Minimum Wage Increase 2027: Washington Leads at $17.73 an Hour

The next round of raises is already locked in

On January 1, 2027, minimum wages will go up again across much of the United States. Congress has not acted. The raises come from inflation formulas, phased schedules and ballot measures passed years ago. Washington state will again have the highest statewide floor. Its rate rises 60 cents, from $17.13 to $17.73 an hour.12 State officials put that at a 3.5% increase.7 Seattle goes further. Its city minimum climbs from $21.30 to $22.14, an adjustment tied to the consumer price index for the Seattle-Tacoma-Bellevue area.3

Washington has company. Connecticut moves from $16.94 to $17.48, and California from $16.90 to $17.40.12 New Jersey adds 56 cents, bringing most workers to $16.48.2 Michigan has one of the biggest jumps in dollar terms, going from $13.73 to $15.14 Smaller adjustments are also scheduled:

• Arizona: $15.15 to $15.65
• Colorado: $15.16 to $15.71
• Minnesota: $11.41 to $11.87
• Ohio: $11.00 to $11.40
• Rhode Island: $16 to $17
• Virginia: $12.77 to $13.754

Maine will go from $15.10 to $15.70, and Montana from $10.85 to $11.20.3

The federal minimum is still $7.25 an hour, where it has been since 2009. Consumer prices have risen more than 50% over that time.3 The main 2027 story is that the gap between the federal floor and state floors keeps getting wider.

How big is the wave?

The headline coverage focused on five states: Washington, California, Connecticut, New Jersey and Michigan.12 That list is far too short. Newsweek cites a tally of 102 minimum wage changes scheduled for 2027 across 20 states and 74 cities, counties and other local jurisdictions. Seventy-three take effect on January 1 and 29 on July 1.3 Alaska is one of the July states, rising from $14 to $15 on July 1, 2027.49

The local layer is where wage floors get highest. In California, several cities will go well above the new $17.40 statewide rate in January:

• San Diego: $17.75 to $18.35
• Palo Alto: $18.70 to $19.25
• City of San Mateo: $18.60 to $19.25
• West Hollywood (non-hotel workers): $20.25 to $20.9410

The state increase has a second effect. California's salary threshold for exempt employees is tied to twice the state minimum, so it rises to $72,384 a year in 2027.10

Some reporting gets the basic facts wrong. One headline described the 2027 increases as reaching "up to 60%"1. The underlying numbers show a 60-cent raise in Washington, not a 60% one.27 One employer compliance guide called California's $17.40 the highest statewide floor in the country8. But Washington's $17.73 and Connecticut's $17.48 are both higher.24 Readers comparing coverage should rely on the rate tables, not the headlines.

Indexing does most of the work

All the outlets agree on how this happens: most of these raises are automatic. Washington voters approved a measure in 1998 that tied future increases to inflation starting in 2001. Lawmakers there no longer vote on each annual change.1 One analysis counts about 19 states plus Washington, D.C., that index automatically. Other states need new legislation or a ballot measure each time.5 Connecticut's increase follows the federal Employment Cost Index.8 Downstate New York, including New York City, begins annual CPI-W indexing in 2027.8

The other route is a fixed schedule toward a set number, usually $15. Michigan reaches $15 in January under a phased compromise and then switches to annual adjustments.69 Virginia goes to $13.75 in 2027 and $15 in 2028, after which indexing takes over.9 Hawaii has the highest statutory target in the country: $18 on January 1, 2028.9 Michigan is also raising its tipped cash wage, from $5.49 to $6.30.4

My reading is that indexing has changed what minimum wage politics is about. In about half the country, wage floors now rise every year unless someone actively stops them. That is why the 2027 increases are hard to reverse. It is also why the national gap keeps widening even in years with little new legislation.

Not only blue states

Fox News framed the 2027 raises as a Democratic-state story, and it put Washington's increase next to the state's August unemployment rate of 4.9%. That figure is above the 4.1% national rate and up from 4.6% a year earlier.2 The same reports also undercut that framing. Florida reached $15 on September 30 and will stay there through the end of 2027. Missouri is also at $15, and Nebraska moves from $15 to $15.26 on January 1.12 Florida resumes indexing in 2028.59

The partisan framing matters less than how states actually adopt these raises. Many of the increases in Republican-led states came from voters, not lawmakers. Those states end up with floors about twice the federal rate. The real divide is between states with any wage floor mechanism and states without one. About 20 states, including Texas, Georgia, Tennessee, Alabama and Indiana, remain at $7.25 with no increase scheduled.5

The cost argument

Critics have kept the cost question in the news. Coverage of Seattle mentioned restaurant owners who closed and listed labor costs among their pressures.1 This is anecdotal evidence, and none of the reports separates labor costs from other causes.

A different critique came from the right this week. A Townhall column argued that the federal minimum has become almost irrelevant. It said only about 1% of hourly workers earned $7.25 or less in 2024, and quoted economist Jason Furman saying the federal minimum was "effectively repealed" over 17 years.12 The column also noted that California's median hourly wage of about $28 is well above its state minimum.12 The same column cited polling showing roughly two-thirds of Americans support a $15 federal minimum.12 That support is the main reason ballot measures keep passing in states where legislatures will not act.

I think both sides are partly right. The federal floor no longer limits most labor markets. But state floors do limit them, and they are rising every year. The debate that matters is now happening in state capitals, not Congress.

Abroad: indexing in Canada, a freeze debate in Britain

Other countries show where this debate could go. In Canada, Ontario, Nova Scotia, Manitoba and Saskatchewan raised their general minimums on October 1 under formulas set in law.14 Ontario went from $17.60 to $17.95, an increase linked to its 1.9% CPI change, and the province expects more than 700,000 workers to benefit.17 Prince Edward Island also rose to $17.30 and has another increase scheduled for April 2027.17 Canada's federal minimum for federally regulated workplaces rose to $18.15 in April.1617 Like Washington state, Canada has made these adjustments routine.

The United Kingdom is moving the other way. A report from the Prosperity Institute think tank proposes freezing the national living wage at £12.71 for five years and abolishing the Low Pay Commission. Shadow business minister Andrew Sharpe endorsed it, though the Conservative Party said he did so in a personal capacity.11 The authors say about 270,000 more young people could be in work. They also say workers would lose roughly £8,900 in purchasing power over five years.11 Economists at Berenberg separately urged a freeze before the October 28 Budget, saying it could create 100,000 jobs.13 The Low Pay Commission says it knows of no robust evidence that higher youth rates caused the recent fall in youth employment.11

What to watch

In the U.S., indexed states that have not yet published 2027 figures will announce them between now and December.9 Employers have about ten weeks to update payroll, workplace postings and exempt-salary thresholds.410 The British freeze debate is the more important test of whether automatic raises can last. Indexing in Canada and the U.S. has taken the yearly decision out of political hands. Whether the U.K. accepts its Low Pay Commission's recommendation this autumn will show whether governments under pressure over unemployment will let that kind of system run.