal & Regulatory U.S. "The trend towards regional minimum wages, such as those in New York and Oregon, also reflect lawmakers' recognition that costs of living are higher in large metro areas than they are in other parts of the state."

While states have been in the forefront of wage hikes, the federal minimum wage has remained at $7.25 an hour since 2009. President-elect Biden has pledged to boost it to $15 an hour and also index the minimum wage to match inflation. 

“The incoming Biden administration has expressed interest in increasing the federal minimum wage, but whether legislation to increase it would pass is an open question,” O’Dell said.

Here is Wolters Kluwer Legal & Regulatory’s analysis on state minimum wage changes coming in 2021.

Alaska: Up to $10.34 per hour, based on a 1.4% increase in the cost of living. Wage rates are adjusted annually based on inflation.

Arizona: Up to $12.15 per hour starting in 2021 based on the Consumer Price Index. 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: Up to $11 per hour.

California: Up to $14.00 per hour, for businesses with 26 or more employees; $13.00 for smaller employers.  

On April 4, 2016, California Governor Edmund G. Brown Jr. signed legislation to gradually raise the state minimum wage with annual increases to reach $15.00 by 2022 for businesses with 26 or more employees and by 2023 for smaller employers. The plan also allows for the Governor to "pause" wage hikes, to be determined by September 1 of each year for the next year, if negative economic or budgetary conditions emerge.

Colorado: Up to $12.32 per hour. [The Denver local government is increasing the minimum wage to $14.77 with another increase to $15.87 happening in 2022.]

Connecticut: Up to $12 per hour, scheduled to increase to $13.00 on August 1, 2021. The minimum wage is scheduled to reach $15.00 per hour in 2023.

Florida: Up to $8.65 per hour. A constitutional amendment approved by voters in the November 3, 2020 General Election will increase the minimum wage to $10.00 on September 30, 2021 and to $15.00 by 2026.

Illinois: Up to $11.00 per hour, from $10.00. The minimum wage is scheduled to reach $15.00 in 2025.

Maine: Up to $12.15 per hour, from $12.00.

Maryland: In 2021, the minimum wage is $11.75 for large employers and $11.60 for small employers, increasing at different increments to reach $15.00 in 2025 for large employers and in 2026 for small employers. 

Massachusetts: Up to $13.50 per hour, an increase of 75 cents. The minimum wage is scheduled to reach $15.00 by 2023.

Minnesota: Up to $10.08 per hour (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).

Montana: Up to 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. Wage rates are adjusted annually based on inflation.

Nevada: For employees who do not receive health benefits, minimum wage to increase to $9.75 on July 1, 2021.  For employees who do receive health benefits applies, to increase to $8.75 on July 1, 2020.

New Jersey: Up to $12.00 per hour for most employees, from $11.00 per hour. The minimum wage is scheduled to reach $15.00 for most employees in 2024.

New Mexico: Up to $10.50 per hour, from $9.00. The minimum wage will increase to $12.00 by 2023.

New York: The state of New York will increase its standard minimum wage to $12.50 in 2021, except for fast-food workers in the state, whose minimum wage will be increased to $15 on July 1, 2021. Also, 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.

Ohio: Up to $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. The minimum wage rate applies to employees of businesses with annual gross receipts of $323,000 per year (changed from $319,000 in 2020). For employees at smaller companies and for 14- and 15-year-olds, the state minimum wage is $7.25 per hour, which is tied to the federal rate.

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. 

Pennsylvania: $7.25 per hour, but $13.50 for employees under Governor's jurisdiction, up from $13.00.

South Dakota: Up to $9.45 per hour, up 15 cents from $9.30 per hour. Wage rates are adjusted annually based on inflation. 

Vermont: Up to $11.75 per hour, a 79-cent scheduled increase over the $10.96 per hour 2020 rate.

Washington: Up to 13.69 per hour, for employees who have reached the age of 18, based on a 1.39% increase in the cost of living. Workers under 16 years old can be paid 85% of the adult minimum wage, or $11.64 per hour, in 2021. The initiative also guarantees paid sick time to workers, allowing workers to accrue one hour of paid sick leave for every 40 hours worked.