We know people are struggling to make ends meet. Many SaverLife members have shared that their wages aren’t keeping up with skyrocketing inflation. But in a long-overdue positive change, 24 states are finally taking action in 2024 to increase the minimum wage for their residents, affecting an estimated 10 million workers.

What is minimum wage, and why should it increase?

In the United States, there’s a federal minimum wage that applies to all non-exempt workers. It was established by the Fair Labor and Standards Act, and it is monitored by the Department of Labor.

• In 2024, the federal minimum wage is $7.25 an hour for non-exempt workers. 
• For employees who receive tips, the federal minimum wage is $2.13 an hour. But the total wage per hour, including tips, must equal $7.25. If not, the employer must make up the difference. 

In addition to the federal minimum wage, many states also have minimum wage laws. You can check the minimum wages by state on the Department of Labor site.

PRO TIP: If a state has a minimum wage above the federal minimum wage, the state minimum wage supersedes the federal, meaning you’re entitled to the state minimum wage.

Inflation has been on the rise since 2020, and 2023 saw continued price increases for common household goods. These price increases put a strain on families and budgets nationwide. 

But even as prices increased, wages often did not. 

According to the American Bar Association, wages in the US have stagnated, which means they haven’t kept up with inflation. 

The combination of high inflation and low wages makes it a lot more expensive for families to purchase even basic necessities. 

What states are increasing minimum wage in 2024, and what does it mean for you?

2024 will see waves of minimum wage increases. 

1. The first wave occurred on January 1 and saw 22 states raise their minimum wages: Alaska, Arizona, California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Maine, Maryland, Michigan, Minnesota, Missouri, Montana, Nebraska, New Jersey, New York, Ohio, Rhode Island, South Dakota, Vermont, and Washington.
2. Additionally, Nevada, Oregon, and Washington D.C. plan to increase their minimum wage on July 1. 
3. And Florida is increasing its minimum wage on September 30. 

Across the states raising their minimum wages, individuals can expect to earn a minimum of $8.85 an hour in Minnesota (if you work for a small employer) all the way up to $16.28 in Washington.

If you don’t live in one of those states, don’t get discouraged.

In addition to these states, there are also 38 cities and counties that are increasing their minimum wage. Most of these cities are in California, but there are cities in Arizona, Colorado, Maine, Minnesota, New Mexico, and Washington that are also increasing the minimum wage. Check out the full list of cities here. 

If you’re making just above minimum wage or you’re not in one of the areas increasing wages this year, these increases could still indirectly benefit you. 

This increase in the minimum wage is also expected to put upward pressure on companies that employ individuals earning a bit more than minimum wage as the pay scale gets adjusted upwards.

According to the National Employment Law Project (NELP), the increase in the minimum wage across the United States is “the result of underpaid workers organizing, demanding, and winning higher wages over the past decade.” 

This wage increase is another step in leveling the playing field and will start to help offset the rising prices workers face.

If you or someone you know has a minimum wage job that might be impacted, it’s important to understand how to adjust your budget and how the increase might allow you to boost your savings. 

Adjusting Your Budget 

Anytime your paycheck increases, it’s a good time to adjust your budget. It can be tempting when you find yourself making more money to treat yourself and splurge more often. And while an occasional splurge isn’t all bad, here are a few things you should do first:

1. Make sure all your bills are paid

If your budget was tight before or you were falling behind on some bills, making more money is a perfect time to get caught up. 

Review your monthly and yearly bills to be sure you’re covering everything you need to cover. If you aren’t, use some of the funds from the minimum wage increase to cover all your bills. This helps you get a firm grasp on your basic expenses. 

It’s important to take care of your bills first because if you wait until the splurging is over, you likely won’t have any money left to add to them.

2. Review your debts

After you receive any sort of raise, it’s a good idea to review your debt. Make sure you’re paying at least the minimum on each debt you have. If some debts are costing you more because of high interest, see if you can use a portion of your raise to pay them off quicker.

3. Increase your savings

Once you make sure all your bills and debts are covered, the next thing you should do is give your savings a boost. 

Look at your budget from before the minimum wage increased, add in any extra you’re paying toward your bills and debt, and compare this to your new income. 

Hopefully, you’re in a situation where there is a surplus. Use some of this surplus to add to your savings each pay period. Be sure to move the money right after you get paid before you have the chance to spend it on something else. You could even ask your employer if you could have a portion of your check go directly to savings.

It can be helpful to have your savings be a set percentage of your income each pay period. That way, when your income goes up and you keep saving the same percentage, your savings will also increase.

4. If you splurge, keep it small

When there’s more money coming in, it can be hard not to splurge. And the occasional splurge or celebration is ok. But it can be helpful to keep it in check. 

Have a plan when you go out to splurge. Know what you’re going to do or buy and how much you’re willing and able to spend. 

Treating yourself to something doesn’t have to mean a designer handbag. It could mean lunch with a friend or a coffee on the way to work. 

Splurging can quickly get out of hand, and your spending can run away from you. Instead, if you decide to spend a bit extra, be thoughtful and only do it after you’ve seen to your bills and increased your savings.

Check out: 4 Thrifty Tips to Treat Yourself When You’re on a Budget

Kimbree Redburn

Kimbree Redburn is an Accredited Financial Counselor® with a background in economic development. She works with her clients to help them understand their financial options and make money decisions with confidence. She believes that financial education gives people a chance to build a better life.