Despite the rising cost of living in the U.S., the federal minimum wage has remained a stagnant $7.25 an hour since 2009. But that hasn’t stopped states from instituting their own minimum wage increases over the last year.
In 2021, 24 states enacted minimum wage increases, including Illinois ($1 increase), New Jersey ($1 increase), and New York ($.70 increase that went into effect Dec. 31, 2020).
And this year, hourly workers in 25 states will see a higher minimum wage. The increase went into effect on January 1, 2022 in 20 states, with the remaining five states enacting the increases in the second half of 2022.
The bump in pay could not come at a better time as the country continues to deal with the COVID-19 pandemic and remains in the midst of the biggest inflation rate increase since the early ‘80s. However, as important as the minimum wage increases are for workers across the country, many have questions about what happens next, including:
Will the Federal Minimum Wage Increase, Too?
This is a complicated question, and the short answer is: We don’t know yet. Though there has been recent progress in this area.
Early last year, lawmakers introduced the Raise the Wage Act of 2021, which would gradually raise the federal minimum wage from $7.25 to $15 by 2025. The bill continues to be debated in Congress.
In April 2021, President Biden raised the minimum wage for federal contractors to $15 an hour, effective on January 30, 2022. The order also eliminates the tipped minimum wage for federal contractors by 2024 and ensures a $15 minimum wage for federal contract workers with disabilities.
So, what are the arguments for and against raising the federal minimum wage? Those in favor of a minimum wage increase believe it would lead to an economic boon due to the fact that more workers would have more money to spend on goods and services. Conversely, many argue that a federal increase could hurt employers and business owners who may not be able to afford paying higher wages.
Regardless, it’s difficult to dictate a wage total that meets the basic needs of all workers, because the cost of necessities like food, shelter, child care, etc., is different based on local economic parameters.
That’s why it’s crucial to ensure that workers, no matter where they are located, are paid a Living Wage.
What Is a Living Wage and Why Is It Important?
Unlike the minimum wage, the Living Wage reflects the nuances of local economies. It’s defined at the county level and takes into account the local costs of food, housing, medical care, and much more.
If you want to know what the Living Wage is in your area, try using the Massachusetts Institute of Technology’s Living Wage Calculator.
Paying a Living Wage is the best way to ensure workers make enough to live on, regardless of where they reside. That’s why Wonolo is committed to working with companies to ensure all workers who accept jobs posted on the platform earn an amount that exceeds an hourly Living Wage.
But after covering the essentials every month, it’s incredibly difficult for many to build savings, pay for college or even establish an emergency fund. But there is help available.
What’s the Best Way to Start Saving Every Month?
According to a recent survey, 51 percent of Americans have less than three months’ worth of expenses covered in an emergency fund, and only 1 in 6 households report having more emergency savings now than prior to the pandemic.
But there are ways to take steps toward building a savings right now. One way is to pick a specific number or percentage from each paycheck and put that money into a savings account. It doesn’t matter how big or small the number is, just pick one and stay consistent. Most banking apps make it possible to do this automatically, that way you don’t even have to think about it.
Another way to save is by partnering with industry leaders that can help you get the most out of your earnings, and our Wonolo Up program makes it easy to do just that. Whether you want to save for retirement, learn about helpful tax write-offs, or put away enough money so you can worry less about unexpected emergencies, Wonolo Up can help you connect to the right company that is offering what you are looking for.
Hopefully, the minimum wage increases at the start of this year are a sign of good things to come for workers everywhere.
*The information provided on this webpage is for general information purposes only and should not be viewed as tax, accounting, legal, financial, or other professional advice. All information provided on the site is provided in good faith, however Wonolo Inc. does not make any representation or warrant of any kind, express or implied, regarding the accuracy, adequacy, validity, reliability, availability or completeness of any information in this article. You should not act upon the information contained in this article without seeking the advice of an accountant, financial planner, or other appropriate professional.
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