As record high U.S. inflation continues to have the most severe impacts on lower income individuals and families, new hourly minimum wage standards went into effect on Friday in 20 states, cities and counties across the country.
While minimum wage thresholds are now above the $7.25 per hour federal minimum in 30 states and the District of Columbia, 20 states, including Utah, continue to match the federal rate, which has remained unchanged since it moved from $6.55 to $7.25 an hour back in 2009.
For context, that $7.25 rate is now over a dollar an hour below the federal poverty rate of $8.38 for a family of two or more with a single wage earner.
Who’s bumping their minimum wages? States that enacted minimum wage increases on Friday include Connecticut, Nevada and Oregon, along with the District of Columbia, which together have almost 6 million workers, per CBS News. Additionally, minimum wages in a dozen California cities, including Los Angeles and San Francisco, saw an increase on July 1, as well as in Chicago and St. Paul, Minnesota. A few counties are also boosting their minimum wages, including Cook County in Illinois and Montgomery County in Maryland.
Some states have adopted simple base rate changes to their minimum wage laws while others have tied minimum wage rates to cost of living increases.
Holly Sklar, CEO of Business for a Fair Minimum Wage, which advocates for higher minimum wages, said indexing minimum wage rates is a more equitable method of working to ensure even the lowest paid workers are earning a living wage.
“When you have indexing to the cost of living you are running in place. It’s not like, ‘I got a huge pay raise,’ but it’s allowing you to not fall behind,” Sklar told CBS MoneyWatch. “It’s really vital.”
A year of wage increases, for some: A report released last December by payroll experts at Wolters Kluwer Legal & Regulatory U.S. identified 26 states that have announced raises to minimum wage rates in 2022.
On Jan. 1, 2022, California became the first state to mandate a minimum wage of $15 per hour, and Washington state isn’t far behind with its new minimum of $14.49 per hour that went into effect the same day.
While most states are making changes that fall well below those rates, some municipal governments have carved out even higher requirements, with West Hollywood, California, embracing the highest minimum wage rate in the country, $17.64 per hour for hotel workers.
Researchers at Wolters Kluwer said while some of the increases going into effect in 2022 have been scheduled for years, conditions wrought by the COVID-19 pandemic have pushed other states to take action on wage issues.
“These minimum wage increases indicate moves toward ensuring a living wage for people across the country,” said Deirdre Kennedy, senior payroll analyst at Wolters Kluwer, in a statement published with the report.
“In addition to previously approved incremental increases, the change in presidential administration earlier this year and the ongoing coronavirus pandemic have also contributed to these changes.”
Inflation hits low wage earners the hardest. Jacob Orchard, a doctoral candidate in economics at the University of California San Diego, explains the gap between the rich and poor grows even wider during inflationary times, known by economists as inflation inequality, due to differences in the typical spending habits of people in each income group.
“In times of economic uncertainty and recession, most households tend to hold back on buying luxury goods,” Orchard wrote in a report for The Conversation. “But by and large, people can’t cut down on necessities such as groceries and heating — although wealthier consumers are better placed to stock up on these necessities when prices are cheap.
“This shift of spending away from luxury items like vacations and new cars, and toward necessities, pushes inflation up for poorer families more than richer ones. This is because lower-income households dedicate a higher percentage of their income on necessities.”
What’s Utah’s minimum wage story? Even amid soaring inflation that’s had the worst impacts on the state’s lowest earners, Utah lawmakers have sidestepped making any changes to the state’s $7.25 per hour minimum wage, though bills proposing changes to the rate make an appearance in almost every legislative session.
The most recent effort by Rep. Clare Collard, D-Magna, was aiming to provide a boost for tipped employees, but her HB364 proposal from the 2022 legislative session never made it to a committee hearing.
In the 2021 session, Collard did a bit better with a bill that would have bumped the state minimum wage to $15 per hour over a four year period. That bill, HB284, got a hearing in front of the House Business and Labor Committee, but the body voted to table the proposal on a 10-3 vote and that’s where the effort died.
In presenting her wage increase proposal, Collard said that there was a wide misconception about the state’s $7.25 minimum only being a rate that applied to working high school students or those in first-time jobs.
“There are families trying to survive on these jobs, and some are working two or three to make ends meet,” Collard told committee members. “When people make more money they raise their standard of living and put more money into the economy. It’s going back into the economy and enabling people to survive.”
During that 2021 hearing, Jordan Hess, vice president of the St. George Area Chamber of Commerce, argued it should remain the free market that makes those decisions and a statewide mandated minimum would hurt Utah’s rural areas.
“We don’t feel that the government should set those wages. The free market economy that our country has been built on, although imperfect, has raised more people out of poverty than any other economic system in the history of the world,” he said.
“And a $15 minimum wage could decimate a lot of our small businesses. ... If $15 an hour is great for Salt Lake County, great. Well, that’s not gonna work in Washington County,” Hess said.