New Year, New Wages

On January 1st, laws raising the minimum wage in 12 states go into effect.

Brendan McDermid / Reuters

Those fighting for a higher minimum wage have cause to celebrate, as the start of 2016 means laws raising the minimum wage go into effect in 12 states. Additionally, the minimum wage in Maryland and D.C. will go up in July, and inflation adjustments will be made to raise the minimum wage in Colorado and South Dakota as well. A handful of cities and counties, including New York, will also see minimum-wage increases.

Efforts to raise the minimum wage paid off in 2015, and as the movement has gained momentum—the current target for many activists and some economists is $15 an hour—the debate over whether raising minimum wage is a good idea will likely become even more heated in 2016.

On the side for raising minimum wage, labor activists argue that the current minimum wage is not enough to live on. There’s also the argument that raising it might also be beneficial for closing the gender wage gap, as women are more likely to hold minimum-wage jobs. And though raising the minimum wage would raise costs for employers and likely prompt them to eliminate several jobs, the net effect is believed to be positive, because higher wages have the potential to pull many out of poverty.

Those skeptical about raising the minimum wage rightfully worry about it decreasing employment (which happened in Puerto Rico, a commonly cited case study). A recent report from the San Francisco Fed argued another point: that raising the minimum wage helps individuals with low wages much more than it helps impoverished families. This is the camp that believes the issue of inequality is better served by raising the Earned Income Tax Credit, a subsidy for low-income families.

It’s in this context that more than a dozen states are raising or adjusting their minimum wage this year. The next battleground, for both proponents and critics, is likely the debate over raising the federal minimum wage—a debate that’s likely to feature prominently in speeches from 2016’s presidential hopefuls.