...
By Suzanne Blake
Reporter
0
Share
Newsweek is a Trust Project member
See more of our trusted coverage when you search.Prefer Newsweek on Googleto see more of our trusted coverage when you search.
Americans in roughly 20 states can expect the minimum wage to increase in 2025, and analysts say it could have major impact on the labor market and consumers.
The states voted to increase wage requirements to fight inflation as workers' salaries didn't reflect the current cost of living.
"The most fascinating element to changing minimum wage laws is the sheer amount occurring on January 1, 2025," Alex Beene, a financial literacy instructor for the University of Tennessee at Martin, told Newsweek.
Read More on News
"Some of the increases are targeted to certain jurisdictions—like West Hollywood or St. Paul, Minnesota—while others are tied to in-need professions like health care workers. Not only is it mostly good news, some of the state and city increases should encourage the federal government to take similar action."
The minimum wage increases span from $0.25 in Montana to $2.15 in Michigan. Michigan will see two wage hikes, on January 1 and February 21.
Delaware, Illinois and Rhode Island decided to bump their minimum wage to $15 per hour for the first time. Seven other states have adopted that minimum wage.
But some states are boosting their minimum wages even higher. In California and New Jersey, it will be mandatory for some health care workers to be paid $17 per hour.
California implemented a $20 minimum wage law in April. While many were concerned the boost would lead to higher prices in fast food and other businesses, a study from the University of California's Berkeley Institute for Research on Labor and Employment did not link the salary jump to any price hikes or labor disruptions.
...
A large swath of states, including Arizona, Colorado, Connecticut, Ohio and Virginia, will be adopting smaller increases to the minimum wage based on the consumer price index (CPI), which evaluates inflation over time.
Missouri is taking a unique approach by incrementally increasing to $13.75 in 2025, then to $15 by 2026.
"We're seeing minimum wage in many of these locations tied to increases in the cost of living, a far-removed concept for the federally set minimum wage that still sits at $7.25 an hour," Beene said.
Across the country, the average state minimum wage in 2025 will be $11.18, a boost from $10.69 in 2024.
Michael Ryan, a finance expert and the founder of michaelryanmoney.com, said companies will likely meet the new income requirements with tech and process innovations and workforce restructuring.
"Expect shifts in employment structures, probably accelerating automation in low-wage sectors," Ryan told Newsweek. "The 2025 minimum wage is about creating sustainable economic ecosystems where workers can thrive, businesses can innovate, and communities can prosper."
Kevin Thompson, a finance expert and the founder and CEO of 9i Capital Group, said the minimum wage changes could affect consumers.
"Higher wages often lead to increased costs for employers, which are typically passed on to consumers through higher prices for goods and services," Thompson told Newsweek. "If prices rise too much, consumer demand could drop, potentially leading to job losses as employers adjust to smaller workforces to maintain productivity and protect margins."
View 0 Comments
Submit Correction
View Editorial & AI Guidelines