Minimum Wage Set to Increase in 8 States on New Year’s Day

The holiday season brings good news to 1.4 million low-wage workers in eight states. On the first day of January, these workers will see their income getting a modest boost as a result of state laws that require the minimum wage to keep up with inflation. This ensures that the real value of the lowest-paid workers' wages does not shrink as normal costs of living go up.

The state minimum wage rates will rise between 28 and 37 cents per hour, which represents an extra $582 to $770 a year for a full-time worker. The eight states are Arizona, Colorado, Florida, Montana, Ohio, Oregon, Vermont and Washington.

The increased consumer spending generated by the raises could lead to an additional $366 million in Gross Domestic Product and create the equivalent of more than 3,000 full-time jobs, according to an analysis by the Economic Policy Institute.

These minimum wage increases represent bright spots on an otherwise bleak economic horizon, said Christine Owens, executive director of the National Employment Law Project, in a statement. Workers' buying power is the secret weapon in the fight to get our economy back on track.

More than one million workers will be directly impacted as the new minimum wage rates will exceed their current hourly pay, and 400,000 more will see a raise as pay scales are adjusted upward to reflect the new minimum wage, according to an analysis of government data by the Economic Policy Institute. Eighty percent of these low-wage workers are over age 20, and 78 percent work 20 hours per week or more.

Strengthening the buying power of low-wage workers is especially critical in the current economic climate. A recent NELP study finds that the majority of new jobs created in the wake of the recession are in low- and mid-wage occupations. Although the share of the workforce that comprises low-wage workers is growing, the wages for this group are declining: Workers in lower-wage occupations (with median wages under $13.52 per hour) have seen a 2.3 percent decline in real wages since the recession began.

In an economy drained by sluggish demand and extreme inequality, we ignore the problem of low wages at our peril, Owens said. While some of our economic challenges seem intractable, the problem of low wages is one we can, and should, act on immediately.

Legislation to increase the minimum wage and add an annual cost-of-living adjustment was introduced in several states this year, including California, Massachusetts, Maryland and Illinois.

The table below lists the following: states with increases; amount of increase; the new wage on January 1, 2012; and increase in annual earnings for a full-time worker.

Arizona: $0.30; $7.65; $624

Colorado: $0.28; $7.64; $582

Florida: $0.36; $7.67; $749

Montana: $0.30, $7.65; $624

Ohio: $0.30; $7.70; $624

Oregon: $0.30; $8.80; $624

Washington: $0.37; $9.04; $770

Vermont: $0.31; $8.46; $645