Minimum Wage Increases in July 2023
Amid a period of high inflation, workers in several states will receive pay increases this summer. Here is a breakdown of minimum wage laws by state.
Keep in mind, state rates may change throughout the year. Many cities and counties also have laws, and those often update on Jan. 1 or July 1. Ensure that employees who travel into those jurisdictions are paid correctly.
In Chicago, the minimum wage is higher than in most states and localities. Tipped employees are paid a base minimum wage of $13 per hour, and employers may take up to 40 percent credit for tips. Employees who receive less than the full minimum wage must be paid the difference. Employers must post the required posters and provide written notice to employees each year with their first paycheck. For more information, see the City of Chicago’s webpage on Minimum Wage and Sick Leave.
In 2019, Chicago aldermen pushed to end the subminimum wage for workers who earn tips, but they were defeated by business interests. Now, they’re reviving that effort. Saru Jayaraman, president of the One Fair Wage national campaign, says paying all workers the same amount will boost youth employment and reduce homelessness and crime in Chicago’s South and West Sides. It will also help restaurants and small businesses. The organization Arise Chicago will develop worker materials and conduct outreach and training in culturally sensitive and trauma-informed ways.
Enacted as part of the state’s 2024 budget legislation, New York’s new minimum wage law sets yearly increases in hourly wages for nonexempt workers that are automatically tied to a combination of prices and labor productivity. Tipped worker minimum wages and tip credits would also rise under the new law. These indexed increases protect the buying power of millions of low-wage workers and reduce income inequality, with a disproportionate impact on women, Black, and Latinx workers.
The state Department of Labor will publish future adjusted minimum wage rates by October 1 of each year, with changes taking effect on January 1. Exceptions are set to prevent automatic increases in the case where the Consumer Price Index for Northeast region urban wage earners and clerical workers is negative; the statewide unemployment rate increases by more than one-half percentage point from its low during the preceding year; or total nonfarm state employment (measured seasonably) decreases. These exceptions make New York an outlier among states that tie their minimum wages to inflation.
In Oregon, the minimum wage will increase from $7.25 to $8.00 per hour, effective July 1. The state will also raise the tipped employee minimum wage to $3.75, which will be increased over the next decade to match the regular minimum wage. In addition, employers will be required to provide employees with a written notice of the changes.
The standard minimum wage rate is adjusted annually on July 1 based on the percentage change, if any, in the U.S. city average Consumer Price Index for all urban consumers published by the Bureau of Labor Statistics. Portland metro counties, such as Clackamas and Multnomah, have a minimum wage that is $1 more than the standard rate, while non-urban counties, such as Deschutes, Jackson and Josephine, have a minimum wage that is $1 less than the standard rate.
Small businesses should ensure that their payroll systems are prepared for these upcoming changes. For example, they should update their RUN Powered by ADP® wages in advance of the July 1 increases and take steps to communicate the new rates to their employees. They should also consider adjusting salary requirements for employees who are exempt from overtime under federal law.
For business owners in Seattle, Tukwila, SeaTac, and other Washington cities, minimum wage increases can impact employee salaries. In order to manage rising staff costs, businesses can take a number of steps. For example, they can create a budget and hire temporary workers to fill in during busy times. Moreover, they can provide employees with transparency by listing their salary ranges on job postings.
In addition to these changes, employers must also implement a new state-run payroll deduction of 0.58% that will go toward long-term care costs. This is a new requirement under the Washington Cares Act, which is set to take effect this year. For nonprofits, this change means that they will need to adjust salaries and benefits in order to offer competitive wages.
The Department of Employment Services has an office dedicated to ensuring compliance with DC wage laws. The office conducts audits and works to recover unpaid wages. They also conduct wage theft prevention webinars for stakeholders.