Minimum wages will rise in more states and cities in 2025

Those at the bottom of the wage scale have seen their paychecks go up strongly since the pandemic started in percentage terms, rising even faster than higher earners. And one reason is increases to the minimum wage. Not, it must be noted, at the federal level, where it’s been $7.25 an hour for more than 15 years. But many states, cities and counties have been raising their minimum wages, in some cases well above the federal level.

Another wave of hikes will kick in Jan. 1, with 21 states and 48 other jurisdictions boosting their minimum rates. In fact, by next year, about 1 in 3 U.S. workers will live in a place where the minimum wage is at or above $15 an hour.

Next year’s minimum wage hikes are the legacy of sustained political pressure by advocates for low-wage workers, said Sebastian Martinez Hickey, a state economic analyst at the Economic Policy Institute.

“We’re more than a decade into the Fight for $15 movement, which started out with worker organizing in New York City among fast-food workers,” he said.

Nearly half of U.S. workers will live in states with a $15 an hour minimum wage or higher by 2027, Hickey said.

“They include very wealthy states like California. But it’s also rural states like Nebraska will reach $15 minimum wage in a couple years,” he said.

That’s more than double the federal minimum wage, which 20 states follow, said Yannet Lathrop, a senior researcher and policy analyst at the National Employment Law Project.

“There’s a substantial workforce that is mainly in the South that is stuck at $7.25. And those states have 37% of the total U.S. workforce. The South is home to a majority of Black workers,” she said.

Minimum wage hikes do well at the ballot box. Michael Strain, director of economic policy studies at the American Enterprise Institute, said that’s not too surprising.

“Voters tend to support minimum wage increases because they think it’s going to increase their wages,” he said.

When the minimum wage goes up, wages a little higher on the income ladder tend to go up as well.

But Strain said $15 an hour or higher isn’t good for everyone: “The higher the minimum wage goes, the harder it is for the least-educated, least-experienced and most-vulnerable workers to find jobs,” he said.

The minimum wage is indexed to inflation in nearly half of states, rising automatically with the cost of living. 

Michele Evermore, a senior fellow at The Century Foundation, worked on Capitol Hill the last time Congress raised the federal minimum wage.

“Indexing to inflation didn’t seem quite as important in 2007 as it does, you know, after our experience of the last few years,” she said, when a sharp spike in inflation hit low-income households particularly hard.