Discussions about income inequality have put raising the minimum wage on the political agenda. But because opposition in Congress blocked an increase to the national rate of $7.25, the debate has moved to the states. This November, minimum wage increases are on the ballot in five states: Alaska, Arkansas, Illinois, Nebraska, and South Dakota. The vote in Illinois is an advisory question, however, and would not change the law.* If voters approve the measures, these states will join the 10 states (and the District of Columbia) that approved legislative hikes in 2014 that go into effect next year.
As a special section in the State Economic Monitor reports, 23 states and DC currently have minimum wages higher than the federal rate (see map), but those states are mostly clustered in the West and Northeast. DC has the highest rate at $9.50, followed by three states with minimum wages at or above $9 (California, Oregon, and Washington). In contrast, nine states—seven of them in the South—have either a minimum wage below the federal rate or no minimum wage, which effectively means that the federal rate applies in these states.
Legislative changes and ballot measures in 2014 mostly occurred in states that already had minimums above the federal rate. That includes DC and seven states (Connecticut, Delaware, Massachusetts, Michigan, Minnesota, Rhode Island, and Vermont) that passed increases, and two states with ballot measures (Alaska and Illinois). If Alaska's measure passes, the rate would increase to $8.75 in 2015 and $9.75 in 2016. The advisory question in Illinois proposes to increase the minimum wage to $10 in 2015. It would not change the law but supporters hope strong approval will inspire legislative action next year (and increase voter turnout on Election Day).*
Three states that passed increases (Hawaii, Maryland, and West Virginia) and two with ballot measures (Nebraska and South Dakota) currently have minimums equal to the federal rate. If their ballot measures pass, Nebraska’s rate would go up to $8 in 2015 (and $9 in 2016) and South Dakota’s would increase to $8.50 in 2015.
Among the states with no minimum wage or a minimum below the federal rate, Arkansas is the only one with a ballot measure. None of these states passed an increase with legislation. If voters approve a ballot measure to raise the minimum—and polls favor passage—Arkansas’s minimum will increase to $7.50 in 2015, $8 in 2016, and $8.50 in 2017.
If all the ballot measures pass, the number of states with minimums above the federal rate would increase to 29 in 2015. Alaska’s and South Dakota’s ballot measures would also index the minimum wage to inflation. Currently, 14 states have established automatic increases.
What would minimum wage increases mean?
Recent Urban Institute studies examined raising the minimum wage in DC. Most of the affected workers are high school graduates; unmarried with no children; and working in food service, accommodation, or retail. The researchers found that “the vast majority” would see increased earnings and disposable income. They also “found little evidence to suggest that employment would fall.”
*This post was updated to note that the ballot measure in Illinois is an advisory question.