The current period of high inflation that has significantly impacted the U.S. economy will also influence a New Year's tradition: The annual state minimum wage increases.

By Jan. 1, hourly minimum wages in 23 states will rise as part of previously scheduled efforts to reach $15 an hour or to account for cost-of-living changes. The increases account for more than $5 billion in pay boosts for an estimated 8.4 million workers, the Economic Policy Institute estimates.

Additionally, nearly 30 cities and counties across the U.S. will increase their minimum wage, according to the EPI, a left-leaning think tank.

The larger-than-typical increases for a dozen states come after inflation hit a 40-year high this summer, leaving families struggling to keep up with the rising costs.

"The fact that there's high inflation really just underscores how necessary these minimum wage increases are for workers," said Sebastian Martinez Hickey, a research assistant at the EPI. "Even before the pandemic, there was no county in the United States where you could affordably live as a single adult at $15 an hour."

The pandemic and the subsequent period of economic recovery has further revealed the growing chasm in America's wealth gap. During the past two years, working conditions and low pay contributed to a swelling of labor movement activity and actions by many large corporations to raise their wage floor.

The pandemic also led to a structural upheaval in the nation's labor market, creating an imbalance of worker supply and demand that still persists. Employers have found themselves short of workers for most of the year, which has pushed up average annual hourly wages in the battle to recruit and retain staff. While some workers in competitive industries such as retail and dining have found their new salary outpaces inflation, most pay has been outpaced by rising prices.

"The story is different because wages have been increasing at the low-end, much faster than inflation and much faster than in middle- or high-wage jobs," said Michael Reich, economics professor at the University of California at Berkeley. "And that means that many workers, even in the $7.25 states, are already getting paid above the minimum wage."

In other words, he said, the minimum wage "has become less and less binding."

"Even though minimum wages might go up by 7%, in many states and cities, labor costs aren't going to go up anywhere as much as they have in the past, because they already have gone up," he said. "That also means that prices aren't going to go up at [places like] restaurants."

The federal minimum wage of $7.25 per hour hasn't budged since 2009, and 20 states have a minimum wage either equal to or below the federal level, making $7.25 their default baseline. The value of the federal minimum wage peaked in 1968 when it was $1.60, which would be worth about $13.46 in 2022, based on the Bureau of Labor Statistics' inflation calculator.

States with scheduled minimum wage increases on Dec. 31, 2022, or Jan. 1, 2023

• Delaware: $10.50 to $11.75
• Illinois: $12 to $13
• Maryland: $12.50 to $13.25
• Massachusetts: $14.25 to $15
• Michigan: $9.87 to $10.10
• Missouri: $11.15 to $12
• Nebraska: $9 to $10.50
• New Jersey: $13 to $14.13* (scheduled increase also includes inflation adjustment)
• New Mexico: $11.50 to $12
• New York: $13.20 to $14.20 (Upstate New York); $15 (in and around NYC)
• Rhode Island: $12.25 to $13
• Virginia: $11 to $12

Cost of living increases of state minimum hourly wages:

• Alaska: $10.34 to $10.85
• Arizona: $12.80 to $13.85
• California: $14.50 (firms with 25 or fewer employees) /$15 (firms with 26+ employees) to $15.50
• Colorado: $12.56 to $13.65
• Maine: $12.75 to $13.80
• Minnesota: $8.42 to $8.63 (small employer); $10.33 to $10.59 (large employer)
• Montana: $9.20 to $9.95
• Ohio: $9.30 to $10.10
• South Dakota: $9.95 to $10.80
• Vermont: $12.55 to $13.18
• Washington: $14.49 to $15.74

Later in 2023:

• Connecticut (effective July 1): $14 to $15
• Florida (September 2023): $11 to $12
• Nevada (effective July 1): $9.50 to $10.25 (firms that offer benefits); $10.50 to $11.25 (no benefits offered)
• Oregon: $13.50 (effective July 1, indexed annual increase to be based on the CPI)

Sources: State websites, National Conference of State Legislatures, Economic Policy Institute

Twenty-one states and 35 cities and counties across the country will be starting the new year by raising their minimum wage. In addition, four other states plan to join them later in the year, along with 20 more locations.

The National Employment Law Project (NELP) says that it represents a record for the number of states, counties and municipalities raising their minimum wage in a single year. The group says high inflation rates may have pushed some places to change.

