JANUARY 2014

THE COUNCIL OF STATE GOVERNMENTS

CAPITOL FACTS & FIGURES

FISCAL & ECONOMIC DEVELOPMENT

Minimum Wage Watch 2014

States in 2014 will be addressing increasingly difcult labor issues, including concerns over raising the minimum wage. President Obama and some members of Congress have called for an increase in the federal minimum wage, but some states already have taken action. Legislators and voters in ve states decided to raise the minimum wage in 2013 and more states are likely to consider the issue in 2014.

Raising the minimum wage is a big topic this year for both state and federal legislators, but the issue remains controversial.
Proponents of raising state minimum wages argue that while the federal rate has remained stagnantit hasnt increased since 2009the costs for housing, food, utilities and health care have continued to climb. This leaves those earning minimum wage with less money to afford the basics, which in turn puts downward pressure on the demand for goods and services. Opponents warn that raising the wage now would have a negative impact on businessesespecially during anemic economic timesand that a minimum wage hike actually hurts those it intends to help by forcing employers to cut jobs or hours at the low end of the pay scale. est percentage of any statefollowed by Oregon (1.1 percent) and California (1.4 percent).

The young and the undereducated are more likely to earn the minimum wage, although those older than 25 make up a significant portion of the people earning at or below the minimum wage.2
In 2012, half of those earning at or below the minimum wage were ages 16-24. About 24 percent of those earning minimum wage were 16-19, which means that 76 percent of those earning minimum wage were older than 20. Those without a high school diploma were more than twice as likely to be in a minimum-wage job as their high school graduate counterparts in 2012. About 10 percent of hourly paid workers without a high school diploma earned the federal minimum wage or less last year, compared to about 4 percent of those who had a high school diploma with no college and about 2 percent of college graduates. Women made up 64 percent of minimum wage earners in 2012.

Millions of workers across the country earn the minimum wage or less.1
The federal minimum wage is $7.25 per hour. Someone working at that rate for 40 hours a week for 52 weeks a year earns $15,080, just below the poverty level for a two-person household. In 2012, an estimated 3.6 million peopleor 4.7 percent of all hourly paid workersmade at or below the federal minimum wage. About 2 million people earned below the minimum wage in 2012. That could be due to Fair Labor Standards Act violations or permitted exemptions to the minimum wage law. Idaho (7.7 percent), Texas (7.5 percent) and Oklahoma (7.2 percent) have the highest proportion of hourly paid workers earning at or below the federal minimum wage. On the other end of the scale, 1 percent of workers in Alaska earn at or below the minimum wagethe small-

Wage floors vary throughout the country, as some states set their rate higher than the federal minimum.3
Although most states establish their own minimum wages legislatively, federal minimum wage law supersedes state law. That means if the minimum wage established by the state is higher than the federal rate, the state rate applies. If the states minimum rate

is lower than the federal rate, the federal rate applies. Alabama, Louisiana, Mississippi, South Carolina and Tennessee dont have an established minimum wage requirement. Only four statesArkansas, Georgia, Minnesota and Wyominghave a minimum wage set below the federal rate. Twenty states have a minimum wage that is the same as the federal rate. Twenty-one states4 have rates higher than the federal rate, ranging from a low of $7.40 per hour in Michigan and $7.50 in Maine, Missouri and New Mexico to a high of $9.32 per hour in Washington state. In 10 statesArizona, Colorado, Florida, Missouri, Montana, Nevada, Ohio, Oregon, Vermont and Washingtonminimum wages are linked to the consumer price index. For these states, the minimum wage is usually increased each year, generally around the rst of the year. On Jan. 1, 2014, these states, except for Nevada, increased their wages.5

Changes for 20146

As of Jan. 1, 2014, the minimum wage increased over 2013 rates in 13 statesArizona, Colorado, Connecticut, Florida, Missouri, Montana, New Jersey, New York, Ohio, Oregon, Rhode Island, Vermont and Washington. Increases ranged from 10 cents an hour in Arizona, Montana and Ohio, to $1 an hour in California and New Jersey. For nine states, the increased minimum wage is because the rate is linked to ination. In three statesConnecticut, New York and Rhode Islandthe increase is due to legislative action. In 2013, voters approved a constitutional amendment in New Jersey to raise the minimum wage by $1 and tie automatic annual increases in the future to the Consumer Price Index. In addition to these 13 states, Californias minimum wage will increase from $8 an hour to $9 an hour on July 1, 2014. In New York, the wage is scheduled to increase to $8.75 per hour on Dec. 31, 2014.

Minimum Wage Changes in 2014

State Arizona California Colorado Connecticut Florida Missouri Montana New Jersey New York Ohio Oregon Rhode Island Vermont Washington Previous Rate $7.80 $8.00 $7.78 $8.25 $7.79 $7.35 $7.80 $7.25 $7.25 $7.85 $8.95 $7.75 $8.60 $9.19 New Rate $7.90 $9.00 $8.00 $8.70 $7.93 $7.50 $7.90 $8.25 $8.00/$8.75 $7.95 $9.10 $8.00 $8.73 $9.32 Effective Date January 1, 2014 July 1, 2014 January 1, 2014 January 1, 2014 January 1, 2014 January 1, 2014 January 1, 2014 January 1, 2014 Dec. 31, 2013 / Dec. 31, 2014 January 1, 2014 January 1, 2014 January 1, 2014 January 1, 2014 January 1, 2014 Reason for Increase Tied to CPI Legislative action Tied to CPI Tied to CPI Tied to CPI Tied to CPI Tied to CPI Ballot Initiative Legislative action Tied to CPI Tied to CPI Legislative action Tied to CPI Tied to CPI

