Last Updated on October 27, 2022

Inflation Will Result in Higher Minimum Wages Next Year

Minimum wages in seven states will rise in January 2023 based on the 8.3 percent increase in inflation over the past year, as reported Sept. 13 by the U.S. Bureau of Labor Statistics in its consumer price index (CPI).

States With Minimum Wage Changes

Seven states will adjust their minimum wages based on the new CPI numbers. This includes:

• Arizona, which has a current minimum wage of $12.80 per hour
• Maine ($12.75)
• Montana ($9.20)
• Ohio ($9.30)
• South Dakota ($9.95)

Minnesota and Vermont also index to the recently released figure, but they cap increases at 2.5 percent and 5 percent, respectively. Five other states and Washington, D.C., adjust their wages based on inflation, but only these seven specifically look at the August numbers.

Cities Increase Minimum Wages

Denver recently announced that its minimum wage will rise on Jan. 1 to $17.29 from its current level of $15.87—an 8.94 percent increase. This wage hike links minimum wage increases after 2022 to increases in the regional CPI.

Some cities already received midyear minimum wage increases on July 1 in light of regional CPI changes. These cities included:

• Los Angeles ($15 to $16.04)
• San Francisco ($16.32 to $16.99)
• Washington, D.C. ($15.20 to $16.10)

Automatic increases may ultimately lead to more cities and states amending their minimum wage laws to provide for a cap on annual increases. California will cap its annual statewide minimum wage increases at 3.5 percent for 2023.

Employers’ Concerns About Pay Compression Worsens

As organizations increase salaries offered to new hires to compete for talent, pay compression is worsening. Pay compression occurs when the pay of one or more new employees is close to the pay of more-experienced workers in the same job, or those in higher-level jobs, including managerial positions. Often, pay compression is the result of a market rate for a given job surpassing the increases historically awarded to long-term employees.

Don’t Forget To Keep Your Workplace Up-to-Date with Compliant Workplace Labor Law Posters

As your pay rate changes, remember labor law poster compliance. All businesses in the United States are required to display state and federal labor law posters in your workplace. Meeting these requirements will help you maintain compliance with labor laws and avoid expensive penalties.

Remember that many federal and state laws require employers to provide notice of employment laws to employees by posting labor law posters in the workplace so that employees are informed of their employment rights. If a business has one or more paid employees, then most likely the business will be required to post some labor law posters.

The hard truth is that the maximum penalty for federal posting violations has risen to over $38,000 since newly announced increases by the Department of Labor and the Equal Employment Opportunity Commission have gone into effect—highlighting the seriousness of posting compliance.

Contact MyHRConcierge for Government Compliance Services

Working with a company such as MyHRConcierge that can help you with effortless ongoing labor law poster compliance is key. Purchase our Labor Law Poster & Compliance Plan online or email MyHRConcierge for assistance at ccooley@myhrconcierge.com.

SHRM Online