"We are seeing that at least some of those jurisdictions that have reached our target rate this year are raising wages by inflation," said Yannet Lathrop, a senior research and policy analyst at NELP. "That's a positive because as we know, now more than ever, inflation can take a big chunk out of paychecks if we don't adjust for that.

While 2022 is set to be a record-breaking year for boosting the minimum wage locally, it's a different story at the federal level, where the minimum wage is $7.25 an hour — the same it's been since 2009. That represents the minimum wage in 21 states across the country.

"Many of those states are actually in the South, where about half the Black population lives, and so it's really important to raise the federal minimum wage, not just because of what it could do for the the the U.S. workforce and the workers that could be affected by that, but also because of the potential racial equality impacts of that policy," Lathrop said.

Lathrop says it's fair to ask if the changes at the local level could push the federal government to also raise the national minimum wage in 2022.

PNC Bank is the latest large U.S. financial services company to increase wages in a bid to keep and attract employees, raising its minimum wage to $18 an hour while also giving higher-paid workers a bump in pay.

The bank said Monday that the wage increase will apply to both PNC employees as well as those working for BBVA USA, which PNC acquired last year. Base-level PNC employees will see their wages increase from $15 an hour to $18, a 20% pay raise. The increase is more substantial at BBVA, which had an $11 minimum wage before PNC bought the bank.

About 20,000 PNC and BBVA employees will see their base pay rise to $18 an hour, the bank said.

“We want the best we can find, and we can afford to do so," said Bill Demchak, chairman and CEO of PNC Financial Services Group Inc., in an interview. "We need to show that we can provide both a career path as well as compensation that makes it us a lifetime opportunity.”

In addition to the higher base pay, PNC and BBVA employees making more than minimum wage will also receive a bump up in pay, in what Demchak described as an “accordion effect” across the its branches.

Pittsburgh-based PNC is now one of the country's largest banks after acquiring BBVA, giving it a nationwide footprint and making it able to compete more effectively with the large money-center banks like JPMorgan Chase and Bank of America.

When the acquisition is completed, PNC will have about 60,000 employees nationwide.

Bank of America announced in May that it would increase its minimum wage to $25 by 2025, and announced last year it would pay all employees $20 an hour. Other banks like JPMorgan and Wells Fargo are paying up to $20 an hour, depending on the geography of where the employee is based.

Demchak said the wage increase was necessary both to compete with other banks but also a moral decision. Along with the fact that many bank branch employees had to work physically at their locations throughout the pandemic, the economic impact of the pandemic made many of their jobs more complex and more important than ever, he said.

“There was a lot of discussion in the past couple years about what entails a living wage, and it resonated with me. I thought ‘how can I offer a person a lifetime career if I cannot offer them a living wage?’," he said.

It’s no secret that increasing the minimum wage through President Joe Biden’s proposed $1.9 trillion stimulus bill will be a tall task.

Passing a minimum wage increase in the stimulus bill has two huge obstacles. One is that several moderate Democratic senators, namely Joe Manchin of West Virginia, remain lukewarm to the proposal. Secondly, there are questions on whether a minimum wage increase can be approved through the budget reconciliation process in the Senate.

The Democrats propose hiking the federal minimum wage from $7.25 an hour to $15 an hour by 2025. Also, it would continually adjust the minimum wage to reflect the cost of living.

Generally bills in the US Senate either need 60 votes to avoid a legislative filibuster, or a simple majority if the budget reconciliation process is used. But in order to use the budget reconciliation process, the bill has to be in agreement with the “Byrd Rule.”

The Byrd Rule in general requires that a proposal must produce a change in government spending or revenue, or change the federal deficit. While spending on a stimulus bill should pass the Byrd Rule, there are questions on whether the minimum wage increase would affect government spending or revenue.

Sen. Bernie Sanders is asking the Senate parliamentarian to adjudicate whether the minimum wage proposal can go through the budget reconciliation process. If it can’t, the bill would require 60 votes for passage. In an evenly divided Senate, it would seem unlikely a $15 minimum wage proposal would garner 10 Republican votes.

White House press secretary Jen Psaki said Friday that despite expressing some doubts, Biden remains committed to get the minimum wage increase passed.

“He would not have put it in the bill if he did not want the minimum wage to be increased,” Psaki said. “That's what he wants to see the outcome as, but he also knows, through many, many decades of working through legislation, that the bill that comes out the other end may not look exactly the same as the bill coming in. And there's several steps.”

