Minimum wage will rise in 18 states in 2018 -- but no one can agree on the impact it will have

  • Eighteen states, including California and New York, will have higher minimum wages beginning in January.
  • Supporters of the increases say it will help millions of working class Americans, but opponents fear increased unemployment and jobs displaced by automation.
  • Many states have annual adjustments or scheduled increases above the federal minimum wage of $US7.25.

On January 1, thousands of workers in California will receive a pay raise.

But not everyone is happy about it.

California is one of 18 states that will increase minimum wage for the new year. The increases start on December 31, when New York state law goes into effect.

According to the New York State Department of Labour, minimum wage in New York City will be $US12 or $US13 an hour, depending on the size of the company. Employers in Long Island and Westchester will soon have to pay employees $US11 per hour. The rest of the state will have a minimum wage of $US10.40. Each of those four groups will have another increase in December 2018.

While California and New York are the biggest states with incoming changes to minimum wage, they are far from the only ones. Arizona, Colorado, Hawaii, Maine, Michigan, Rhode Island, Vermont, and Washington have planned increases.

And Alaska, Florida, Minnesota, Missouri, Montana, New Jersey, Ohio, and South Dakota will all have minimum wage increases starting January 1, based on annual indexed adjustments. Several other states will increase minimum wage later on in 2018.

Advocates of minimum wage increases say they support the poorest and neediest members of the workforce. Those in opposition to wage increases say that the poor, working class is hurt more than it benefits because of job losses: Many of the lowest paying jobs are at risk of becoming automated when employers are required to pay human workers more money, but the degree to which consequences will be felt is unknown.

Let’s use California, the most populated state in the US, to illustrate why the future of minimum wage is so uncertain.

In California, 33% of workers have at least a Bachelor’s degree, but of those making minimum wage, only 13% are college graduates. On the other hand, 52% of all workers affected by minimum wage never went to college, even though that group makes up 34% of California’s working population.

The right-leaning Employment Policies Institute recently published a study that predicts California’s path to becoming the first state with a $US15 minimum wage will cost the Golden State 400,000 jobs.

The left-leaning UC Berkeley Labour Center explored who would be impacted by California raising the minimum wage to $US15 and came to the opposite conclusion. Over time, the Berkeley study said, the change will affect 5.6 million workers with an average increase of 24% yearly income.

The initiatives are expected to most impact younger people, racial minorities, and those with less education. Berkeley says that 55% of Californians affected by increasing minimum wage to $US15 will be Latino.

The federal minimum wage of $US7.25 has not been moved since 2009.The Democratic Party has adopted an increase to a $US15 minimum wage as part of its platform.

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