Minimum Wage Increases Less Impactful Due to Recent Wage Inflation
by King White, on Nov 16, 2021 9:47:11 AM
State and federal minimum wage mandates have long been an important factor to evaluate during the site selection process. Historically, there has been mounting political pressure to increase the minimum wage to $15 per hour in an effort to provide a livable wage for workers. Labor-cost-sensitive employers with retail, call center, warehouse, and unskilled production workers had the greatest exposure.
Then came the COVID-19 pandemic, which created a much different situation as the great wage inflation caused mass labor shortages due to federal subsidies and changing employee attitudes. This shift in labor conditions forced the economy to naturally push entry-level wages to $15 per hour or more across the majority of cities in the U.S.
Despite this recent trend, it remains important to evaluate minimum wage changes during the site selection process due to the long-term implications of your location decisions. The following data compares current and future minimum wage legislation over the next five years to help you develop the best site selection strategy.
12 states will increase minimum wages by 2026
There are 12 states increasing their minimum wage over the next five years. The states increasing to $15 per hour are the most important to watch as there will likely be more wage pressure in these states. Those states include California, Connecticut, Illinois, Maryland, Massachusetts, Michigan, and Washington D.C. The following table indicates each state’s minimum wage by 2026.
| State | 2021 Minimum Wage |
2026 Minimum Wage |
Hourly Increase (2021-2026) |
| Alabama | None | None | N/A |
| Alaska | $10.34 | $10.34 | $0.00 |
| Arizona | $12.15 | $12.15 | $0.00 |
| Arkansas | $11.00 | $11.00 | $0.00 |
| California | $14.00 | $15.00 | $1.00 |
| Colorado | $12.32 | $12.32 | $0.00 |
| Connecticut | $13.00 | $15.00 | $2.00 |
| Delaware | $9.25 | $9.25 | $0.00 |
| Florida | $10.00 | $15.00 | $5.00 |
| Georgia | $5.15 | $5.15 | $0.00 |
| Hawaii | $10.10 | $10.10 | $0.00 |
| Idaho | $7.25 | $7.25 | $0.00 |
| Illinois | $12.00 | $15.00 | $3.00 |
| Indiana | $7.25 | $7.25 | $0.00 |
| Iowa | $7.25 | $7.25 | $0.00 |
| Kansas | $7.25 | $7.25 | $0.00 |
| Kentucky | $7.25 | $7.25 | $0.00 |
| Louisiana | None | None | N/A |
| Maine | $12.15 | $12.15 | $0.00 |
| Maryland | $11.75 | $15.00 | $3.25 |
| Massachusetts | $13.50 | $15.00 | $1.50 |
| Michigan | $9.87 | $15.00 | $5.13 |
| Minnesota | $10.08 | $10.08 | $0.00 |
| Mississippi | None | None | N/A |
| Missouri | $10.30 | $12.00 | $1.70 |
| Montana | $8.75 | $8.75 | $0.00 |
| Nebraska | $9.00 | $9.00 | $0.00 |
| Nevada | $9.75 | $12.00 | $2.25 |
| New Hampshire | $7.25 | $7.25 | $0.00 |
| New Jersey | $12.00 | $12.00 | $0.00 |
| New Mexico | $10.50 | $12.00 | $1.50 |
| New York | $12.50 | $12.50 | $0.00 |
| North Carolina | $7.25 | $7.25 | $0.00 |
| North Dakota | $7.25 | $7.25 | $0.00 |
| Ohio | $8.80 | $8.80 | $0.00 |
| Oklahoma | $7.25 | $7.25 | $0.00 |
| Oregon | $12.75 | $13.50 | $0.75 |
| Pennsylvania | $7.25 | $7.25 | $0.00 |
| Rhode Island | $11.50 | $11.50 | $0.00 |
| South Carolina | None | None | N/A |
| South Dakota | $9.45 | $9.45 | $0.00 |
| Tennessee | None | None | N/A |
| Texas | $7.25 | $7.25 | $0.00 |
| Utah | $7.25 | $7.25 | $0.00 |
| Vermont | $11.75 | $12.55 | $0.80 |
| Virginia | $9.50 | $9.50 | $0.00 |
| Washington | $13.69 | $13.69 | $0.00 |
| Washington D.C. | $15.20 | $15.20 | $0.00 |
| West Virginia | $8.75 | $8.75 | $0.00 |
| Wisconsin | $7.25 | $7.25 | $0.00 |
| Wyoming | $5.15 | $5.15 | $0.00 |
Conclusions
Minimum wage legislation will continue to be a critical factor that companies need to carefully monitor despite the recent wage inflation that occurred as the economy recovered from COVID-19. It is also important to evaluate municipal-level minimum wages as many cities have their own laws and regulations. Minimum wage changes will continue to be only one factor that companies should consider during the site selection process. Other site selection factors such as labor availability, labor costs, logistics, business climate, real estate, economic incentives, and other conditions that are specific to a company’s industry or operation type may prove to be more critical.
