Five states have passed measures to raise the minimum wage this year, according to data published by the National Conference of State Legislators. Only one of these states, California, has passed a bill that would raise the minimum wage to $10 per hour. Based on data from the U.S. Department of Labor, 24/7 Wall St. identified the states with the highest minimum wages.
Whether or not a higher minimum wage is good for the economy continues to be the subject of debate. The National Employment Law Project (NELP), which advocates raising the minimum wage, maintains that the decline in the purchasing power of the minimum wage "has contributed to the growth of income inequality over the past three decades."
Other groups maintain that raising the minimum wage is bad for business and jobs. The Heritage Foundation notes that if the United States raises the minimum wage to $10.10 an hour, the combined costs of wages, employer penalties for not paying health insurance and taxes "would raise the minimum cost of hiring a full-time worker to $12.71 per hour."
A state's cost of living may influence its minimum wage. The cost of living in six of the eight states with a minimum wage over $8 an hour is higher than the nationwide cost of living. In Connecticut, where the minimum wage is currently $8.25, the cost of living is the fourth highest in the nation. The cost of living is similarly high in California, Massachusetts and Vermont.
Another factor keeping the minimum wage high in these states likely involves labor representation. Among these eight states, only Nevada is a "right to work state," meaning workers cannot be required to join a union or pay for a union's costs as a condition of employment.
Many states where current ! minimum wages are among the nation's highest also have high union membership. In Washington, which currently has the nation's highest minimum wage, 18.5% of workers are union members, fourth highest nationally. Among private sector workers, five of the eight states had among the 10 highest union membership.
Based on information provided by the U.S. Department of Labor, 24/7 Wall St. identified the eight states with a minimum wage above $8 per hour. Additional figures on the cost of living in various states are from the Missouri Economic Research and Information Center (MERIC). Data on union membership by state are from the Union Membership and Coverage Database for 2012. Figures on poverty, income and income inequality as of 2012 are from the Census Bureau's American Community Survey. Unemployment rates are as of October 2013, from the Bureau of Labor Statistics.
These are the eight states with the highest minimum wages.
8. Massachusetts
> Minimum wage: $8.00 (tied for 7th highest)
> Poverty rate: 11.9% (11th lowest)
> Union participation: 14.3% (12th highest)
> Cost of living: 8th highest
Unlike the many states that tie minimum wages to inflation to ensure earnings keep up with living costs, in Massachusetts the minimum wage has not changed since 2008. The cost of living in Massachusetts is hardly low. Overall, the state is one of the most expensive places to live in the country. The cost of health care, for example, is higher than in every state except for Alaska. That burden, however, may not be felt as much by the state's population because more than 95% of residents are covered by health insurance, the most in the nation. Other high costs may still be affordable for many living in Massachusetts. Median household income last year was among the highest in the United States, at $65,339. Union participation in the state is especially strong. Roughly 64% of public workers are union members, trailing only New York.
7. California
> Minimum ! wage: $8.! 00 (tied for 7th highest)
> Poverty rate: 17.0% (18th highest)
> Union participation: 17.2% (6th highest)
> Cost of living: 6th highest
California's minimum wage of $8 per hour is tied with Massachusetts as the seventh highest in the nation. This should change, as California's legislature recently approved plans to increase the state's minimum wage to $9 per hour next year and to $10 per hour by 2016, higher than any other state. The state is among the nation's most expensive, especially due to the high cost of housing, which trails only Hawaii and New York, according to MERIC. While California's poverty rate was just 18th highest among the 50 states, poverty remains an issue. When extending poverty measures to take into account families and individuals that are not reflected in standard poverty rates, California had the nation's highest "supplemental poverty measure" from 2010 and 2012, at 23.8% versus 16% nationally, according to a recent report from the Census Bureau.
6. Nevada
> Minimum wage: $8.25 (tied for 4th highest)
> Poverty rate: 16.4% (19th highest)
> Union participation: 14.8% (10th highest)
> Cost of living: 24th lowest
Workers in Nevada must either be paid $8.25 an hour, or the federal minimum wage of $7.25 an hour if they receive health benefits. Nevada also indexes its minimum wage to annual changes in inflation or the federal minimum wage, whichever increases by more. But because the federal minimum was raised in 2009, the state has not increased its minimum wage in recent years. Still, the state's minimum wage remains among the nation's highest. Nearly 15% of the state's workers, including 11.1% of the state's private workers, were union members last year, 10th and fourth highest nationwide, respectively.
