Minimum wage hike in 21 states: Economists warn of impact on small businesses and entrepreneurs

The start of 2025 marked a change for millions of workers, with 21 states and 48 counties implementing minimum wage increases. According to an analysis by the Economic Policy Institute, these reforms will benefit 9.2 million employees. However, economists warn about the negative consequences of these changes for small businesses and entrepreneurs.

State and local increases

Among the states leading the increase is Washington, which now has the highest minimum wage in the country at $16.66 per hour. California and New York are not far behind, setting minimums of $16.50 per hour in several areas. On the other hand, states such as Montana and Ohio applied more modest increases, setting their minimum wages at $10.55 and $10.70, respectively.

In certain cities and counties, the increases exceed the state minimums. For example, in New York City, Long Island and Westchester, the minimum wage reaches $16.50, a dollar higher than in the rest of the state. Other states include:

- Alaska: $11.91

- Arizona: $14.70

- California: $16.50

- Colorado: $14.81

- Connecticut: $16.35

- Delaware: $15

- Illinois: $15

- Maine: $14.65

- Michigan: $10.56

- Minnesota: $11.13

- Missouri: $13.75

- Montana: $10.55

- Nebraska: $13.50

- New Jersey: $15.49

- New York: $15.50 ($16.50 in NYC, Long Island and Westchester)

- Ohio: $10.70

- Rhode Island: $15

- South Dakota: $11.50

- Vermont: $14.01

- Virginia: $12.41

- Washington: $16.66

Negative consequences for business

Experts warn that the increase could lead to negative consequences for businesses, especially small businesses. The Wall Street Journal editorial section pointed out that the increases could drive automation, reduce work hours and raise prices.

In states such as Missouri and Nebraska, the increases are part of longer plans that aim to establish a $15-an-hour wage by 2026.