Minimum Wage Hike Gives 547K NJ Workers A New Year's Raise

NEW JERSEY — Some 8.4 million U.S. minimum wage workers will get a raise in 2023, including 547,100 workers in New Jersey, according to a recent Economic Policy Institute analysis.

The Economic Policy Institute — a Washington, D.C.-based nonpartisan, nonprofit research group that regularly tracks changes in the minimum wage — said its report reflects disparities in pay across the country, especially among women and workers of color, who make up the majority of low-wage employees.

The minimum wage will rise in 23 states and Washington, D.C. on New Year’s Day. Wages will increase by about $5 billion with the wage hikes, with annual earning increases of about $150 in Michigan to $937 in Delaware, according to the report from the Economic Policy Institute.

The federal minimum wage last increased on July 24, 2009, when it reached $7.25. The United States is in the midst of its longest period without a national increase since the introduction of the federal minimum wage in 1938. The current minimum wage recently hit its lowest value against inflation since February 1956, the Economic Policy Institute says.

But several states have gone higher than federal regulations. When the changes take effect in 2023, the state with the highest minimum wage will be Washington, with a starting hourly rate of $15.74.

In some cases, wage increases were prompted by inflation-linked adjustments, automatic triggers by state law and legislative action, or both. In Washington, D.C., the tipped wage goes up by 65 cents due to a successful midterm election ballot measure calling for the elimination of the tipped wage by 2027.

On New Year's Day, New Jersey's minimum wage will jump from $13 to $14.13, while the tipped minimum wage increases from $5.13 to $5.26.

Inflation has partially triggered New Jersey's wage raises. The state passed a law in 2019 that gradually raised the minimum wage from $8.60 to $15 per hour for most employees by 2024.

During the transition period to the $15 minimum wage, New Jersey typically raises the figure by $1 each year. But under the state law, the minimum can increase more in the event of significant increases in the Consumer Price Index — a figure used to measure inflation. So inflation added 13 cents per hour to New Jersey's regularly scheduled wage increase.

• Read more: Inflation To Drive NJ's Minimum Wage Increase Higher Than $1 Next Year

In 2023, 13.9 percent of the state's wage-earning workforce of 3.9 million will receive a raise under the minimum-wage bump. An estimated 335,800 children live in households affected by the wage hikes, reflecting 17.1 percent of the state's children.

New Jersey's 2022 minimum wage of $13 ranks eighth in the U.S., but the Garden State also consistently sports one of the nation's highest costs of living.

Additionally, 27 cities and counties, primarily in California, will increase their minimum wages on Jan. 1, which the Economic Policy Institute said will further increase the number of workers who are likely to see bigger paychecks in 2023.

The Economic Policy Institute said that because of long-standing discrimination and occupational segregation, the most concentrated effects are seen among:

• Hispanic or Latino workers, 21.8 percent (20.1 percent of the workforce);
• Black workers, 12.2 percent (9.5 percent of the workforce);
• Multiracial and Native American workers, 14.4 percent (2 percent of the workforce).

The minimum wage increases will “have a meaningful impact on workers struggling to make ends meet,” the think tank said in its release, noting that 23.2 percent of affected workers have incomes below the poverty line, and another 26.5 percent have incomes below twice the poverty line.

Other highlights from the report:

• About 55 percent of affected workers are those 25 and older, and nearly half (45 percent) work full-time. Most of the affected workers have a high school diploma or less education, but about 41 percent have at least some college.
• More than 2 million parents will get a raise, including more than 1 million single parents. It’s estimated more than 5.7 million children live in households that will see an increase in earnings in 2023.
• The smallest increase will be in Michigan, where the minimum wage goes up 23 cents to $10.10 an hour.
• The biggest rate hike is in Nebraska, with a $1.50 an hour increase to $10.50 an hour.

The federal minimum wage remains at $7.25 for non-tipped hourly workers, and the tipped-wage minimum is $2.13 per hour.

According to a separate report from the Economic Policy Institute, more than a dozen states pay non-tipped employees at that rate. Among those states, some have increased the tipped wage above the federal minimum, notably in North Dakota and Iowa, where the minimum tipped wages are $4.86 and $4.35 an hour, respectively.

Two states — Wyoming and Georgia — have minimum wages below the federal minimum, at $5.15 each. Wyoming’s tipped wage minimum is $2.13 an hour, and Georgia hasn’t established one.

Alabama, Louisiana, Tennessee, Mississippi, South Carolina and Tennessee don’t set minimum wages.