In 2025, 23 states in the United States will raise their minimum wage standards to provide workers with better financial buffers to cope with essential and discretionary expenses. Some states will see minimum wage rates of $15 per hour or higher.
The $15 minimum hourly wage threshold was once considered a pipe dream, but now it is gradually becoming more common, thanks to the nationwide strikes of fast-food and other minimum wage workers in 2012.
According to a report released by the National Employment Law Project on December 9 last year, 21 states and 48 city counties will increase their minimum wage rates by January 1, 2025.
Some states and city counties have plans to raise minimum wages at a later date in 2025.
On New Year’s Day, Illinois, Delaware, and Rhode Island will reach the $15 minimum wage mark for the first time. These three states will join the ranks of seven other states that have already reached or exceeded that level.
Several states are further increasing their minimum wage standards. In California and New Jersey, many healthcare workers’ minimum wages will increase to $17 per hour.
Furthermore, 47 areas, including over 20 regions in California, will reach or exceed the $15 mark on January 1, with most areas rising to over $17.
On April 1, minimum hourly wages for fast-food workers in California soared from $14 to $20, significantly surpassing the state’s $16 standard minimum wage.
Other states are also raising minimum wages but have not reached $15 yet. Missouri’s minimum wage will increase from $12.30 to $13.75, and Nebraska’s minimum wage will rise from $12 to $13.50.
States like Arizona, Colorado, Connecticut, Ohio, and Virginia are slightly increasing their minimum wages, adjusting based on the Consumer Price Index (CPI) to reflect changing inflation over time.
Since 2009, the federal minimum wage has remained at $7.25 per hour, and efforts to increase the minimum wage have so far failed to pass in Congress. Currently, about 30 states (representing over 60% of the U.S. workforce) have minimum wages higher than the federal standard.
Washington state already has a minimum wage of $16.28, and businesses in Burien and King County in the state with 500 or more workers will see their minimum wages leap to $21.16, setting the highest hourly wage threshold nationwide.
Later in 2025, several states and dozens of localities will also raise their minimum wages. Thus, a total of 23 states and 65 city counties (a record-breaking 88 jurisdictional areas) will increase their minimum wage at some point in 2025.
By 2026 or 2027, Alaska, Florida, Hawaii, Missouri, and Nebraska will reach the $15 minimum wage mark. According to data from the National Employment Law Project and the Economic Policy Institute, this will bring the number of states with minimum wages at or above $15 within the next three years to 16, representing nearly half of the U.S. workforce.
However, analysts warn that this growth may have significant impacts on the labor market and consumer behavior.
A report by the Congressional Budget Office in 2021 suggested that raising the federal minimum wage to $15 per hour would increase the incomes of millions and lift 900,000 Americans out of poverty but could also potentially lead to a reduction of around 1.4 million jobs within a few years.
Nonetheless, a study by the Institute for Research on Labor and Employment at the University of California, Berkeley found no evidence that wage increases would lead to price hikes or labor market disruptions.