WASHINGTON -- Driven by a recovering economy and concerns about income inequality, many states and localities this year significantly raised their minimum wages, but most enacted gradual, multiyear hikes and some loaded the raises with caveats and conditions.
In taking action, states and localities leapfrogged the federal minimum wage, which has been stuck at $7.25 since 2009.
In the past, states and cities tended to enact minimum wage increases over one or two years. Now, many are incrementally raising workers' pay over as many as six years. Many also are setting different pay rates for small and large businesses, or regions delineated based on their cost of living. Some of the increases include so-called off ramps, which allow states to delay scheduled hikes if there is an economic or budgetary crunch.
Most states have put the Great Recession behind them, but memories of anemic tax revenues and slashed budgets still haunt state lawmakers, and fears about the next downturn are growing as the country's economic expansion enters the traditional danger zone.
"This expansion has already been going seven years," said Sylvia Allegretto of the Center on Wage and Employment Dynamics at the University of California, Berkeley. "We don't go much more than 10 years without a recession, so that's why they have to take this into account."
This year California and New York, liberal-leaning states with expensive cities and cheaper rural areas, led the way. Those states raised their minimum wages higher than any other, and were the first to tie scheduled increases to fiscal and economic conditions. States, in turn, were led by cities, many on the West Coast, which had raised their minimums earlier this year or last year.
In California, Gov. Jerry Brown and legislators were spurred in part by a looming statewide ballot measure that seemed certain to pass. The ballot proposal would have increased the state's $10 minimum wage by a dollar a year to $15 in 2021. But it would not have tied the increases to fiscal or economic conditions, and did not distinguish between large and small employers.
The bill the Democratic governor signed in April represents a more cautious approach. For employers with 26 or more employees the wage will reach $15 an hour by 2022. For employers with 25 or fewer employees it will reach $15 by 2023. After the minimum wage reaches $15 for everyone it will be indexed annually to inflation.
The law also allows the governor to pause the scheduled increases if the state's budget tightens or the broader economy falters.
Had the wage been lifted through referendum, under California law it could only be lowered by referendum. There were worries both in the governor's office and in the Legislature about what would happen in an economic slowdown.
"It made sense for the Legislature and the governor to get this work done ourselves," said state Sen. Mark Leno, a San Francisco Democrat who chairs the Senate budget committee and has sponsored numerous minimum wage bills. Leno also owns a sign-making company.
"I think it is a sustainable model and should give some level of comfort to employers, in particular smaller employers, who fear their inability to bear additional costs in an economic downturn."
Under the new law, the governor will receive an economic assessment every August and will decide the following month whether the next scheduled increase should go into effect. Factors going into that decision will include job growth, sales tax revenue and retail sales, said California Department of Finance Director Michael Cohen.
"It's groundbreaking," Cohen said. "California is thinking about budget impacts of the minimum wage."
New York Gov. Andrew Cuomo signed a bill, also in April, that will gradually raise New York's $9 minimum wage to $15. Employers in New York City with 11 or more employees will reach that level in 2018, and city employers with 10 or fewer workers will do so in 2019.
As in California, New York can pause its hikes beginning in 2019 if budget officials determine the state's economy is in trouble. And under New York's plan, suburban and rural parts of the state will have longer phase-in times and more opportunities to delay the increases. Suburban areas will reach the $15 threshold in 2021. In rural areas the wage will hit $12.50 an hour in 2020 and be tied to inflation until it reaches $15.
In the District of Columbia, lawmakers last week approved a bill, backed by Democratic Mayor Muriel Bowser, which will lift the $10.50 base wage to $15 by 2020. It was already scheduled to go up to $11.50 in July. After 2020 annual increases will be tied to inflation.
"We know when you have federal inaction for long periods of time, which we've had, we do see we've had an increased activity on the state level," Berkeley's Allegretto said. "States like California where there is a high cost of living tend to move first."
While most states have a state minimum wage that is the same or higher than the federal level, six states _ Alabama, Louisiana, Mississippi, New Hampshire, South Carolina and Tennessee _ have no state minimum wage law, meaning their workers get the federal minimum.
According to the National Conference of State Legislatures, 14 states began 2016 with higher minimum wages than the year before. Of those, 12 states increased their rates through legislation passed in the 2014 or 2015 sessions and two others automatically increased their rates based on the cost of living. At least 29 states, plus D.C., now have minimum wages above the federal level, according to NCSL.
Of the 11 states that currently tie increases to the cost of living, eight did not increase their minimum wages in 2016, NCSL said. Colorado called for an 8-cent increase and South Dakota a 5-cent increase. Maryland ($8.25), Minnesota ($9 for large employers and $7.25 for small employers) and D.C. ($10.50) have additional increases scheduled for this summer. Nevada will announce in July whether there will be a cost of living increase to its $8.75 minimum wage.
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