In January, San Francisco will officially be the first U.S. city to have a minimum wage of above $10, nearly $3 more than the federal minimum wage of $7.25. And that won’t be the only locale in which workers will see a little extra pay in 2012. In fact, eight states will be raising their minimum wage next year, which, according to the Economic Policy Institute, will benefit 1.4 million workers:
There are eight states that have legislated annual, inflation-linked increases in their minimum wage. This “indexing” of the minimum wage ensures that the real value of the lowest-paid workers’ wages does not shrink as normal costs of living go up. On Jan. 1, 2012, minimum-wage workers in Arizona, Colorado, Florida, Montana, Ohio, Oregon, Vermont, and Washington will all see an increase in their paychecks.
The table below describes the workers affected by the increase. Across these eight states, an estimated 1,045,000 workers will be “directly affected.” These are workers whose current wages are between the existing state minimum wage and the new Jan. 1 minimum wage. In addition, another 394,000 workers will be “indirectly affected” by the increase. These indirectly-affected workers are those whose current wages are just above the new Jan. 1 minimum, and are likely to also see a wage increase as employers adjust their overall pay structures to reflect the new minimum (the “spillover” effect).
The extra money pumped into the economy by the increases should also create about 3,000 jobs. But even with these increases, the minimum wage has a long way to go: It would actually take a minimum wage of about $9.92 today to match the buying power of the minimum wage in 1968.