Business Owners Say New Year Minimum Wage Hikes Will Boost Consumer Spending, Strengthen Businesses and Local Economies

Twenty-one states will raise their minimum wage on New Year’s Day as the calendar turns to 2025. Two other states and the District of Columbia have increases scheduled later in the year. Business owners across the country are welcoming the increases, saying they will boost consumer spending, increase productivity, improve hiring, employee retention and customer service, and strengthen local economies.

Hundreds of business owners in Missouri and Alaska worked with Business for a Fair Minimum Wage to support November 2024 ballot initiatives in their states to raise the minimum wage and enable workers to earn paid sick leave. More than 500 Missouri businesses in the Missouri Business for a Healthy Economy coalition and more than 130 Alaska businesses in the Alaska Business for Better Jobs coalition supported the ballot initiatives, which passed resoundingly with 57.6% of Missouri voters and 58% of Alaska voters approving.

With voters in Missouri and Alaska approving ballot measures, 15 states plus D.C. have a minimum wage of $15 or higher now or are phasing in scheduled increases to $15 or higher: Alaska, California, Connecticut, Delaware, Florida, Hawaii, Illinois, Maryland, Massachusetts, Missouri, Nebraska, New Jersey, New York, Rhode Island and Washington State. Washington has the highest state minimum wage at $16.66 as of Jan. 1, 2025.

​​“It’s great news that 23 states are raising their minimum wage in 2025,” said Holly Sklar, CEO of Business for a Fair Minimum Wage. “Workers are also customers and minimum wage increases boost consumer buying power. They go right back into the economy as increased spending at local businesses. Fairer pay also reduces costly employee turnover, increases productivity and improves customer service. Employees often make the difference between a repeat customer and a lost customer. State raises are vital for workers, businesses and communities as the federal minimum wage remains stuck at just $7.25, falling further and further behind the cost of living.”

In accordance with Proposition A, Missouri’s minimum wage will increase to $13.75 on Jan. 1, 2025 and $15 on Jan. 1, 2026 – followed by annual indexing so the minimum wage does not lose buying power. Beginning May 1, 2025, employees will be able to earn one hour ofpaid sick timefor every 30 hours worked. Employers with fewer than 15 employees can limit usage to 40 hours per year; those with 15 or more employees can set a limit of 56 hours.

In accordance with Ballot Measure One, Alaska’s minimum wage will increase to $13 on July 1, 2025, $14 in July 2026, and $15 in July 2027. Annual cost of living indexing will resume January 1, 2028. Beginning July 1, 2025, workers will be able to earn one hour ofpaid sick timefor every 30 hours worked. Employers with fewer than 15 employees can limit usage to 40 hours per year; those with 15 or more employees can set a limit of 56 hours.

Business owners in states raising their minimum wage are available for comment through the New Year.

Erik Milan, owner of Stick It In Your Ear music store in Springfield, Missouri, said, “Raising Missouri’s minimum wage will be good for workers and businesses. When workers in our community are paid more, they can spend more at local businesses. And businesses depend on consumer spending to survive, grow and hire. Thanks to better wages and paid sick time because of Proposition A, businesses will also benefit from lower employee turnover, increased productivity, better health and morale, and better customer service.”

Derrick Green, owner of Waffles and Whatnot in Anchorage and treasurer of the Alaska Black Chamber of Commerce, said, “Alaska’s minimum wage increases will help Alaskans thrive. At Waffles and Whatnot our staff treats our restaurant and customers as family because we treat them as family. We show them that we value them by paying fair wages and offering paid time off. Our customers appreciate our food, our service and our friendly atmosphere. The more that people can make a living in Alaska, the stronger our businesses and communities will be.”

Annie Adams, owner of Second Chic and Second Chic Outlet, three clothing stores in Buffalo, New York, said, “New York’s minimum wage increase will be good for business. When people have more money in their pockets, they can spend more at local stores like mine. I already pay my staff above the minimum wage because they have the knowledge and positive attitude that keeps my customers happy. Our business grew in 2024 with the opening of Second Chic Outlet, offering even more affordable deals to our customers.”

Aaron Seyedian, owner of Well-Paid Maids in D.C., Maryland, Virginia, New York City and Chicago, said, “We welcome the minimum wage increases starting off the year in Illinois, New York and Virginia as well as D.C.’s annual increase in July. We’re as committed as ever to good pay for our employees who deliver the great service our customers appreciate. Our low employee turnover saves us a lot of money and time on hiring and training. And we’re happy to report another year of record revenue for our business. Plus we expanded to Chicago in 2024.”

Amelia Rosser, owner of Sheelytown Market in Omaha, Nebraska, said, “Raising the minimum wage makes great business sense. Nebraska’s main street businesses will do better when more people have more money to spend. When employees are paid fairly they can focus on delivering great customer service and driving sales instead of worrying about making rent. Investing in employees helps your business grow.”

