Across the United States, the movement to raise the minimum wage is gaining momentum. As of January 1, 2025, 21 states and 48 localities have increased their minimum wages, with states like California, New York, and Washington implementing substantial raises. Most of these areas now boast a minimum wage of $15 per hour or higher. However, Wisconsin has notably not joined this list, continuing to adhere to the federal minimum wage of $7.25 per hour, unchanged since 2009.
Wisconsin remains tied to the federal rate, which starkly contrasts with the economic pressures of today. Record inflation and upward market pressures have significantly outpaced wage growth, leaving the purchasing power of the typical American—and particularly Wisconsinites—waning. With the average rent in Wisconsin sitting at $1,126 per month as of late 2024, a full-time minimum wage job scarcely covers basic living expenses.
Initially, when the federal minimum wage was established in the 1930s, it was intended as a living wage. However, as the cost of living has escalated dramatically since the last increase in 2009, even higher wages are now falling short of "livable."
Contrary to the outdated stereotype of minimum wage workers being teenagers earning pocket money, today’s reality paints a different picture. Research from the Economic Policy Institute reveals that the primary beneficiaries of a raised minimum wage are on average 35 years old, predominantly women, parents, and racial minorities.
A higher minimum wage not only boosts individual earnings but also enhances equity across these groups, which are systemically more likely to live in poverty.
Raising the minimum wage has macroeconomic benefits that extend beyond the individual. It can catalyze local economies, particularly after initial adjustments. For example, in New York City, smaller businesses were given time to adapt to new wage standards, which eventually led to increased local spending, benefiting both essentials and non-essentials like entertainment and dining out. This boost in consumer spending enhances overall economic morale and stability.
Moreover, the feared job losses commonly associated with higher wages are often counteracted by increased consumer demand, which can stabilize and even grow job markets.
The broader social impact of raising the minimum wage is profound. As wages rise, employers are compelled to offer competitive pay to attract and retain talent, indirectly uplift entire income bracket, and create a ripple effect that enhances the quality of life and economic activity. Higher wages mean workers have more discretionary income, fostering a robust cycle of spending and employment.
Despite the clear benefits, there is currently no definitive proposal to raise the minimum wage in Wisconsin at the state level. The Raise the Wage Act of 2023, introduced by Senator Bernie Sanders, aimed to gradually increase the federal minimum wage to $17 per hour by its fifth year but faced bleak prospects under the current administration. This shifts the responsibility to states and localities, where there is growing bipartisan support for wage increases as both smart and necessary policy.
Navigating payroll adjustments with changing wage laws can be challenging. Partner with Payroll Freedom for expert guidance and tailored solutions that keep you compliant and ahead of the curve. Learn more about how our services can help your business thrive amid these changes.