Minimum wage increases to take hold in 20 states

Low-wage workers in 20 states are getting a raise on the first day of 2015, when minimum wage increases automatically take hold.

According to an analysis by the Economic Policy Institute, a left-leaning think tank, that will mean an additional $1.6 billion in wages for the U.S. workforce in the coming year.

In nine of those states, the wage increase will be the result of existing laws requiring that the minimum wage keep up with inflation. Another 11 states — plus the District of Columbia — passed minimum wage laws in 2014 that will take effect on Jan. 1.

States that mandated new minimum wage hikes in 2014 include liberal strongholds such as Vermont and Massachusetts but also some more conservative states such as Arkansas and South Dakota. During the November elections, four red states approved ballot initiatives raising the minimum wage, even as the Republican Party swept state and federal races.

"Obviously, we were really excited to see the increases through ballot proposals and through legislation, because that really shows there is an appetite for raising wages to a level that is closer to a living wage," said Yannet Lathrop, a researcher with the National Employment Law Project (NELP).

In several states, the laws passed in 2014 mandate wage increases in 2016, 2017, and even 2018. The most ambitious of those laws may be Vermont's, which will bring the state's minimum wage up to $10.50 per hour in 2018.

But the labor movement, and its allies such as NELP, are setting their sites higher.

"Even with increased wages, too many workers cannot make ends meet and are forced to rely on taxpayer-funded public assistance programs to pay their bills and put food on the table," said AFL-CIO president Richard Trumka in a statement.

Alternative labor groups, such as those organizing fast food workers, and Walmart employees have been demanding industry-wide wage floors of $15 per hour. In some cities, notably San Francisco and Seattle, the groups succeeded in pushing local governments into passing a $15 minimum laws.

Many of those proposed wage hikes leave out some low-wage workers, or at least increase their wages at a lower level. Tipped workers such as food servers operate on a different wage scale in most states. Under federal law and most state laws, employers can count at least some of the tips their workers receive as a "tip credit" and discount it from the minimum wage they are required to pay.

In Vermont employers of tipped workers will be required to pay at least half the minimum wage, provided that tips make up the other half. Even in 2018, as long as an employee receives at least $5.25 per hour in tips, his or her manager will be required to contribute $5.25 per hour to his or her wages.

In New York, where the minimum wage rose to $8.75 on December 31, the tipped wage will remain at $5 per hour — or $8, including tip — pending the recommendation of a state advisory board. Living wage activists are urging the board to increase the tipped wage, arguing that workers who need to rely on tips to make a living wage are more likely to be victimized by wage theft.

"We really do hope that the wage board decides to make that recommendation," said Lathrop.