Psaki responded to reports that Biden told a group of governors that he doesn’t expect a minimum wage increase through reconciliation.

“He said what he had said publicly about a week and a half earlier during a CBS interview, which is that, you know, he is looking at -- he was in the Senate for 36 years, he knows it has to go through a process -- through the parliamentarian in the Senate,” Psaki said. “He put the minimum wage -- an increase in the minimum wage in his bill because he hopes that it is -- because he feels that it is long overdue for that to be raised for American workers. “

If passed, the federal minimum wage would increase to $9.50 on June 1, $11 in June 2022, $12.50 in June 2023, $14 in June 2024 and $15 in June 2025.

Earlier this month, the nonpartisan Congressional Budget Office examined what would happen if the Raise the Wage Act gets enacted in March.

In its findings, while the CBO projects that the poverty rate would decline by .9%, roughly the same percentage of workers would find themselves out of work.

Here are the highlights:

- The number of unemployed Americans would increase by a projected 1.4 million workers, or .9%.
- Conversely, the act would reduce the number of Americans in poverty by .9%.
- The cumulative budget deficit through 2033 would increase by $54 billion. Increases in annual deficits would be smaller before 2025.
- Higher prices for goods and services, stemming from the higher wages of workers paid at or near the minimum wage, would increase federal spending.
- Changes in employment and income distribution would increase spending for some programs (such as unemployment compensation), reduce spending for others (such as nutrition programs), and boost federal revenues.

Senate Minority Leader Mitch McConnell cited the CBO’s findings on the floor of the Senate.

“But remember, this is about liberal dreams and not urgent needs,” McConnell said about Democrats wanting to include a minimum wage increase in the stimulus bill.

To read the full report, click here.

Justin Boggs is a writer for the E.W. Scripps National Desk. Follow him on Twitter @jjboggs or on Facebook.

WASHINGTON (AP) — Senate leaders and moderate Democratic Sen. Joe Manchin have struck a deal over emergency jobless benefits, breaking a nine-hour logjam that had stalled the party’s showpiece $1.9 trillion COVID-19 relief bill.

The compromise, announced by the West Virginia lawmaker and a Democratic aide, seems to clear the way for the Senate to begin a climactic, marathon series of votes expected to lead to approval of the sweeping legislation.

Democrats had already set aside one battle over boosting the minimum wage.

Manchin is probably the chamber’s most conservative Democrat, and a kingmaker in a 50-50 Senate that leaves his party without a vote to spare.

WASHINGTON —

President Joe Biden is set to sign an executive order to increase the minimum wage to $15 an hour for federal contractors, providing a pay bump to hundreds of thousands of workers.

Biden administration officials said ahead of Tuesday's signing that the higher wages would lead to greater worker productivity, offsetting any additional costs to taxpayers.

"This executive order will promote economy and efficiency in federal contracting, providing value for taxpayers by enhancing worker productivity and generating higher-quality work by boosting workers’ health, morale, and effort," the White House said in a statement.

The officials could not provide an exact figure on how many workers for federal contractors would receive a raise, only that it would be hundreds of thousands. There are an estimated 5 million contract workers in the federal government, according to a posting last year for the Brookings Institution by Paul Light, a public policy professor at New York University.

The increase could be dramatic for workers who earn the current minimum of $10.95 an hour. Those workers would receive a 37% pay hike, though the increase would be rolled out gradually, according to the terms of the order.

The White House said the workers would include cleaning professionals and maintenance workers, nursing assistants who care for veterans, cafeteria workers providing for the military and laborers who build and repair federal infrastructure.

All federal agencies would need to include the higher wage in new contract offerings by Jan. 30 of next year. By March 30, agencies would need to implement the higher wage into new contracts. The increase would also be in existing contracts that are extended.

The wage would be indexed to inflation, so it would automatically increase with each year to reflect changes in prices. The tipped minimum wage of $7.65 an hour for federal contractors would be replaced by the standard minimum by 2024.

Biden has pushed to establish a $15 hourly minimum wage nationwide for all workers, making it a part of his coronavirus relief package. But the Senate parliamentarian said the wage hike did not follow the budgetary rules that allowed the $1.9 trillion plan to pass with a simple majority, so it was not included in the bill that became law in March.