2024: Minimum Wage Increases Set to Benefit Workers and Businesses in 2025

As the calendar turns to 2025, 21 states will raise their minimum wage on New Year’s Day, with two additional states and the District of Columbia scheduled to increase theirs later in the year. Business owners nationwide are welcoming these changes, citing benefits such as boosted consumer spending, improved productivity, better hiring and employee retention, enhanced customer service, and strengthened local economies.

In Missouri and Alaska, hundreds of business owners partnered with Business for a Fair Minimum Wage to support November 2024 ballot initiatives that not only raise the minimum wage but also enable workers to earn paid sick leave. These initiatives passed overwhelmingly, with 57.6% of Missouri voters and 58% of Alaska voters approving.

With these new measures, 15 states plus D.C. now have a minimum wage of $15 or higher or are in the process of phasing in scheduled increases: Alaska, California, Connecticut, Delaware, Florida, Hawaii, Illinois, Maryland, Massachusetts, Missouri, Nebraska, New Jersey, New York, Rhode Island, and Washington State. Washington leads the nation with the highest state minimum wage, set at $16.66 as of Jan. 1, 2025.

Holly Sklar, CEO of Business for a Fair Minimum Wage, praised the developments, stating: “It’s great news that 23 states are raising their minimum wage in 2025. Workers are also customers, and minimum wage increases boost consumer buying power. These increases go right back into the economy as spending at local businesses. Fairer pay reduces costly employee turnover, increases productivity, and improves customer service. Employees often make the difference between a repeat customer and a lost customer. State raises are vital for workers, businesses, and communities, especially as the federal minimum wage remains stuck at just $7.25, falling further behind the cost of living.”

Missouri: Proposition A. Under Proposition A, Missouri’s minimum wage will rise to $13.75 on Jan. 1, 2025, and to $15 on Jan. 1, 2026. Annual indexing will follow to ensure the minimum wage keeps pace with inflation. Starting May 1, 2025, workers will earn one hour of paid sick time for every 30 hours worked. Employers with fewer than 15 employees can limit usage to 40 hours annually, while those with 15 or more employees can set a limit of 56 hours.

Alaska: Ballot Measure One Under Ballot Measure One, Alaska’s minimum wage will increase to $13 on July 1, 2025, $14 in July 2026, and $15 in July 2027, with annual cost-of-living adjustments resuming on Jan. 1, 2028. Beginning July 1, 2025, workers will also accrue one hour of paid sick time for every 30 hours worked. Usage limits are the same as Missouri: 40 hours annually for small employers (fewer than 15 employees) and 56 hours for larger employers.

Business Owner Perspectives Business owners in states raising their minimum wages are optimistic about the impact.

Annie Adams, owner of Second Chic and Second Chic Outlet, three clothing stores in Buffalo, New York, expressed her support:

“New York’s minimum wage increase will be good for business. When people have more money in their pockets, they can spend more at local stores like mine. I already pay my staff above the minimum wage because they bring the knowledge and positive attitude that keeps my customers happy. Our business grew in 2024 with the opening of Second Chic Outlet, offering even more affordable deals to our customers.”

As these increases take effect, businesses and workers alike anticipate positive ripple effects for local economies and communities.