The minimum wage will increase in 21 states next year. Here’s what to know

On Jan. 1, 2025, millions of workers across the U.S. will see their paychecks grow as the minimum wage rises in 21 states.

According to the National Employment Law Project (NELP), a nonprofit advocacy group, these changes, driven by cost-of-living adjustments, reflect a growing effort to ensure wages keep pace with inflation.

For the first time, three states – Illinois, Delaware, and Rhode Island – will hit a $15 per hour minimum wage, joining seven other states that already have wages at or above that level.

Meanwhile, California and New Jersey, are taking it a step further, raising the wage floor to over $17 per hour for some healthcare workers. New Jersey plans to roll out gradual increases for small employers and agricultural workers as well, while boosting wages for large employers and long-term care facilities.

Many other states, including Arizona, Colorado, Connecticut, Ohio, and Virginia are implementing smaller, annual increases linked directly to the cost of living. These adjustments, tied to the Consumer Price Index (CPI), are designed to ensure wages stay in line with inflation over time, providing steady, predictable boost for workers.

However, not every state is following suit. Seven states – Arkansas, Hawaii, Maryland, Massachusetts, Nevada, New Mexico, and West Virginia – won’t be raising their minimum wages in 2025, even though their current rates are above the federal threshold of $7.25 per hour. Hawaii is skipping a step increase this year but plans to resume hikes in 2026.

California has already set a bold example when it implemented its $20 minimum wage law on April 1, 2024. A study by the University of California’s Berkeley Institute for Research on Labor and Employment found that this increase did not lead to major price hikes or job losses, challenging the common fears associated with wage hikes in the fast-food sector. As more states follow suit, this could signal a shift in how wage raises are viewed across the country.

As wage floors continue to climb, workers in sectors like healthcare and fast food stand to benefit, potentially prompting companies to reassess their business models.