Labor costs will increase next year as 23 states hike their minimum wages

The change: The minimum wage will rise in 23 states next year, as well as in Washington, DC.

• The increases will range from a modest 25 cents in both Montana and Ohio to $2.15 in Michigan.
• Washington, DC, will have the highest minimum wage at $17.50 per hour effective July 2024, followed by Washington ($16.66), California ($16.50), and Connecticut ($16.35).

Why it matters: Higher labor costs eat into companies’ margins, which leads to difficult choices for retailers and restaurants.

• After California’s $20 fast-food wage law took effect in April, chains hiked prices, reduced employee hours, and leaned on automation for operational efficiencies.
• Almost immediately, foot traffic fell at several fast food chains. For example, Burger King’s California stores ran 46 basis points ahead of the national average in February and March but fell 386 basis points behind the national average in April and May. McDonald’s stores were roughly in line with the national average in February and March but underperformed by 248 basis points in April and May.

Our take: Companies may need to find new efficiencies to avoid passing on their additional costs to consumers who are already extremely price sensitive.

This article is part of EMARKETER’s client-only subscription Briefings—daily newsletters authored by industry analysts who are experts in marketing, advertising, media, and tech trends. To help you finish 2024 strong, and start 2025 off on the right foot, articles like this one—delivering the latest news and insights—are completely free through January 31, 2025. If you want to learn how to get insights like these delivered to your inbox every day, and get access to our data-driven forecasts, reports, and industry benchmarks, schedule a demo with our sales team.