Pete Turner, owner of Illegal Pete’s Restaurants in Colorado and Arizona, said, “We welcome the new year increases raising the wage floors in Colorado and Arizona. The people in our industry work as hard as anybody out there, and they deserve to make a good living. Our business continues to grow, and that’s in large part because of our great team of employees. Our commitment to living wages and benefits has led to higher productivity and a growing base of customers who appreciate our food and our service.”

Courtney Sunborn, owner of Ecolistic Cleaning in Rehoboth Beach, Delaware, said, “I’m excited that Delaware’s minimum wage is finally reaching $15 in 2025. In our business we’ve seen that higher pay leads to employees who are happier, healthier and more productive. They provide the exceptional service that keeps our residential and commercial clients happy and our business growing. As Delaware workers earn more, they can afford to spend more and that’s good for the economy.”

Steven Dyme, CEO of Flowers for Dreams, with locations in Illinois, Michigan, Minnesota and Wisconsin, said, “We embrace minimum wage increases as good for business as well as workers. We’ve seen that workers who are paid fairly and treated with respect provide the quality product and customer service that sustains small businesses for the long term. Minimum wage increases also boost the consumer spending that businesses depend on and strengthen local economies.”

Mitch Cahn, president and founder of Unionwear, an apparel and accessories manufacturer in Newark, New Jersey, said, “When wages go up, so does consumer spending and revenues at businesses, helping them to grow and create new quality jobs. Paying fair wages and taking care of your team leads to lower employee turnover, which means more knowhow, efficiency and resourcefulness on the shop floor. We have high morale and high productivity. Raising the minimum wage is a great investment in New Jersey’s economy.”

Mike Draper, owner of Raygun, a clothing, home goods and design company headquartered in Des Moines, Iowa, with locations in Kansas City, Missouri; Omaha and Lincoln, Nebraska; and Chicago, Illinois, said, “Raising the minimum wage helps economies thrive. We invest in our employees and the return on that investment is huge. We opened a new store in Lincoln, Nebraska in 2024 and we’re looking at additional expansion in 2025. When employees are paid fairly they can focus on their jobs instead of being stressed over how they can afford to pay their bills. They do a better job, stay with us longer, and help us keep building a better business.”

Jessica Galen, owner of Bloomy Cheese & Provisions in Dobbs Ferry, New York, said, “The walkable downtowns and vibrant communities New Yorkers want are made up of small, independent businesses like mine. Our businesses are stronger when our employees and folks who work locally are making enough to make ends meet. The minimum wage increase will recirculate back into the economy through spending at the main street shops that make up the fabric of our communities. It’s a virtuous cycle. When we take care of our employees, they take care of us.”

Scheduled increases for Jan. 1, 2025 include:

  • Alaska increases to $11.91 on Jan. 1, 2025 and then, in accordance with Ballot Measure 1, it  increases again to $13 on July 1, 2025. It increases to $14 on July 1, 2026, $15 on July 1, 2027, followed by annual indexing resuming January 1, 2028.
  • Delaware increases to $15 on Jan. 1, 2025.
  • Illinois increases to $15 on Jan. 1, 2025.
  • Michigan increases to $10.56 on Jan. 1, 2025 and then to $12.48 on Feb. 21, 2025 in accordance with a 2024 ruling by the Michigan Supreme Court. The minimum wage is scheduled to increase to $13.29 on Feb. 21, 2026, $14.16 in 2027 and $14.97 in 2028, followed by annual indexing.
  • Missouri, with the passage of Proposition A, increases to $13.75 on Jan. 1, 2025, $15 in 2026, and then is indexed annually.
  • Nebraska increases to $13.50 in 2025 and $15 in 2026, and then is indexed annually.
  • New York increases on Jan. 1, 2025 to $16.50 in New York City, Westchester County and Long Island and $15.50 in the rest of the state, followed by 50-cent increases in 2026 to $17 and $16 respectively. Indexing begins in 2027.
  • Rhode Island increases to $15 on Jan. 1, 2025.

States with indexing where annual increases (based on the Consumer Price Index unless indicated otherwise) take effect Jan. 1, 2025, include:

State increases later in 2025:

  • Oregon and the District of Columbia will have cost of living increases on July 1, 2025. As noted above, Alaska has a second 2025 increase on July 1.
  • Florida’s minimum wage will increase to $14 on Sept. 30, 2025, and then to $15 in 2026; in 2027, Florida will resume annual indexing.

In addition, numerous city and county minimum wages will increase on Jan. 1 or later in 2025. The UC Berkeley Labor Center provides a comprehensive Inventory of US City and County Minimum Wage Ordinances.

The federal minimum wage has been stuck for more than 15 years at $7.25 an hour since July 24, 2009—the longest period in history without a raise. The federal minimum wage has eroded greatly since it peaked in purchasing power in 1968, when the minimum wage was worth $14.76 in 2024 dollars, according to the U.S. Bureau of Labor Statistics Inflation Calculator.

Business for a Fair Minimum Wage is a national network of business owners and executives and business organizations that believe fair pay makes good business sense. www.businessforafairminimumwage.org.

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