In a move to support workers in keeping up with inflation, 21 states are raising their minimum wage in 2025. The January 1 update on minimum wages is set to help over 9.2 million workers, many of whom fall below the poverty line. These wage hikes may not be sufficient in collectively bringing this segment of the population above the poverty line, but it is a step in the right direction.
As many states move to take action, the federal minimum wage of $7.25 an hour remains unchanged. The federal minimum has been left untouched since 2009 and still sets the wage baseline in 20 states. The regulation has been criticized for setting the bar unreasonably low, but there are no proposed changes to the federal standard yet.
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Which States Are Raising the Minimum Wage in 2025?
The minimum wage hike went into effect on January 1, 2025, and affects workers in Maine, Vermont, Washington, Montana, Minnesota, Illinois, Michigan, New York, Rhode Island, South Dakota, Ohio, New Jersey, Connecticut, California, Colorado, Nebraska, Missouri, Virginia, Delaware, Arizona, and Alaska.
Insight from the Economic Policy Institute (EPI) shows that the minimum wage in Delaware, Illinois, and Rhode Island is now standing at $15.00 an hour. As a result, 10 states and Washington D.C. can claim to have a minimum wage at or above $15.00 an hour. With over a third of all U.S. workers contained in these jurisdictions, the rise in wages can have a considerable impact on the workforce. By 2027, this percentage should expand to cover nearly half of the workforce.
Delaware has made the biggest increase in terms of the scale of change, with a $1.75 increase from $13.25 in 2024 to $15.00 in 2025. Washington already had a higher minimum wage limit compared to the other states making a change, and it still remains on top with a change from $16.28 in 2024 to $16.66 in 2025.
The average wage changes in these 21 states will range between $201 and $1,291.
Why is the Minimum Wage Going Up in these States?
The minimum wage increase in January 2025 is due to three primary reasons. Two of the states, Nebraska and Missouri, are making a change due to ballot measures passed by voters. For Illinois, Michigan, New York, Rhode Island, and Delaware, the changes are occurring due to decisions made by state legislators. For the rest of the states making a change, the increase has been made to help workers keep up with inflation as a part of automatic due process.
The data shows that 9 million workers will benefit from the wage raise across the country. According to the EPI, almost one in five or 20% of these affected workers live in households that operate below the poverty line. Almost 49% of them have household incomes below twice the poverty line.
The non-profit think tank also explains that around 25% of the affected workers are parents and more than 5.3 million children live in these households where they will benefit from a wage increase. The minimum wage hike in January will not only benefit the workers but also the quality of life for children in these affected households.
It is also interesting to note that 88.0% of the affected workers are adults and around 41.4% of these workers have completed some form of higher education beyond high school. There is a common misconception that only teenagers work minimum wage jobs as a way to gain experience and some disposable income when, for a large number of adults, these jobs are their only way of making ends meet.
Over time, we should get a better sense of how these minimum wage hikes have affected the lives of workers and employers alike and this should make it easier for other states to plan their own adjustments accordingly.
