2018 Minimum Wage Changes
It is a new year and, of course, that always brings new challenges for employers. Many laws enacted in 2017 went into effect on January 1, 2018. This is also true for wage related laws, with 18 states increasing the minimum wage effective January 1st.
Minimum Wage changes in 2018 for all 50 states
Below is a table of prior and current minimum wage rates for all 50 states, along with the District of Columbia, Guam, Puerto Rico, and the U.S. Virgin Islands.
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Hourly increases ranged from just $.04 in Alaska to $1.00 in Maine. Colorado increased its rate by $.90 per hour, while Hawaii and Maryland both increased by $.85 per hour. As a percentage of last year’s rates, Maine’s increase was the highest at 11%, while Colorado, Hawaii and Maryland each increased over 9%. On the low end, Alaska’s increase was just .04%, while Florida, Minnesota, Missouri, Montana, New Jersey and Ohio showed increases of less than 2% each.
Following is a breakdown of the increases among the 18 states that showed increases:
1 state - $.04; 4 states - $.15; 1 state - $.16; 1 state - $.20; 1 state - $.35; 5 states - $.50; 1 state - $.70; 2 states - $.85; 1 state - $.90; 1 state - $1.00
Thus, the median increase among the 18 states was $.50 per hour and the average increase was $.45 per hour.
What affects state minimum wage rates?
Changes to state minimum wage rates arise from two different methods. Changes are either made through periodic legislative action or by an indexed method that is usually tied to changes in the Consumer Price Index (CPI). Loosely put, increases in the cost of living will result in automatic increases to the minimum wage rate in those jurisdictions that have implemented indexed rate changes.
The Federal minimum wage law is not indexed and it, quite literally, requires an act of Congress to make a change to the Federal rate. Consequently, in times of inflation, workers who are subject to the Federal rate will see their buying power erode as the cost of goods and services increase. The Federal rate has not changed since July 24, 2009.
Back in 1998, the state of Washington was the first to adopt an indexed rate that required cost-of-living adjustments to the rate beginning in 2001. Currently, 19 states either use or will be using inflation indexed rates, including: AK, AZ, CA, CO, DC, FL, ME, MI, MN, MO, MT, NJ, NV, NY, OH, OR, SD, VT, and WA.
State and local revel “Living wage”
The current trend in the United States is for workers to earn a “living wage” that allows families to provide for their basics needs. The federal government has not kept up with this change in thinking and economics, so many States and localities have taken it upon themselves to incrementally increase the minimum wage over time to try to close the gap between what can be earned from a minimum wage job and the true cost of basic living expenses. The concept of a living wage is not a new idea and dates back ancient Greece. In modern economics, the basic premise is that increased wages will raise the standard of living for the lowest earners in our society and this in turn will boost the economy. Of course, another benefit to the government would be less reliance on public aid, welfare, housing and food subsidies. At a micro-economic level, workers who can afford to pay their bills will be more content in their work, resulting in less turnover and more worker loyalty, which in turn will result in more productivity and efficiency for employers. Whether you agree with the economics of the issue or not, the trend in wages is that the minimum wage levels will continue to increase in United States until a level of parity with the true cost of living is achieved. It certainly isn’t likely that minimum wage rates will decrease!
Employers need to be aware of this upward trend in minimum wage rates and they need to factor those increased costs into their long-term planning, projections and budgets. The experts at BOR-GO can assist you in planning and managing all of your Human Capital needs. Call us today for a no obligation consultation!
Updated on September 12, 2018 21:31