A wave of minimum wage increases is on the way in 2024 (Courtesy of the Jacksonville Business Journal) — Minimum wages are going up in dozens of cities and states on Jan. 1, in large part because of automatic increases set by legislation.
The highest minimum wage by state ringing in the new year will be Washington, at $16.28, followed by California, at $16. The District of Columbia saw its minimum wage increase to $17 on July 1, 2023. Many states have either scheduled increases into minimum wage laws or have pegged them to inflation, triggering automatic bumps in their minimum wage rates.
“Minimum wage increases are a great way to start the new year,” said Holly Sklar, CEO of Business for a Fair Minimum Wage, in a news release. “They help workers put food on the table and keep a roof overhead, and they boost the consumer spending that businesses depend on. Fairer wages help businesses hire and retain employees, and deliver the reliable customer service that leads to repeat customers instead of lost customers. While the federal minimum wage falls further and further behind the cost of living, at just $7.25 an hour, state increases are vital for workers, businesses and communities.”
The group, which pushes for higher minimum wages, collected a list of upcoming scheduled increases. They include:
- Delaware increases to $13.25 on Jan. 1 and $15 in 2025.
- Hawaii increases to $14 on Jan. 1, then to $16 in 2026 and $18 in 2028.
- Illinois increases to $14 on Jan. 1 and $15 in 2025.
- Maryland increases to $15 on Jan. 1 for businesses of all sizes.
- Michigan increases to $10.33 on Jan. 1.
- Nebraska increases to $12 in 2024, $13.50 in 2025 and $15 in 2026, and is then indexed to keep pace with the cost of living.
- New Jersey increases to $15.13 on Jan. 1 and is then indexed. For seasonal businesses and those with fewer than six employees, the minimum wage increases to $13.73 on Jan. 1, then rises to at least $15 by 2026.
- New York increases on Jan. 1, to $16 in New York City, Westchester County and Long Island, and $15 in the rest of the state, followed by $0.50 increases in 2025 and 2026. Indexing begins in 2027.
- Rhode Island increases to $14 on Jan. 1 and $15 in 2025.
States with automatic increases on Jan. 1, pegged to inflation or other data, include:
- Alaska increases to $11.73
- Arizona increases to $14.35
- California increases to $16
- Colorado increases to $14.42
- Connecticut increases to $15.69 (CT is indexed to the Employment Cost Index)
- Maine increases to $14.15
- Minnesota increases to $10.85 for employers with annual gross revenues of at least $500,000 and $8.85 for employers with revenues of less than $500,000
- Missouri increases to $12.30
- Montana increases to $10.30
- Ohio increases to $10.45
- South Dakota increases to $11.20
- Vermont increases to $13.67
- Washington state increases to $16.28
Fewer employees will get promoted in 2024
Meanwhile, employers are planning on promoting, on average, about 9.3% of their workforce in 2024. That’s down from actual results a year ago, when employers promoted 10.3% of their workforce.
Promotions — and other un-budgeted salary hikes — were a common theme in the hiring market during the turnover tsunami, as companies sought to retain talent and avoid the need to replace those individuals amid an intense hiring market.
But experts say that often left companies with bloated payrolls and employees who were paid more than their roles could justify.
Pay raise, salary surveys show similar outlook for 2024
The latest data from Mercer’s U.S. Compensation Planning Survey in November found companies are forecasting total salary increase budgets of 3.8% in 2024. That’s down slightly from the 3.9% those same companies forecasted three months ago.
Other surveys of employers have come up with similar numbers for pay raise projections in 2024. The latest Salary Budget Planning Survey by WTW, formerly known as Willis Towers Watson, found companies are planning for a 4% increase in salary budgets in 2024. That’s down from the 4.4% increase seen in 2023, although still above the 3.1% increase in 2021 and before the Covid-19 pandemic.
Company review site Glassdoor also recently said wages will be sticky in 2024 and that companies are looking more at cutting costs from benefits that have proliferated in recent years.
While wage growth may be slowing, year-end bonuses are making a comeback this year. Data from staffing firm Robert Half found 96% of employers expect to award a year-end bonus to their teams, with 54% saying they would offer more than they did a year ago.