These 27 States Will Increase the Minimum Wage in 2023

These areas don't go by the federal minimum wage.

Cost of living increases have made life difficult for many Americans this year, particularly those in lower-income households. If you're already spending a large percentage of your budget on essentials, you have less insulation against spiraling prices. That's particularly true for those earning minimum wage.

The federal minimum wage is $7.25 an hour, a figure that has not increased since 2009. If we factor in inflation, it would have had to grow to $10.20 to let people buy the same amount of goods and services today. In real terms, the current minimum wage has shrunk by almost 30% since it was set.

However, a number of states, counties, and cities have passed their own minimum wage rules that override federal requirements. Moreover, many will increase their minimum wages in 2023. Some are set to make the move at the start of the year and others will follow as the year progresses.

These 27 states will increase their minimum wages in 2023

According to a report by the National Employment Law Project (NELP), a record number of states and localities will increase their minimum wages next year. It will hit or exceed the $15 mark in California, Connecticut, Massachusetts, Washington State, and parts of New York.

Here's how the 2023 minimum wage increases breakdown by state:

• Alaska: Minimum wage set to rise to $10.85 by Jan. 1
• Arizona: Minimum wage set to rise to $13.85 by Jan. 1
• California: Minimum wage set to rise to $15.50 by Jan. 1
• Colorado: Minimum wage set to rise to $13.65 by Jan. 1
• Connecticut: Minimum wage set to rise to $15.00 by Jan 7
• Delaware: Minimum wage set to rise to $11.75 by Jan. 1
• Florida: Minimum wage set to rise to $12.00 by Sep. 30
• Illinois: Minimum wage set to rise to $13.00 by Jan. 1
• Maine: Minimum wage set to rise to $13.80 by Jan. 1
• Maryland: Minimum wage set to rise to $13.25 for large employers and $12.80 for small employers by Jan. 1
• Massachusetts: Minimum wage set to rise to $15.00 by Jan. 1
• Michigan: Minimum wage set to rise to $10.10 by Jan. 1 and then to $13.03 by Feb. 20.
• Minnesota: Minimum wage set to rise to $10.59 for large employers and $8.63 for small employers by Jan. 1
• Missouri: Minimum wage set to rise to $12.00 by Jan. 1
• Montana: Minimum wage set to rise to $9.95 by Jan. 1
• Nebraska: Minimum wage set to rise to $10.50 by Jan. 1
• Nevada: Minimum wage set to rise by Jan 7. It will be $11.25 in companies with no health insurance and $10.25 in companies with health insurance.
• New Jersey: Minimum wage set to rise to $14.00 for many employees by 2023. People doing seasonal or agricultural work will receive less, as will those working for smaller companies.
• New Mexico: Minimum wage set to rise to $12.00 by Jan. 1
• New York: Minimum wage is set to increase to $14.20 in Upstate New York at the end of 2022. It's already $15.00 in New York City, Long Island, and Westchester County.
• Ohio: Minimum wage set to rise to $10.10 by Jan. 1
• Oregon: The state's minimum wage has increased steadily since 2016. Wages depend on what part of the state you live in, and will increase in line with inflation in 2023.
• Rhode Island: Minimum wage set to rise to $13.00 by Jan. 1
• South Dakota: Minimum wage set to rise to $10.80 by Jan. 1
• Vermont: Minimum wage set to rise to $13.18 by Jan. 1
• Virginia: Minimum wage set to rise to $12.00 by Jan. 1
• Washington State: Minimum wage set to rise to $15.74 by Jan. 1

Minimum wage rules also depend on the type of job you do. For example, last year, President Biden issued an executive order requiring federal contractors to pay a $15 minimum wage. As the list above shows, some states have different requirements for smaller companies. There are also reductions in wage requirements for workers who earn extra money in tips.

Surviving on minimum wage

There's a lot of politics around minimum wage debates. It was originally introduced to protect workers from exploitation, and some argue that the wage hasn't kept up with cost-of-living increases. Others believe that many businesses wouldn't be able to cover significantly higher wages, so a national minimum wage increase would lead to more unemployment.

Putting the politics aside, If you worked 40 hours a week at the federal minimum wage of $7.25, you'd earn about $15,000 a year. In a two-person household, that's below the federal poverty line. Once you factor in taxes, housing, utilities, and food, there won't be a lot (if anything) left in the bank for anything else.

That means it's almost impossible to find cash to build more stable financial foundations. For example, many financial experts recommend saving as much as 20% of your income. This allows people to invest for their old age and build up emergency savings to cushion them against the unexpected. If you're stretching your money just to pay for the basics, it's not easy to build any kind of financial security in your savings account.

Bottom line

Minimum wage workers might be able to take on extra hours or find other ways to earn some additional cash. But ultimately, there are only so many hours in the day and there's only so much people can do.

The increases being applied in many states will go some way to helping minimum wage workers, as do SNAP food benefits and other financial assistance. Nonetheless, lower-income workers are less likely to have a cushion against recession or other economic issues in 2023.