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Workers in more than 20 states will earn extra money in the new year thanks to increases in state minimum wages. Those boosts can benefit older workers; research has found that minimum wage hikes help them stay in the workforce longer, leading to better finances in retirement.
In 20 states, the 2025 hourly minimum wage for workers who don’t get tips will be the same as the federal minimum wage of $7.25 per hour for nontipped workers, a pay rate that hasn’t been raised since 2009. Other states and the District of Columbia set minimum wages higher than the federal amount; the Washington, D.C., minimum wage of $17.50 is the highest state-level wage in the nation.
In 2025, Delaware will have the largest increase in the nation, raising its minimum hourly wage by $1.75. Four other states — Illinois, Missouri, Nebraska and Rhode Island — are raising their minimum wages by at least $1 per hour.
While it’s often thought that the minimum wage only matters to teenagers and others just entering the workforce, a substantial share of older workers could benefit from these increases. In 2024, more than 20 percent of people age 55 and older worked in jobs that paid less than $17 per hour, according to research from Oxfam America.
For these older workers, income from minimum wage jobs — often part-time — can help them continue to work longer and wait to claim Social Security and other retirement benefits. An August 2023 study in the Journal of Public Economics found that “minimum wage increases lead to increased employment, delayed full permanent exit from employment, and delayed claiming of retirement benefits.”
The Social Security earnings cap seems to play a key role in the decision, according to the study. The researchers found that when earnings from a minimum-wage job might put workers near or over this cap, meaning their monthly retirement benefits would be reduced because their income exceeds the annual limit, older adults often opted to delay claiming benefits to avoid the hit to their benefits. In 2025, benefits recipients who won’t reach their full retirement age before the end of the year would have their benefits reduced by $1 for every $2 they earn working beyond $23,400. Waiting until full-retirement age to claim Social Security benefits results in higher monthly benefits once you do claim, and the earnings cap goes away altogether for people over 70.
The states listed below will see minimum wage increases in 2025, most of which take effect on Jan. 1. Oregon, which adjusts its minimum wage annually based on the U.S. City Average Consumer Price Index, a statistic compiled by the U.S. Bureau of Labor Statistics, could raise its wage on July 1. In some states, small businesses — usually defined as employers with fewer than 15 workers or earning below a revenue threshold set by the state— may be exempt from paying their state’s minimum wage.
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