By Jackson Brainerd
Minimum wage debates have been a staple in state legislatures the past several years.
From 2013-2016, there were 30 enacted increases via either legislation or ballot measure compared to three in the four years prior. Activity on the issue has slowed recently, however.
At least 33 states proposed increases in 2017, but Rhode Island was the only state to pass an increase. At least 32 states have proposed an increase in 2018, but so far only two—Massachusetts and Delaware—have pushed the legislation across the finish line.
Massachusetts will phase in an increase to $15 over five years, while Delaware will increase the minimum wage from $8.25 to $9.25 by October 2019. Vermont’s legislature passed a measure to gradually increase the minimum wage to $15 by 2024, but it was vetoed by Governor Phil Scott (R).
While 2018 looks to be a quieter year relative to recent years past, something worth keeping an eye on is the significant and growing divergence between state minimum wages across the country, and between average state rates and the federal minimum wage.
The federal rate is $7.25, which is shared by almost half of the states. Washington currently has the highest state minimum wage at $11.50 an hour (D.C.’s is $13.25), and another 12 states and the U.S. Virgin Islands are above $10. Several of these states are in the process of phasing in rate increases up to $12 (Arizona, Colorado and Maine), $13.50 (Oregon and Washington) and $15 (California and New York).
The degree of this discrepancy is as large as it has ever been. Historically, state and federal minimum wage rates have been clustered much closer together. For example, the average minimum wage of the 10 highest minimum wage states in 1979 was just 1.7 percent higher than the federal minimum wage of $2.95.
In 1988, the top-10 state average was 8.7 percent higher than the federal minimum wage. In 1998, the year after a federal rate increase, the difference shrunk to 3.3 percent. By 2008, however, this discrepancy had grown to roughly 31.3 percent, but shrunk again as the federal government raised the minimum wage over several years to its current rate by 2010.
Today, the average minimum wage of the 10 states with the highest rate is 45.7 percent higher than the federal rate. By Jan. 1, 2020, assuming no new state or federal enactments, the difference will grow to 62.9 percent as states phase in previously enacted increases.
Source: NCSL research
These differences are more interesting when geography is considered (see map above). The prospect of increasing the minimum wage is not necessarily a partisan goal; in 2016, Arizona voters passed a minimum wage increase with 58 percent of the vote, and elected President Trump with 48 percent of the vote.
Democratically controlled legislatures have been more likely to approve such measures over the last several years, while Republican-controlled legislatures have left the issue to voters (ballot proposals to increase the minimum wage will be on the ballot in Republican-controlled states like Arkansas and Missouri in 2018). Of the 23 legislatively enacted minimum wage increases in the states and Washington, D.C. since 2012, 22 occurred in Democratically controlled states.
These Democratic states are largely concentrated on the West and Northeastern coasts, which has potentially interesting implications when it comes to examining the impact of minimum wage policies and the extent to which regional minimum wage discrepancies result in measurable differences in terms in of labor markets and wage growth for lower income workers.
Jackson Brainerd is a policy specialist in NCSL's Fiscal Program.