Millions of low-wage earners in the United States are set to receive a raise in 2025, as 21 states plan to increase their minimum wages starting January 1. This development is driven by various mechanisms, including inflation adjustments, new legislation, and ballot measures, according to the Economic Policy Institute (EPI).
Out of the 9.2 million workers who will benefit from these pay hikes, nearly 20% reside in households below the poverty line, while close to 49% have family incomes below twice the poverty threshold. Despite these advancements, the federal minimum wage remains stagnant at $7.25 an hour—a figure unchanged since 2009. Over the past 15 years, this rate has lost 30% of its purchasing power due to inflation, leaving many workers financially strained.
“The truth is the number of workers that earn $7.25 per hour is quite low, but that still means with inaction we are leaving tens of millions of workers out to dry,” Sebastian Martinez Hickey, a state economic analyst at EPI, told CBS MoneyWatch.
Currently, nearly one-third of workers live in states with a $15 minimum wage, a number expected to expand to almost half by 2027. However, even in states with wage increases, the new minimums often fall short of what’s required for a modest but adequate standard of living. For example, Ohio’s minimum wage will rise to $10.70 in 2025, but no county in the state has a living wage below $17.73 per hour, according to EPI estimates.
Wage increases vary across states
The mechanisms and rates of wage increases vary significantly across the 21 states implementing changes in 2025. Some highlights include:
- Alaska: The minimum wage will increase by 18 cents to $11.91, reflecting an inflation adjustment.
- California: Workers will see a 50-cent increase, raising the minimum to $16.50.
- Connecticut: The hourly rate will jump 66 cents to $16.35, also tied to inflation.
- Delaware and Illinois: Both states will reach a $15.00 minimum wage, with Delaware increasing by $1.75 and Illinois by $1.00, both due to legislative actions.
- New York: Minimum pay will rise to $15.50 statewide and $16.50 in New York City, Long Island, and Westchester, reflecting a legislative adjustment.
In addition to these examples, states like Missouri and Nebraska are implementing significant hikes due to voter-approved ballot measures. Missouri will increase its minimum wage by $1.45 to $13.75, while Nebraska’s minimum will rise by $1.50 to $13.50.
A closer look at inflation-adjusted increases
Inflation adjustments are a key driver behind many of the increases. For instance:
- Colorado: The base hourly rate will rise 39 cents to $14.81.
- Minnesota: Workers will see a 28-cent boost to $11.13.
- South Dakota: The minimum wage will climb 30 cents to $11.50.
- Vermont: An inflation adjustment will push the minimum to $14.01, a 34-cent increase.
These adjustments are intended to keep pace with constantly rising costs for wages as well as with the continually widening gap between minimum and living wages. To illustrate, Maine’s latest increment from $14.15 to $14.65 follows the mandates of a 2016 referendum to provide each year cost-of-living adjustments. But keeping in mind the plight of wage earners, workers in Maine still face hardships with regard to their salaries not keeping up with housing and other living expenses.
Some states have lagged in terms of implementing fairly robust adjustments, like Oklahoma which is now leaving very few options to voters in June 2026, who will vote on increasing the minimum wage of the state to gradually reach $15. Workers would well have to wait more than a year for any of that possible relief to come their way.
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Challenges ahead
Although such wage increases have occurred, the majority of states are still tied to the $7.25 federal minimum wage, which Martinez Hickey states is not enough to meet basic needs. Increased cost-of-living pressures are now on their way, and the coming increases are, in fact, an achievement; showing essential contrasts in wage adequacy across the U.S.
Almost half of all U.S. workers could reside in states with minimum wages of at least $15 by 2027. However, the real challenge ahead still is to bridge the gap between what is set by law and the true living wage for most American workers—the higher priorities on which advocates will battle in the years ahead.
