These States are Raising Minimum Wages in 2023

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About half of all states are expected to implement a higher minimum wage in 2023.

A total of 26 states have announced that higher minimum wages will be introduced during 2023, with one more state likely to see an adjustment in July.

Meanwhile, 23 states and Washington, D.C., will implement higher minimum wages on Jan. 1. Those increases, which will range from 23 cents to $1.50 per hour, will affect 8 million workers.

  • AK – $10.85 per hour, up from $10.34 per hour.
  • AZ – $13.85 per hour, up from $12.80 per hour.
  • CA – $15.50 for all employers regardless of size. While the hourly minimum wage for employers with fewer than 26 employees was originally scheduled to rise to only $15 in 2023, California labor law requires the minimum wage for these employers to equal that of large employers (those with 26 or more employees) when the rate of inflation exceeds 7% in the year that the hourly minimum wage for large employers is $15.00. The average consumer price index from July 1, 2021, to June 30, 2022, increased by 7.9%.
  • CO – $13.65, up from $12.56.CT$14 per hour, scheduled to increase to $15 on June 1, 2023.
  • DE – $11.75 per hour, up from $10.50, pursuant to legislation signed in July 2021 that will increase the minimum wage to $15.00 by 2025 (S.B. 15, L. 2021).
  • FL – $11.00 per hour, up from $10.00. Wage rates are adjusted annually based on inflation. A constitutional amendment approved by voters in the November 3, 2020, General Election will increase the minimum wage to $12.00 on September 30, 2023, and to $15.00 by 2026.
  • IL – $13.00 per hour, up from $12.00. The minimum wage is scheduled to reach $15 in 2025.
  • ME – $13.80 per hour, up from $12.75.
  • MD – In 2023, the minimum wage is $13.25 for large employers and $12.80 for small employers, increasing at different increments to reach $15 in 2025 for large employers and in 2026 for small employers.
  • MA – $15.00 per hour, an increase of 75 cents.
  • MI – $9.87 per hour increasing to $10.10 January 1, 2023, and (possibly) to $13.03 on February 19, 2023. (The Michigan Court of Claims struck down a legislative amendment to two voter-initiated laws that brought the state’s minimum wage to $12.00 by 2022. The voter-initiated law was thus reinstated, with an effective date of February 19, 2023. The law tied minimum wage increases to inflation beginning in 2023, which would set the minimum wage at $13.03 in 2023, pending the outcome of an appeal of the court’s decision.)
  • MN – $10.59 per hour (up from $10.33) for employees of large employers with an annual gross volume of sales not less than $500,000. Small employers must pay employees a minimum wage of at least $8.63 per hour (up from $8.42).
  • MO – $12.00 per hour, up from $11.15 per hour.
  • MT – $9.95 per hour for businesses with annual gross sales of more than $110,000. Wage rates are adjusted annually based on inflation.
  • NV – $10.50 per hour for employees who do not receive health benefits, to increase to $11.25 on July 1, 2023. $9.50 per hour for employees who do receive health benefits, to increase to $10.25 on July 1, 2023.
  • NJ – $14.13 per hour for most employees, up from $13.00 per hour. The minimum wage had been scheduled to reach $14.00 per hour in 2023 but was adjusted due to a significant increase in the Consumer Price Index. The minimum wage for direct-care workers in long-term health care facilities is $3 higher than the state minimum wage (A 4482, L. 2020).
  • NM – $12.00 per hour, up from $11.50.
  • NY – Tiered/Rates vary by region: $15 per hour in New York City and in Nassau, Suffolk, and Westchester counties; $14.20 per hour in the remainder of the state. Effective October 1, 2022, the minimum wage for home care aides as defined in New York’s Public Health Law §3614-c increased by $2 per hour above the basic minimum hourly rate.

