WASHINGTON — On Jan. 1, Rhode Island’s minimum wage will increase by 25 cents to $8 per hour, benefiting an estimated 23,000 low-wage workers in the state. The increased consumer spending generated by Rhode Island’s minimum-wage increase will boost economic growth by $3.9 million, according to an analysis of Census data by the nonpartisan Economic Policy Institute.
Rhode Island is joined by 12 states — Arizona, Colorado, Connecticut, Florida, Missouri, Montana, New Jersey, New York, Ohio, Oregon, Vermont, and Washington — that will also raise the minimum wage on New Year’s Day, boosting wages for a total of more than 2.5 million workers.
Connecticut’s minimum wage will rise 45 cents to $8.70 per hour. The increase will benefit an estimated 107,000 workers and boost economic growth by $24.7 million.
“As Congress drags its feet on raising the federal minimum wage, more and more Americans are earning poverty-level wages in expanding industries like retail and fast food,” said Christine Owens, executive director of the National Employment Law Project. “In the face of federal inaction, states are boosting the paychecks of the lowest-paid workers, promoting growth and consumer spending, and hopefully providing an example for Congress to follow.”
Rhode Island’s minimum-wage increase is the result of a measure approved earlier this year by the state legislature and signed into law by Gov. Lincoln Chafee. The minimum-wage increases taking effect in the 13 states on Jan. 1 will generate more than $619 million in new economic activity and support the creation of 4,600 new full-time jobs as businesses expand to meet increased consumer demand.
As of Jan. 1, 21 states, plus the District of Columbia, will have minimum-wage rates above the federal level of $7.25 per hour, which translates to just over $15,000 per year for a full-time minimum-wage earner.
The Fair Minimum Wage Act of 2013, supported by President Obama and introduced in the U.S. Senate and House of Representatives earlier this year, would raise the federal minimum wage to $10.10 per hour and adjust it annually to keep pace with the rising cost of living. The Fair Minimum Wage Act would also gradually raise the minimum wage for tipped workers from its current low rate of $2.13 per hour, where it has been frozen since 1991, to 70 percent of the full minimum wage.
As the unemployment rate in many states continues to slowly decline, new job growth across the country remains disproportionately concentrated in low-wage industries, such as retail and food services, making an increase in the minimum wage an urgent priority for growing numbers of working families that find themselves relying on low-wage work to make ends meet. Fully 58 percent of new jobs created in the post-recession recovery have been low-wage occupations, according to a 2012 report by the National Employment Law Project.
The most rigorous economic research over the past 20 years shows that raising the minimum wage boosts worker pay without causing job losses — even in regions where the economy is weak or unemployment is high. A recent study by the Center for Economic and Policy Research reviews the past two decades of research on the impact of minimum wage increases on employment and concludes that “the weight of the evidence points to little or no effect of minimum wage increases on job growth.” An April 2013 poll found that 67 percent of small business owners support raising and indexing the minimum wage, indicating that the majority believe an increase will help boost economic growth.