5. Illinois
> Minimum wage: $8.25 (tied for 4th highest)
> Poverty rate: 14.7% (24th lowest)
> Union participation: 14.6% (11th highest)
> Cost of living: 21st lowest
Overall, it is ! cheaper t! o live in Illinois than most other states. The state's minimum wage is the highest in the Midwest at $8.25, tied with Nevada and Connecticut. Even so, Governor Pat Quinn has advocated raising the minimum wage to $10 per hour. In some sectors, union membership may be strong enough to improve working conditions without the government. For example, nearly 40% of private construction workers are union members, by far the most compared to other states. Despite the well-being suggested by the relatively low cost of living and the high wages — typical Illinois households earn more than the national median — the state still faces challenges. As of October, the state's 8.9% unemployment rate was one of the highest in the country.
4. Connecticut
> Minimum wage: $8.25 (tied for 4th highest)
> Poverty rate: 10.7% (4th lowest)
> Union participation: 14.0% (14th highest)
> Cost of living: 4th highest
In May, the Connecticut House passed a bill to increase the state's minimum wage to $9 per hour by 2015. Governor Dan Malloy noted the bill would make life "easier for working people in [the] state without adversely impacting the business community." However, as of the third quarter of this year, Connecticut was still one of the most expensive states in the nation to live. The state ranked at least sixth highest in every major component factored into the cost of living, including ranking fourth highest for groceries and second highest for transportation, according to MERIC. Income inequality in the state also remains extreme. Last year, only New York had a higher Gini coefficient than Connecticut — the coefficient measures income distribution. The wealthiest 5% of Connecticut households accounted for 24.6% of all state earnings as of 2012, more than in any other state.
3. Vermont
> Minimum wage: $8.60
> Poverty rate: 11.8% (10th lowest)
> Union participation: 10.7% (21st highest)
> Cost of living: 9th highest
Minimum wage is $8.60 per hou! r in Verm! ont, the third highest in the nation. While a typical Vermont household income was higher than in most states last year, earnings do not go as far. The state's fuel and food costs are among the highest in the nation. The minimum wage rate in Vermont is partly determined by inflation, as calculated by the consumer price index. The state labor department recalculates the appropriate wage every year. This year, the minimum wage is scheduled to increase by 13 cents to $8.73 an hour. As is usually the case nationwide, poverty in Vermont has been worse in urban areas. In Burlington, the state's largest city, the city council implemented a livable wage ordinance in 2001. The ordinance set a minimum pay of $17.71 per hour when health insurance is not offered and $13.94 an hour when it is. Last year, less than 12% of households lived below the poverty line and only 6.5% of residents lacked health insurance, both among the best rates in the nation.
2. Oregon
> Minimum wage: $8.95
> Poverty rate: 17.2% (15th highest)
> Union participation: 15.8% (9th highest)
> Cost of living: 13th highest
Despite having the nation's second highest minimum wage, take-home incomes in Oregon may be inadequate for many state residents. Median household income was lower than the national rate in 2012, at $49,161. More than one in five households relied on food stamps last year, the highest proportion in the country. Additionally, despite having a higher cost of living than the country as a whole, the state's median income was just over $49,000, more than $2,000 less than the national median income. Soon, however, workers earning minimum wage can expect a moderate improvement. Starting January 1, 2014, the minimum wage will increase by 15 cents to $9.10 per hour. With the increase, minimum wage employees working 30 hours a week will earn an additional $234 annually, according to the state's Bureau of Labor and Industries.
1. Washington
> Minimum wage $9.19
> Poverty rate: 13.5! % (19th l! owest)
> Union participation: 18.5% (4th highest)
> Cost of living: 15th highest
Washington has the highest minimum wage in the nation at $9.19 per hour. Recently, state officials certified a vote in favor of Proposition 1, the ballot measure to implement a $15 wage floor in the city of SeaTac. The new law, if passed, will affect roughly 6,000 airport and hotel employees in SeaTac, Washington. Union activity is strong in Washington, with 18.5% of the state's workforce active union members, more than all but three other states. Union membership among those working in the manufacturing sector is the highest out of every state. Washington is also among America's wealthier states, with a median household income of $57,573 as of 2012, versus a national median of $51,371.
24/7 Wall St. is a USA TODAY content partner offering financial news and commentary. Its content is produced independently of USA TODAY.
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