UPDATED 10:00 AM PT – Sunday, January 3, 2021
The beginning of the new year brings new minimum wages. Workers in 20 states are seeing bumps from a few cents to more than a dollar an hour.
On Sunday, reports detailed the raises. New Mexico will see the biggest rise of an additional $1.50 per hour, which brings the state’s minimum wage to $10.50. Minnesota will see the lowest reported bump at only eight cents.
Multiple localities are doing their own wage hikes, as well, with cities in Arizona and California increasing wages from $13 to $15.
Some raises will also depend on how many workers a business employs.
Advocates for wage increases said the bumps will help reduce poverty and offer much-needed pay raises to essential workers. However, critics said the increases will raise labor costs for employers and slow job growth, especially as the economy tries to recover during the pandemic.
“There’s good and bad in something like this and you’ve got to be careful,” Independent Wealth Management Advisor Mike Reeves said. “If you go too far with raising the minimum wage, you’re going to lose jobs and the move to technology will be sped up. However, on the other side, if somebody’s doing a good job, they need to be paid fairly and you want to maintain a certain standard of living.”
According to reports, the pandemic has already hurt minimum wage efforts in certain areas. In Michigan, for example, state law prohibits a scheduled minimum wage hike when the state’s annual unemployment rate is above 8.5 percent. The rate has reportedly been above 10 percent for most of 2020.
In 2019, a non-partisan report projected that a $15 minimum wage would lead to more than one million jobless workers in an average week.
Additionally, business interest groups said they’re opposed to the wage increases because businesses are already facing the pressure to cut workers during the pandemic. Experts also argue that consumers will face higher prices amid a bump in wages.
“Businesses always have to provide a profit, so they are going to do what’s in their best interest to provide that profit,” Josh Smith of Strategic Wealth Designers said. “So one way they may do it is to raise prices or raise costs, but there’s only so much consumers will take of that.”
Back in 2019, House Democrats passed a bill to increase the federal minimum wage to $15 an hour, but it didn’t pass the Republican-controlled Senate.
However, Democrat candidates in Georgia said the federal minimum wage will increase if they win. John Ossoff even claimed it should be higher than $15.
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