by Ceci Grover, on Jan 18, 2024 8:00:00 AM
Effective Jan. 1, 2024, 22 states increased their minimum wage level, with three more expected to implement increased minimum wages throughout the year. As of Jan. 1, the state of Washington had the highest state-level minimum wage at $16.28, more than double the federal minimum wage of $7.25 (which has remained unchanged since 2009). 13 states reverted to using the national minimum wage of $7.25, and seven states either have a minimum wage below the national level or no state minimum wage law.
See the map below for 2024 minimum wage updates by state.
What does this mean for manufacturing and distribution workers?
While minimum wage increases have impacts on lower-skill occupations and industries, production and manufacturing-related employees will likely not be heavily affected. Most employees are already receiving compensation well over the state or federal minimum wage as a result of inflation, competition for workers, cost of living, and skill requirements. Further, as explained in a recent Wall Street Journal article, “As employers clamored to hire from a limited pool of workers [over the last few years], Americans in lower-paying industries gained leverage to obtain some of the largest pay raises and perks.”
See the map below for minimum wage levels by state.
What are actual, market wages for manufacturing and distribution workers?
The map below shows the median hourly advertised salary over the last 12 months for production occupations (SOC 51-0000). This is based on job posting data, that is actual advertised wages for production occupations from the labor analytics firm Lightcast. Site Selection Group oftentimes uses this data in conjunction with other databases and official wage data to show actual, current wages for manufacturing and logistics requirements. Overall, advertised wages for production workers are well above statutory minimum wage levels, ranging from 30% to 200% above minimum requirements. However, advertised wages from job postings tend to correlate with states with higher costs of living and higher minimum wage levels (e.g. California).
See the map below for advertised median hourly earnings and cost of living by state.
Minimum wage levels are a helpful signal, but don’t tell the whole story
Because of workforce shortages and increasing skill requirements, target wages for manufacturing and distribution workers have continued to rise based on Site Selection Group’s project experience. For any company considering establishing a new manufacturing or distribution operation, it is critical to evaluate the specific skill requirements and to evaluate several data sources to calibrate target wages. While the minimum wage level is one indicator of relative wage differences from one state to another, conducting a thorough compensation evaluation is an important step to ensuring long-term success in a new market.
Sources: U.S. Department of Labor; Bureau of Labor Statistics
Lightcast Q4 2023 Data Set
