NEW YORK -- Eight states -- including Ohio -- will ring in the New Year with a higher minimum wage, under state laws that require wage floors to keep pace with inflation.
San Francisco, one of the few cities that sets its own minimum wage above the federal level, is also raising wages for the lowest-paid workers in the new year. It will become the first big city in the country to require companies to pay more than $10 an hour.
The increases in Ohio, Arizona, Colorado, Florida, Montana, Oregon, Vermont, and Washington will be 28 cents to 37 cents an hour, according to the National Employment Law Project. That is an extra $582 to $770 a year for a full-time minimum-wage worker and resets the states' minimum wages to $7.64 to $9.04 an hour.
At the high end is Washington state, which will become the first state in the nation to set its minimum wage above $9 an hour. The federal wage floor for most workers is $7.25 an hour.
In Ohio, the minimum wage will be $7.70 an hour, up from $7.40.
About 1 million minimum-wage employees will be affected by increases in the eight states, according to the Economic Policy Institute, a liberal research organization. An additional 400,000 who make just above minimum wage also are likely to get raises because many employers adjust their pay distribution for all employees when a new minimum goes into effect.
Most of the minimum-wage employees affected in these states are women, over the age of 20 and white, according to the institute's analysis of Labor Department data.
A national minimum wage was first enacted during the Great Depression and has been raised sporadically by Congress rather than being automatically indexed to price changes. Adjusting for inflation, the federal wage floor was highest in 1968.
The eight states, as well as 10 others and the District of Columbia and a handful of cities, however, have set an even higher wage floor, which in many cases is indexed to consumer price increases. How that floor changes, and when, depends on the state. Labor organizers are planning additional minimum wage campaigns in several other states next year, according to the National Employment Law Project.
The broader effects of raising the minimum wage are disputed. Some economists argue that raising the cost of labor will actually hurt low-wage workers because employers will decide to hire fewer people. Others say the increased spending power of low-wage workers will create jobs to support added demand.
It is not clear that employers will offset the cost of higher wages by cutting their numbers of employees.
Some economists say they believe that these higher labor costs might be passed along in the form of higher prices for goods and services and that employers also might accept a smaller profit margin when wages rise.
A landmark 1994 case study of a local fast-food industry by David Card and Alan Krueger, who is now the chairman of President Obama's Council of Economic Advisers, found that raising the minimum wage did not lower employment.
Dozens of similar studies have been published since then, and the results have run the gamut.
For example, a study of San Francisco airport employees conducted in 2004 by economists at the University of California, Berkeley, and the University of Waterloo, also found that increasing wages did not lower employment but instead reduced employee turnover. But a literature review of a variety of studies published around the same time came to the opposite conclusion.
Whatever the effect on total employment, for employees who do receive raises in the new year, the added income still will not be enough to push their families above the poverty line.