Happy New Year: January 1 State Minimum Wage Hikes

Here we are in the midst of the busy holiday season – especially for warehouse-based 3PLs that serve retail and e-commerce customers – but some of you will need to start preparing for the New Year, specifically minimum wage increases that will go into effect on January 1, 2112.

Although the 2012 federal minimum wage will remain unchanged at $7.25 per hour, a number of states will be implementing minimum wage hikes you need to pay attention to if you have employees located in those states.

Nationwide, 18 states and Washington, D.C. have minimum wage rates that are higher than the federal minimum wage of $7.25, according to U.S. government data. In all, 10 states will increase their rates in 2012, because they yoke annual increases in their minimums to increases in the cost of living.

While the intention of minimum wage increases is to raise the spending power of the lowest paid workers, which advocates say helps the economy, research shows they have a negative impact on job growth.

Michael Saltsman, research fellow at the Employment Policies Institute, said, “Between 2003 and 2007, 28 states —including Missouri, Montana, Ohio, Oregon, and Washington — raised their minimum wage above the federal level, with the stated goal of helping the lowest-paid workers. Yet, despite these good intentions, award-winning economic research published last year found no resulting reduction in poverty.” (http://epionline.org/news_detail.cfm?rid=328)

The reasons are two-fold, Saltsman explained. “First, minimum wage increases are poorly targeted to low-income families, and often benefit part-time employees in a higher-income family instead of the intended recipients. Secondly, wage hikes make it more expensive to hire less-skilled and less-experienced jobseekers, and the unintended consequence is fewer hours and jobs for people who need them most.”

Here is the list of state minimum wage hikes that are scheduled to take effect on January 1:

Ohio: A 30-cent per hour increase, from $7.40 to $7.70 per hour. However, employers can pay the federal minimum wage to minors, ages 14 and 15 years old, and adults if the business’s gross revenue is $283,000 per year (previously it was $271,000).

Florida: A 36-cent per hour increase from $7.31 to $7.67 per hour. The minimum wage was raised six cents per hour earlier this year on June 1.

Oregon: A 30-cent per hour increase, from $8.50 to $8.80 per hour.

Washington: A 37-cent per hour increase, from to $8.67 to $9.04 per hour (The U.S. Department of Labor says Washington State’s minimum wage is the highest for any state in the country).

Arizona: A 30-cent per hour increase from $7.35 to $7.65 per hour.

Montana: A 30-cent per hour increase, from $7.35 to $7.65 per hour.

Colorado: A 28-cent per hour increase, from $7.36 to $7.64 per hour.

Vermont: A 31-cent increase from $8.15 to $8.46 per hour.

Missouri: Although the state law mandates that the minimum wage rise with the cost of living, the Missouri Department of Labor announced that the state minimum wage will remain unchanged in 2012 at $7.25 per hour.

San Francisco: I suppose it shouldn’t surprise most readers of this blog to learn that the city of San Francisco has its own minimum wage, which will increase by 32 cents, from $9.92 per hour in 2011 to $10.24 on January 1.

Nevada is among the states with a law requiring that minimum wages be adjusted annually, but it had not yet announced what that increase will be for next year when this was written. Its current minimum wage is $7.25 per hour for those employees who have health benefits provided by their employers, and $8.25 per hour for all others.