Minimum Wage Increases Due to Inflation in Minnesota and Other States

This week the State of Minnesota announced that the new minimum wage for all employees working for larger employers would increase $.15 to $9.65 per hour, beginning January 1, 2018.  For smaller employers who have less than $500,000 in annual revenues, it’ll increase to $7.87.  This represents Minnesota’s first inflationary adjustment under the state’s minimum wage law passed in 2014.

And Minnesota is not alone.  In recent years several states passed new minimum wage laws catapulting their state’s minimum hourly rate of pay past the federal standard of $7.25 set back in 2009.  These states typically pin annual adjustments to the Consumer Pricing Index (CPI), meaning the increases are relatively small while core inflation is muted and larger when it is not. Along with Minnesota, the following states are in this bucket where the minimum wage increases are tied to inflation:

• Arizona

• California

• Colorado

• Maine

• Michigan

• Missouri

• Montana

• Nevada

• New Jersey

• New York

• Ohio

• Oregon

• South Dakota

• Vermont

• Washington

• Washington D.C.

We can foresee that as long as there is inflation these states will continue to see annual increases in the minimum wages for employees.  This is Minnesota’s first year with the inflationary adjuster set to take effect, but it will not be the last, nor will it be the last for the other 17 states and D.C. with the same automatic adjustment mechanisms.

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