Who got a raise on January 1? Millions of workers across the country — but not in every town or state.
The start of 2026 brought a wave of legislated pay increases: 22 states and dozens of cities and counties raised their minimum wages, according to the National Employment Law Project (NELP). For many low‑paid workers this meant a meaningful bump to take‑home pay; for small business owners it meant juggling higher payrolls amid already rising operating costs.
A national patchwork
The picture is uneven. Some states pushed the wage floor well above $15 an hour, while others left the federal baseline of $7.25 untouched. Highlights that took effect Jan. 1 include:
- New York: $17.00 in New York City, Long Island and Westchester; $16.00 for the rest of the state
- Washington: $17.13
- California: $16.90
- Connecticut: $16.94
- Rhode Island and Hawaii: $16.00
- Nebraska and Missouri: $15.00
- Minnesota: $11.41 (an inflation‑linked increase)
- Virginia: $12.77
A longer list compiled by worker advocates shows Arizona, Colorado, Maine, Michigan, Montana, New Jersey, Ohio, South Dakota, Vermont and several others also moving the floor upward. Alaska, Florida and Oregon are scheduled to increase later in 2026.
Federal law still sets a $7.25 minimum that hasn’t changed since 2009; states have increasingly filled the gap with their own, higher floors. NELP’s tracking helps explain where each jurisdiction lands and why the patchwork exists: a combination of ballot measures, statutes and inflation‑indexed adjustments. For background on federal rules, see the U.S. Department of Labor.
What this looks like on Main Street
Not every business owner greeted the change with celebration. In Tazewell, Virginia, Joseph Damato, co‑owner of The Happy Goat, described the recent 36‑cent increase to $12.77 as both "a good thing and a bad thing." He said higher pay helps employees, but added that small businesses already stretched by rising costs can feel squeezed. Damato doesn’t plan to raise prices immediately — a common short‑term choice among smaller firms — but he urged lawmakers to consider how new labor rules disproportionately affect independent operators.
Local differences matter. Iowa, for example, still ties its minimum wage to the federal $7.25 and has not raised it since 2008, leaving it below most neighboring states. That contrast has practical consequences: businesses near state lines may face recruiting and retention challenges when a neighboring state offers substantially higher base pay.
The economics and the argument
Proponents of higher minimum wages point to better ability for workers to cover basics — rent, transportation, groceries — and to reduced reliance on public assistance. Opponents warn of higher costs passed to consumers, pressure to reduce hours or staffing, and uneven effects on very small businesses.
Empirical studies continue to show mixed results, and context matters: local cost of living, industry mix, and whether increases are phased in or indexed to inflation all influence outcomes. Many recent state changes were framed as responses to inflation after the 2021–2022 spike, while others represent longer‑running political shifts toward higher floors.
There’s another layer often less visible in day‑to‑day coverage: automation and productivity changes. As employers face higher labor costs, some will invest in tech to reduce repetitive tasks. Debate over where that leads — displacement or different job mixes — is heating up in policy and tech circles; for broader context on artificial intelligence’s potential impacts on work, see the ongoing debate over AI’s reach and how tools like Google’s Gemini are being integrated into workplace software Gemini Deep Research plugs into Gmail and Drive.
What workers actually see in their paychecks
For many hourly employees the increases are immediate and concrete: a few dollars more per hour can add several hundred dollars a month depending on hours worked. In some places, the minimum wage now reaches or exceeds $15 — essentially doubling the federal baseline. In others, particularly in parts of the Midwest and the South, the federal rate still governs.
Some jurisdictions also made changes to tip taxation or tipped‑wage rules this year, a detail that matters in restaurants and service industries where tips make up a large share of income. Local reporting from Virginia noted both the wage floor increase and adjustments to how tips are taxed or treated on paychecks.
A moving landscape
Expect the patchwork to keep shifting. Several states have built automatic, inflation‑linked increases into law; others will revisit minimum pay at the ballot box or in legislatures. The result is a mosaic of pay floors that employers, job seekers and policymakers must manage — sometimes within a single commuting area.
For workers, the changes can bring relief. For businesses, they often mean planning: revisiting prices, staffing models and productivity investments. And for residents of states like Iowa and Wisconsin — where the floor remains $7.25 — the contrast with neighbors may become more politically salient.
This is not a single‑size‑fits‑all story. It’s a collection of local decisions, economic tradeoffs and political choices that will play out differently in diners, factories and offices across the country.