    The minimum wage for workers in fast food establishments is $15 per hour in all of New York state. The minimum wage at all airports (LaGuardia, JFK, and Newark Liberty International) reached $19.00 in 2023.
  • OH – $10.10 per hour, up 80 cents from $9.30 per hour. Wage rates are adjusted annually based on inflation. The minimum wage rate applies to employees of businesses with annual gross receipts of $372,000 per year (changed from $342,000 in 2022). For employees at smaller companies and for 14- and 15-year-olds, the state minimum wage is $7.25 per hour, which is tied to the federal rate.
  • OR – The state minimum wage is tiered, with the highest rate in the Metro Portland area at $14.75 per hour, the lowest in rural (non-Urban) areas at $12.50 per hour, and a “standard” minimum wage of $13.50 per hour in the rest of the state. Starting July 1, 2023, the minimum wage in Portland will be set at $1.25 over the standard minimum wage, and the non-Urban rate will be set at $1 less than the standard minimum wage. Also starting July 1, 2023, the minimum wage adjustment will be tied to inflation.
  • RI – $13.00 per hour up from $12.25. The state minimum wage will reach $15.00 per hour in 2025.
  • SD – $10.80 per hour, up 85 cents from $9.95 per hour. Wage rates are adjusted annually based on inflation.
  • VT – $13.18 per hour. This is a 63-cent scheduled increase over the $12.55 per hour 2022 rate.
  • VA – $12.00 per hour, up from $11.00. The increase is part of a series of scheduled increases to reach $15.00 per hour by 2026.
  • WA – $15.74 per hour. Workers under 16 years old can be paid 85 percent of the adult minimum wage, or $13.38 per hour, in 2023.

The state poised to provide the highest minimum pay rate is Washington, at $15.74 per hour, according to Wolters Kluwer.

Workers under the age of 16 in that state will be paid $13.38 per hour starting in 2023, or 85% of the adult minimum wage.

The minimum wage in Washington, D.C., will be $16.10 per hour.

Washington, D.C., and 13 states tie their minimum wages to the consumer price index, a government measure for the average change consumers pay for certain goods and services.

The Return to Office Fades

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The Wall Street Journal recently published an article on the lack of movement in employees returning to the office as remote work remains a popular option, even as a number of states have outlined plans to roll back mask mandates.

Building security firm, Kastle Systems, reported declining office occupancy in January.

  • An average of 33% of the workforce came in the office in the first week of February.
  • This was down from 41% in the first week of December.
  • Movie theatres are at 58% of pre-pandemic levels.
  • Restaurants are at 75%.
  • Air travel is at 80%.
  • Attendance at NBA games was 93%.

Restaurants and bars in business districts are hurting more than those is residential areas. 3,400 restaurants in Massachusetts remain closed, mostly in downtown areas.

After close to 2 years of working from home, surveys suggest most employees prefer that option to avoid commutes and get greater flexibility over the work day. Studies have shown that productivity is just as high and managers are reluctant to insist employees return during a labor shortage.

Will Employees Return to the Office?

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Will employees ever return to the office? No one knows for sure. But the office of 2022 will be different as hybrid working systems become the most common solution.

  • Property developers like SL Green Belt Realty outfitted the new 93-story skyscraper in Manhattan with a superior air filtration system, a 4,000 square foot terrace, included a high-end café. 90% of the tower’s 1.7 million square feet is leased after opening in September 2020.
  • New office designs avoid allocating space by department. Instead, areas have a focus and employees can choose between quiet spaces, rooms with advanced video conferencing technology or areas for team working.
  • Demand for newly designed office space is strong, but weak for traditional office space.

The stark reality is that many offices may be under-utilized for the foreseeable future.

  • New York law firm Greenberg Traurig has given up 25% of its space and opened 4 regional offices nearer where employees live. Despite this change, only 50% of workers are showing up.
  • Heidrick & Struggles signed a new lease for 35,000 square feet at the end of 2020, roughly 50% less space than it had before.
  • UiPath has signed a lease for 26,000 square feet in the new 93-story skyscraper in Manhattan but doesn’t plan to move in until Fall 2022.

