As we
roll into 2016, a concern from 2015 has followed us into the New Year. During 2015, much had been said, speculated,
and decided in regards to minimum wage increases. A good amount of the fruition of those
discussions and decisions begins in 2016. In our first Astronology of 2016, we will explore the changes in minimum wages
in 2016.
Currently,
the Fair Labor Standards Act (FLSA) has set the federal minimum wage to $7.25
per hour. According to the United States
Department of Labor’s website, “Many states also have minimum wage laws.
Where an employee is subject to both the state and Federal
minimum wage laws, the employee is entitled to the higher of the two minimum
wages.” Although the federal minimum wage is $7.25, your state may have a higher
rate. In that case, the state minimum
wage prevails, as it is more generous to the employee.
Because your state may have a higher minimum wage rate than the federal level, and possibly scheduled annual increases, it’s important to stay informed on any state labor changes. As of now, scheduled increases for 2016 include the following:
Because your state may have a higher minimum wage rate than the federal level, and possibly scheduled annual increases, it’s important to stay informed on any state labor changes. As of now, scheduled increases for 2016 include the following:
| Minimum Wage | |||
| State | Date | New Rate | Notes |
| Alaska | January 1, 2016 | $9.75 | Future Increases 1-1-2017 |
| Arkansas | January 1, 2016 | $8.00 | $8.50 1-1-2017 |
| California | January 1, 2016 | $10.00 | |
| Colorado | January 1, 2016 | $8.31 | |
| Connecticut | January 1, 2016 | $9.60 | $10.10 1-1-2017 |
| Hawaii | January 1,2016 | $8.50 | $9.25 1-1-2017 $10.10 1-1-2018 |
| Maryland | July 1, 2016 | $8.75 | $9.25 7-1-2017 $10.10 7-1-2018 |
| Massachusetts | January 1, 2016 | $10.00 | $11.00 1-1-2017 |
| Michigan | January 1, 2016 | $8.50 | $8.90 1-1-2017 $9.25 1-1-2018 |
| Minnesota | August 1, 2016 | $9.50 Large Employers $7.75 Small Employers |
Future Increases Annually 1-1-2018 |
| Nebraska | January 1, 2016 | $9.00 | |
| New York | December 31, 2015 | $9.00 All $9.75 Fast Food |
Future Increases To $15.00 fast food by 2018, all other industries by 2021 |
| Rhode Island | January 1, 2016 | $9.60 | |
| South Dakota | January 1, 2016 | $8.55 | |
| Vermont |
January 1, 2016 | $9.60 | $10.00 1-1-2017 $10.50 1-1-2018 |
| Washington D.C. | July 1, 2016 | $11.50 | Future Increases Annually 7-1-2017 |
| West Virginia | January 1, 2016 | $8.75 | |
The National Conference of State Legislatures highlighted the following on the 2016 minimum wage updates:
- Of the 14 states that begin the New Year with higher minimum wages, 12 of them increased their rates through legislation passed in 2014 and 2015. Two states automatically increased rates based on cost of living.
- There are 11 states that currently tie minimum wage increases to the cost of living. Eight of those did not increase their minimum wage rates for 2016. The three states from the 11 that will be making increases in 2016 are
- Colorado ($0.08 per hour increase)
- South Dakota ($0.05 per hour increase)
- Nevada (to be announced later this year, and taking effect in July 2016)
- Maryland, Minnesota, and Washington D.C. have increases scheduled later in the year.
While increases to the minimum wage may present financial challenges to employers who have a substantial number of employees paid at that level, all employers need to be aware of and responsive to minimum wage changes. “Pay compression is a consideration for many of our clients,” explains National Director Jennifer Loftus. “Pay compression occurs when the pay rates for new employees are at the same or higher levels than those for current employees. Pay compression can also occur between pay rates of employees at the minimum wage, and rates for positions one to two pay grades above.” Loftus explains that employers should conduct compression analyses to determine additional employees impacted by the minimum wage changes, and determine the cost to adjust pay rates accordingly, to ensure internal equity is maintained between employees and various grade levels, and compression is avoided. “Pay compression is sometimes a costly matter to address,” states Loftus, “but the costs of employee turnover may be far greater.”
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