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20 states to raise minimum wage by New Year's Day

Despite Obama's failure to convince Congress to raise the federal minimum wage, 20 states will ring in the New Year with a higher minimum pay rate.

Despite President Obama’s failure to convince Congress to raise the federal minimum wage in 2014, 20 states across the U.S. will ring in the New Year with a higher minimum pay rate, affecting more than 3.1 million workers. 

The hourly rate hikes in nine states, including Arizona, Colorado, Florida, Missouri, Montana, New Jersey, Ohio, Oregon and Washington, will be minimal, ranging from 12 cents to 23 cents, and are the result of adjustments to keep up with inflation, according to the National Conference of State Legislatures.

States with minimum wage increases in 2015

Hover over states to see their new wages

Source: Economic Policy Institute

But the wage increases in the remaining 11 states are more significant and are taking place because state legislatures passed new laws or voters approving ballot initiatives. That list includes Alaska, Arkansas, Connecticut, Hawaii, Maryland, Massachusetts, Nebraska, Rhode Island South Dakota, Vermont and West Virginia.

Several of the states that passed the minimum wage ballot initiatives this year are among the most conservative in the country, including South Dakota, Nebraska, Arkansas and Alaska. Yet GOP senators in those states voted against going forward with a bill in April that would have gradually increased the federal minimum wage as well.

Minimum wage workers in South Dakota will get the biggest increase -- $1.25 an hour, boosting the minimum wage to $8.50 an hour. In Alaska and Massachusetts, minimum wage workers will see a $1 increase to $8.75 and $9, respectively. Among all states that will see a spike, Washington state will have the highest base pay of $9.47 an hour, followed by Oregon with $9.25 an hour and Vermont and Connecticut with $9.15.

The new wages –capping a year of fast-food and retail worker protests for better pay -- also means that starting New Year's Day, 29 states and Washington D.C. will have minimum wage rates above the federal minimum wage of $7.25 an hour. 

President Obama has been unable to persuade Congress to boost the federal minimum wage to $10.10 an hour, even after arguing that someone working full time, making minimum wage which comes out to about $14,500 a year, cannot keep his or her family above the poverty line. A proposal to raise the minimum wage to $10.10 died in the Senate in April when Democrats failed rally the 60 votes required to bring it to a clean vote.  Critics -- mostly conservatives, pro-business groups and small business owners-- have argued the move would hurt businesses that operate on slim earnings and would stunt job growth, as higher hourly wages would force businesses to scale back on hiring.

David Cooper, an economic analyst at the left-leaning Economic Policy Institute, said minimum wage workers is states hiking wages by $1 or more will see a noticeable difference. An extra dollar in pay comes out to about $2,000 in extra income annually. “That’s pretty substantial for someone who’s only making about $15,000 a year,” said Cooper, adding in states with larger increases, there should be “some small increase in consumer spending in those states.”

In the nine states where wages minimally went up as a result of inflation, purchasing power will simply be preserved, Cooper said. 

The lack of action at the federal level has helped make the minimum wage a prominent issue at the state level. Republican Minority Leader Sen. Mitch McConnell has said in the past that raising the federal minimum wage would not be considered in the next session if the GOP won the upper chamber of Congress, which it did. But the latest hikes could be indicative of a continued grassroots push to a new federal standard, especially as minorities and a majority of voters from both parties have expressed support for such increases.