Jennifer Burnett, CSG Program Manager, Fiscal and Economic Development Policy | jburnett@csg.org

REFERENCES
U.S. Department of Labor, Bureau of Labor Statistics, Characteristics of Minimum Wage Workers: 2012, http://www.bls.gov/cps/minwage2012.htm Ibid. 3 U.S. Department of Labor, Wage and Hour Division, Minimum Wage Laws in the States - January 1, 2014. http://www.dol.gov/whd/minwage/america.htm. 4 Although both Nevada and Ohio are included in the list of states with minimum wages higher than the federal rate, there are some notable exceptions. The minimum wage in Nevada of $8.25 is required for workers not offered health benefits insurance by their employers. If health benefits are provided, the wage is $7.25, the same as the federal rate (http://www.laborcommissioner.com/min_wage_overtime/2013%20Annual%20Bulletin%20-%20Minimum%20Wage.pdf). Ohios minimum wage of $7.95 applies only to employers who gross more than $292,000. If an employer grosses less than $292,000, the federal minimum wage applies. 5 If an annual inflation adjustment is made in Nevada, the adjustment goes into effect in July. 6 U.S. Department of Labor, Wage and Hour Division, http://www.dol.gov/whd/minwage/america.htm.
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THE COUNCIL OF STATE GOVERNMENTS

State Minimum Wage 2014

Effective Minimum Wage1

State
United States Alabama Alaska Arizona Arkansas California* Colorado Connecticut Delaware Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington West Virginia Wisconsin Wyoming

20132
$7.25 $7.25 $7.75 $7.80 $7.25 $8.00 $7.78 $8.25 $7.25 $7.79 $7.25 $7.25 $7.25 $8.25 $7.25 $7.25 $7.25 $7.25 $7.25 $7.50 $7.25 $8.00 $7.40 $7.25 $7.25 $7.35 $7.80 $7.25 $8.25 $7.25 $7.25 $7.50 $7.25 $7.25 $7.25 $7.85 $7.25 $8.95 $7.25 $7.75 $7.25 $7.25 $7.25 $7.25 $7.25 $8.60 $7.25 $9.19 $7.25 $7.25 $7.25

20143
$7.25 $7.25 $7.75 $7.90 $7.25 $8.00 $8.00 $8.70 $7.25 $7.93 $7.25 $7.25 $7.25 $8.25 $7.25 $7.25 $7.25 $7.25 $7.25 $7.50 $7.25 $8.00 $7.40 $7.25 $7.25 $7.50 $7.90 $7.25 $8.25 $7.25 $8.25 $7.50 $8.00 $7.25 $7.25 $7.95 $7.25 $9.10 $7.25 $8.00 $7.25 $7.25 $7.25 $7.25 $7.25 $8.73 $7.25 $9.32 $7.25 $7.25 $7.25

Year-over-Year Change
SAME SAME $0.10 SAME SAME $0.22 $0.45 SAME $0.14 SAME SAME SAME SAME SAME SAME SAME SAME SAME SAME SAME SAME SAME SAME SAME $0.15 $0.10 SAME SAME SAME $1.00 SAME $0.75 SAME SAME $0.10 SAME $0.15 SAME $0.25 SAME SAME SAME SAME SAME $0.13 SAME $0.13 SAME SAME SAME

Total Number of Workers Paid At or Below Minimum Wage4

65,000 2,000 68,000 50,000 127,000 42,000 23,000 11,000 214,000 136,000 14,000 31,000 85,000 93,000 46,000 44,000 60,000 74,000 11,000 67,000 62,000 90,000 60,000 45,000 97,000 4,000 32,000 23,000 13,000 103,000 23,000 224,000 137,000 7,000 147,000 64,000 11,000 195,000 10,000 59,000 12,000 86,000 452,000 37,000 5,000 123,000 29,000 26,000 94,000 9,000

Percent of Hourly Workers Paid At or Below Minimum Wage4

6.0% 1.0% 4.6% 6.9% 1.4% 3.4% 2.7% 5.0% 5.1% 6.4% 4.2% 7.7% 2.8% 5.2% 5.0% 5.6% 5.2% 7.1% 2.9% 5.0% 4.0% 3.7% 3.9% 6.4% 6.3% 1.5% 5.7% 3.2% 3.5% 5.8% 4.7% 5.5% 6.2% 3.4% 4.5% 7.2% 1.1% 5.7% 3.4% 5.4% 4.7% 5.5% 7.5% 4.9% 2.7% 6.8% 1.7% 5.7% 5.4% 5.2%

*Californias minimum wage will increase from $8.00 an hour to $9.00 an hour on July 1, 2014, and increase again to $10.00 an hour on January 1, 2016. 1 Four states have a state minimum wage that is lower than the federal minimum wage: Wyoming ($5.25), Georgia ($5.15), Minnesota ($6.15) and Arkansas ($6.25). In these states, the effective minimum wage is $7.25, the federal rate. 2 Rate as of Jan. 1, 2013, U.S. Department of Labor, Wage and Hour Division, http://www.dol.gov/whd/state/stateMinWageHis.htm 3 Rate as of Jan. 1, 2014, U.S. Department of Labor, Wage and Hour Division, http://www.dol.gov/whd/minwage/america.htm 4 Employed wage and salary workers age 16 and over, U.S. Department of Labor, Bureau of Labor Statistics, Characteristics of Minimum Wage Workers: 2012, http://www.bls.gov/cps/minwage2012.htm

THE COUNCIL OF STATE GOVERNMENTS