Employers are meeting resistance from employees who have developed a taste for working-from-home. 30% of workers surveyed by Gallup would prefer never to come into the office.

  • Molson Coors has dropped plans for a 5-day-a-week, changed to 4-day-a-week and now is aiming for 3-day-a-week after meeting resistance from its 2,200 employees concerned about Covid, childcare, unexpected school closures and vaccinations. Molson Coors implemented a vaccine mandate to address employee safety concerns. Employees sharing conference rooms must wear masks. The UK office in England though has returned to 100% remote working under the UK’s latest work-from-home order.
  • Vacancy rates for office properties are at near record levels in US cities and rents may be depressed for years.

What Happened to All the Workers?

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Employers continue to struggle with hiring. So where did all the workers go? The Wall Street Journal reports that over 500,000 became self-employed in 2021. Currently 9.44 million workers are registered as self-employed. That is the highest total since 2008 after the financial crisis.

Meanwhile, the US workforce remains 3% lower than before the pandemic. There are many reasons, including mothers who left the workforce to look after children, 300,000 working-age adults who died of Covid or have long-term repercussions, hundreds of thousands who went onto Social Security at 62 and others who simply found ways to do with less.

Part of the shift to self-employment might be temporary. Employers looking to hire though need to create job postings to attract the self-employed. Key factors to highlight, if applicable, are:

  • Job security
  • Annual gross pay including any overtime
  • The annual dollar value of your benefit plans

Extra Unemployment Pay Has Disappeared, So Why Haven’t the Workers Returned?

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Earlier this year, a change came: $300-a-week federal supplement for unemployed Americans was cut off. Many people, they argued, would then take the millions of jobs that employers were desperate to fill.

Yet three months after half the states began ending that federal payment, there’s been no significant influx of job seekers.

In states that cut the $300-a-week federal supplement, the workforce has risen no more than it has in the states that maintained the payment.

That federal aid, along with two jobless aid programs that served gig workers and the long-term unemployed, ended nationally Sept. 6.

Yet America’s overall workforce actually shrank that month. “Policymakers were pinning too many hopes on ending unemployment insurance as a labor market boost,” said Fiona Greig, managing director of the JPMorgan Chase Institute, which used JPMorgan bank account data to study the issue. “The work disincentive effects were clearly small.”

Labor shortages have persisted longer than many economists expected, deepening a mystery at the heart of the job market. Companies are eager to add workers and have posted a near-record number of available jobs. Unemployment remains elevated. The economy still has 5 million fewer people working than it did before the pandemic. Yet job growth slowed in August and September.

An analysis of state-by-state data by The Associated Press found that workforces in the 25 states that maintained the $300 payment actually grew slightly more from May through September, according to data released Friday, than they did in the 25 states that cut off the payment early, most of them in June. The $300-a-week federal check, on top of regular state jobless aid, meant that many of the unemployed received more in benefits than they earned at their old jobs.

An earlier study by Arindrajit Dube, an economist at University of Massachusetts, Amherst and several colleagues found that the states that cut off the $300 federal payment saw a small increase in the number of unemployed taking jobs. But it also found that it didn’t draw more people off the sidelines to look for work.

A range of factors are likely keeping millions of former recipients of federal jobless aid from returning to the workforce.

  • Many Americans in public-facing jobs still fear contracting COVID-19
  • Some families lack child care
  • Early retirement
  • 700,000+ Americans have died plus some who recovered have long term COVID related issues

Plus not all employers are doing the best possible job to attract the applicants who are out there

  • Some employers lack transition and training plans to entice applicants from “other” industries
  • As the recruiting market has got more competitive, employers with out-of-date hiring systems and job posting content are losing out to competitors with state-of-the-art systems

The pandemic appears to have caused a re-evaluation of priorities, with some people deciding to spend more time with family and others insistent on working remotely or gaining more flexible hours.

