Ready or not, you may have to pay unskilled hourly workers more in 2017. Since the federally mandated minimum wage remains resolutely stuck at $7.25 an hour, states and municipalities throughout much of the country have taken payment matters into their own hands. And they're continuing to mandate higher pay. On January 1, minimum wage increases take effect in 19 states and 21 municipalities.
Massachusetts and Washington will have the highest state-wide minimum pay, at $11 an hour. But some municipalities are mandating more. For example, SeaTac, Washington (home of the Seattle-Tacoma International Airport) is raising the minimum wage to $15.24 an hour. And some states are taking a varied approach, such as New York, which will mandate a range of $9.70 to $11 per hour, with the highest minimum for workers in New York City. (You can learn more about your own state or city's minimum wage and coming increases from this minimum wage tracker by the Economic Policy Institute.)
More increases are on the way. Some states, including Florida, New Jersey, and Ohio, are raising the minimum wage automatically, having enacted laws that tie increases to cost-of-living changes. Not only that, in many states, including Washington, California, Oregon, Maine, and the District of Columbia, the current minimum wage increase is part of a process to phase in higher minimum wages over time so that further increases are already planned for future years.
What does all of this mean to hourly workers and their employers? Predictably, it's either impending disaster or the greatest thing ever, depending on your viewpoint and political leanings. Minimum wage earners and activists hail the increases as a lifesaver in an increasingly unaffordable world. Restaurant owners (who are most affected by the change) claim that a higher minimum wage will force them to decrease portion size, start charging for side dishes, or as Inc.'s Norm Brodsky says he may have to do, increase automation and decrease employment.
It may well be that employers respond to increased minimum wages by hiring fewer employees. And a University of Washington study suggests that employers faced with minimum wage increases respond by reducing the hours their employees work. Some would argue these findings prove that raising the minimum wage may negatively affect employers without particularly helping employees. But a closer look suggests that they may help workers. Since many minimum wage-earners work two or more jobs to survive, giving them a slightly shorter workday with no loss of pay seems like a good thing. And it seems hard to argue that this nation needs more jobs that pay so poorly only high school students or retirees can afford to do them.
But, whether higher minimum wages are good for America or not may not really matter right now. The fact is, these new minimum wages were voted in and they take effect starting Sunday. If you're an employer in an affected state or city, you'll have to give minimum wage earners a raise--whether you think it's the right thing to do or not.