In New Mexico, the minimum wage will increase to $10.50, up $1.50 from the current $9 wage. And in California, the rate for employers with 26 workers or more will rise from $13 to $14 an hour, the highest state-wide baseline in the country. In Minnesota, the gain is just 8 cents, to a $10.08 hourly rate for large employers.
Although some of the new state increases were set in place years before, they carry additional significance now, when low-wage workers have been hit particularly hard by the coronavirus pandemic.
“We have lots of low-wage, service workers who are working through the Covid crisis, many of whom are in jobs with a greater risk of transmission,” said Ken Jacobs, chair of the Center for Labor Research and Education at the University of California-Berkeley. “This will be a very welcome boost for them. As well, a lot of families are struggling right now in this crisis.”
Workers’ needs are greater during an economic downturn because, with so many people jobless, they have little bargaining power and employers are able to keep wages low, said Ben Zipperer, an economist at the Economic Policy Institute, a progressive think tank.
Business interests push back
At the same time, some legislators and business organizations have called for a pause on scheduled minimum wage hikes, citing the burden on small businesses that are already struggling.
In New York, members of the state Senate Republican Conference had urged Governor Andrew Cuomo to stop the planned increases slated to go into effect Thursday.
“New York is implementing the minimum wage gradually over many years, not all in one fell swoop,” Evercore ISI economist Ernie Tedeschi told CNN Business via email. “Moreover, and this is the most important point, the schedule for New York’s minimum wage increases has been known for years now, and businesses have been planning for and expecting the hikes this whole time.”
Starting Thursday, the minimum hourly wage in the state will increase 70 cents to $12.50 an hour. The minimum wage rates in suburban Long Island and Westchester County will also rise to $14 per hour from $13 an hour. (The minimum was already set at $15 in New York City).
Some states will have to wait
For the 20 states that will raise their minimum wages, the effects ultimately should be more positive than negative, the EPI’s Zipperer said.
“Redistributing money towards the lowest paid workers is smart policy, because they will spend it,” he said. “This will help the shortfall in consumer demand our economy faces right now.”