Some former recipients, especially older, more affluent ones, have decided to retire earlier than they had planned. With Americans’ overall home values and stock portfolios having surged since the pandemic struck, Fed officials estimate that up to 2 million more people have retired since then than otherwise would have.

And after having received three stimulus checks in 18 months, plus federal jobless aid in some cases, most households have larger cash cushions than they did before the pandemic. Greig and her colleagues at JPMorgan found in a study that the median bank balance for the poorest one-quarter of households has jumped 70% since COVID hit. A result is that some people are taking time to consider their options before rushing back into the job market.

Nationally, the proportion of women who were either working or looking for work in September fell for a second straight month, evidence that many parents — mostly mothers — are still unable to manage their childcare duties to return to work. Staffing at childcare centers has fallen, reducing the care that is available. And while schools have reopened for in-person learning, frequent closings because of COVID outbreaks have been disruptive for some working parents.

Exacerbating the labor shortfall, a record number of people quit their jobs in August, in some cases spurred by the prospect of higher pay elsewhere.

Learn how to boost your hiring, and increase your chances of finding qualified applicants with myApplicants. Download the fact sheet to learn more.

Reduced Employment Opportunities

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The Wall Street Journal reported Friday, July 16th that although job openings are at a record high, the impression that all employers are hiring like never before may be misleading. Many businesses that laid off workers during the pandemic are already predicting they will need fewer employees in the future.

As with past economic shocks, many large or sophisticated employers have taken the opportunity to invest in automation or implement system changes to reduce dependency on labor.

“In industries from hotels to aerospace to restaurants, business have reviewed their operations and discovered ways to save on labor costs for the long term” – this applies to low-wage sectors.

  • Marriott plans to limit housekeeping and reconfigure food and beverage operations. Marriott also reduced management staff by 30% in 2020 in food and beverage departments and plans on the changes being permanent
  • Hilton is adopting “a flexible housekeeping policy” with daily service only available on request
  • Unite Here, a union that represents hotel workers reporting that the end of daily cleaning could result in 180,000 job losses
  • Dave & Busters has installed tablets for customers to order food and drink, allowing managers to schedule fewer servers
  • Applebee’s is using tablets to let customers pay without a waiter

The Worker Shortage Explained

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Over 4-8 million fewer people are currently in the US labor force than before the pandemic, depending upon how they are counted. Why?

  • Fear of Covid-19, sickness (the USA still averages over 14,000 positive cases a day); if 14,000 people quarantine for 14 days, that removes nearly 200,000 from the available workforce even if they don’t get really sick
  • Lack of childcare and open schools
  • Previous employer has offered to rehire soon
  • Few job openings in their area
  • Extended jobless benefits

The situation is the same in the United Kingdom where vaccination rates exceed the USA. Employers report a shortage of workers as every business tries to re-open at the same time and potential employees in the EU are prohibited from travelling by continuing Covid-19 restrictions and Brexit.

According to a Census Household Pulse survey taken in late March, 6.3 million people reported that they were not working because they needed to care for a child not in a school or day care. Another 2.1 million were caring for an older person. An additional 4.1 million Americans said they were not working because of concerns about getting or spreading Covid-19.

The labor shortage should ease later in 2021, but the process may take months as:

  • Vaccination rates continue to rise
  • Schools fully re-open
  • Federal unemployment bonus expires in September

In addition, employers may not be seeing applicants due to weak job postings.

It is very important that employers update their job postings and hiring practices to be competitive in this new labor market.

To discuss hiring, onboarding and training, email contractorsuccessteam@mitcsoftware.com.

Hiring Picks Up in the USA

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The number of unemployment-benefit recipients is falling at a faster rate in Missouri and 21 other states are canceling enhanced and extended payments this month. This suggests that ending the aid could push more people to take jobs, according to the Wall Street Journal.

Federal pandemic aid bills boosted unemployment payments by $300 a person each week, and extended those payments for as long as 18 months; well longer than the typical 26 weeks or less.

