Pay Raise: US Increases Minimum Wage for Millions of Workers, Takes Effect on New Year
- Millions of U.S. workers entered 2026 with a pay rise as new minimum wage laws took effect
- Wage increases across 19 states and several cities were expected to boost earnings by $5 billion
- From Seattle to New York, local wage standards pushed pay higher while the federal rate stayed unchanged
Many U.S. workers began the new year with a pay rise as minimum wage increases took effect across 19 states and several cities on Thursday, January 1, 2026.
According to a December report by the Economic Policy Institute, more than 8.3 million workers were expected to benefit from the hikes, which would collectively add an estimated $5 billion in earnings nationwide.
Source: UGC
Local wage standards push pay higher
Alongside state-level changes, cities and municipalities with their own wage standards also raised pay.
Seattle’s minimum wage rose to $21.30 an hour, while workers in Minneapolis saw their hourly rate increase to $16.37.
Hawaii recorded the largest jump, with its minimum wage rising by $2 per hour, from $14 to $16.
Other states with notable increases included Arizona, California, Michigan, New Jersey and New York.
Federal minimum wage unchanged
Despite these changes, the federal minimum wage remained at $7.25 an hour, where it has stood since 2009. Minimum wage levels continued to vary widely depending on location, with state and local laws often setting significantly higher standards.
State-by-state minimum wage increases
The following states implemented new minimum wage levels on January 1, 2026:
• Arizona: $15.15 (from $14.70); tipped wage $12.15 (from $11.70)
• California: $16.90 (from $16.50)
• Colorado: $15.16 (from $14.81); tipped wage $12.14 (from $11.79)
• Connecticut: $16.94 (from $16.35); tipped wage $6.38 (no change)
• Hawaii: $16 (from $14); tipped wage $14.75 (from $12.75)
• Maine: $15.10 (from $14.65); tipped wage $7.55 (from $7.33)
• Michigan: $13.73 (from $12.48); tipped wage $5.49 (from $4.74)
• Minnesota: $11.41 (from $11.13)
• Missouri: $15 (from $13.75); tipped wage $7.50 (from $6.88)
• Montana: $10.85 (from $10.55)
• Nebraska: $15 (from $13.50); tipped wage $2.13 (no change)
• New Jersey: $15.92 (from $15.49); tipped wage $6.05 (from $5.62)
• New York: New York City, Long Island, Westchester: $17 (from $16.50); tipped wage $11.35 (from $11)
• Remainder of state: $16 (from $15.50); tipped wage $10.65 (from $10.35)
• Ohio: $11 (from $10.70); tipped wage $5.50 (from $5.35)
• Rhode Island: $16 (from $15); tipped wage $3.89 (no change)
• South Dakota: $11.85 (from $11.50); tipped wage $5.93 (from $5.75)
• Vermont: $14.42 (from $14.01); tipped wage $7.21 (from $7.01)
• Virginia: $12.77 (from $12.41); tipped wage $2.13 (no change)
• Washington: $17.13 (from $16.66)
Source: Getty Images
Economic impact of wage hikes
The Economic Policy Institute stated that the increases would provide a significant boost to low-income households.
“More than 8.3 million workers are expected to benefit from minimum wage hikes in 19 states,” the report said, highlighting the scale of the changes.
The new wage levels marked a continued trend of states and cities setting higher standards than the federal minimum, reflecting the rising cost of living across the country.
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