The extended benefits are set to expire in early September, but states can opt out before then.

  • Organizations need to gear up their hiring between now and October to take advantage of the influx of new potential applicants.

Missouri Gov. Mike Parson said the benefits were helpful during the height of the pandemic, but their continuation has “worsened the workforce issues we are facing.”

The 21 states that have ended, or will end the beefed-up payments in June, saw a 13.8% drop since mid-May in the number of people receiving unemployment benefits. The four states planning to end the benefits in July and September saw 10% and 5.7% drops, respectively, the Journal said, citing an analysis by Jefferies LLC.

The additional payments may have contributed to a labor shortage, those in favor of cutting the benefits have said, while others argue other economic and pandemic-related issues are keeping people out of work, according to the WSJ. Both are probably true.

Workers may still receive unemployment benefits on their states’ programs when the additional payments end in September.

Several states are offering payouts to workers who accept jobs and complete an allotted number of weeks as an employee as part of an effort to whittle down the reliance on the federal program.

3 Tips to Boost Hiring

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Recruitment is a complex process, but essentially, it is a competitive marketing process – if contractors want to convert candidates into hires, they need to look at the process the same way marketers look to convert leads to sales. Contractors need to ensure that their recruitment funnel is solid.

You can’t win if you don’t compete!

#1 Post on multiple job boards. If your company is only posting on one job board like Indeed, you are probably not reaching all the available applicants. Post on Indeed, Facebook and any free local job boards. Use an ATS (Applicant Tracking System) that supports posting to unlimited job boards with one click.

#2 Make sure applicants can apply directly from their smart phone. Don’t suggest candidates fax their resume. No one knows what a fax is today or has access to one. Printing and uploading paper job applications will also lose applicants.

APPLICANTS MUST BE ABLE TO APPLY DIRECTLY FROM THEIR SMART PHONE

Asking today’s new hire to download a paper form to fill-in and email it back is a big turn off. It’s too hard. The candidate needs to be able to apply within your talent management application.

#3 Communicate by text. Modern employers are communicating through text, the best medium for reaching today’s new hire, especially millennials. This will work much better early in the recruitment process. Don’t be afraid to over-communicate. Your ATS should allow you to text directly from within the application.

Why the Worker Shortage Continues

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The Wall Street Journal reported on Friday, May 7th that there are many reasons holding back potential employees from the labor market. Over 4-8 million fewer people are currently in the labor force than before the pandemic, depending upon how they are counted.

  • Fear of Covid-19, sickness (the USA still averages over 45,000 positive cases a day). If 45,000 people quarantine for 14 days, that removes approximately 500,000 from the available workforce even if they don’t get really sick
  • Lack of childcare and open schools
  • Previous employer has offered to rehire soon
  • Few job openings in their area
  • Extended jobless benefits

“I think this is just as much about a shortage in labor supply as it is about a shortage of labor demand,” Jason Furman, an economist at Harvard University commenting on the weaker than expected April jobs report, told CNBC. “If you look at April, it appears that there were about 1.1 unemployed workers for every job opening. So there are a lot of jobs out there, there is just still not a lot of labor supply.”

Census data taken in recent weeks suggests the closures of day-care centers and schools have forced millions of Americans to stay home and care for children or oversee online learning.

According to a Census Household Pulse survey taken in late March, 6.3 million people reported that they were not working because they needed to care for a child not in a school or day care. Another 2.1 million were caring for an older person.

An additional 4.1 million Americans said they were not working because of concerns about getting or spreading Covid-19.

The labor shortage should ease in 2021, but the process may take months as:

  • Vaccination rates continue to rise
  • Schools fully re-open
  • $300 per week federal unemployment bonus above and beyond what states provide, expires in September

To learn more, download the the myApplicants fact sheet.

To discuss hiring, onboarding and training, email us at contractorsuccessteam@mitcsoftware.com.