Premarket stocks: These three big unknowns will drive markets in 2023

Premarket stocks: These three big unknowns will drive markets in 2023

A version of this story first appeared in CNN Business’ Before the Bell newsletter. Not a subscriber? You can sign up right here. You can listen to an audio version of the newsletter by clicking the same link.


New York
CNN
 — 

We’re in the salad days of the New Year — that period where many feel refreshed and motivated and perhaps even optimistic about the year to come. There’s a certain clarity that comes during this time in January.

That said, the big question weighing on everyone’s mind is whether or not the United States will enter a recession this year. And there are three big “ifs” that will determine the health of the economy: The strength of the labor market, the American consumer and the Federal Reserve.

Will the labor market cool off?

Jobs has been the word of the week as investors eye a slew of data highlighting a strong labor market that is confoundingly resistant to the Fed’s attempts to cool the economy.

The US labor market is historically tight, with the unemployment rate, as of November, at just 3.7{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} and about 1.7 available jobs for every job seeker. If job numbers come in as expected on Friday, 2022 will be the second-best year on record for job growth.

This is all happening as the Fed tries to actively cool the labor market. Policymakers fear that persistent wage growth in a tight labor market will keep already sky-high inflation levels elevated.

For the Fed to reach its desired target of 2{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} inflation, jobs will have to take a hit, with unemployment rising to about 4.6{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} this year, according to the central bank’s projections released in December. The central bank will likely continue to put pressure on the economy by instituting painful rate hikes until we get there.

In an interview with the Financial Times this week, Gita Gopinath, second in command at the International Monetary Fund, urged the Fed to continue with rate increases this year, citing the labor market’s resilience.

So will wages moderate this year? Analysts at Goldman Sachs predict that they will. They believe that unemployment will grow and wage growth will slow from above 5{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} in 2022 to about 4{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} by the end of this year.

“This would still be a bit too hot, but any sizeable drop would provide Fed officials with a proof of concept for the idea that gradual labor market rebalancing can dampen wage and eventually price pressures without a recession,” they write.

If 2022 taught investors anything, it’s that you can’t beat the Fed. So expect more good-is-bad economic news, since a strong monthly jobs report will likely continue to correlate to a weak market.

Will Americans continue to spend?

American consumers carried the weight of the economy on their backs last year. Even as interest rates rose and growth weakened, they kept on shopping.

Bank of America CEO Brian Moynihan told CNN around the holidays that the continued strength of the US consumer is nearly single-handedly staving off recession.

But weaker-than-expected retail sales in November pummeled market sentiment last month and raised the odds that the Fed’s punishing interest rate hikes would push the economy into recession.

US retail sales fell 0.6{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} in November, the weakest performance in nearly a year. Weak sales are likely to continue, say analysts, and if they do, retailers’ earnings will suffer.

Disposable income fell from the spring of 2021 through the summer of 2022 as inflation outran wage growth and pandemic savings dried up. While American bank accounts are still fairly robust, consumers are borrowing more. In the third quarter of 2022, credit card balances jumped 15{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} year over year. That’s the largest annual jump since the New York Fed began tracking the data in 2004.

Will the Fed pivot?

This is the main question on every investor’s mind — and the answer will not only help determine what happens to markets this year, but also whether the economy will fall into recession.

In the minutes from the December Fed meeting, central bank officials spelled it out for interested parties: No policy makers anticipated that rate cuts would be appropriate in 2023. The minutes warned that “an unwarranted easing in financial conditions … would complicate the Committee’s effort to restore price stability.”

And while officials welcomed softer inflation reports in recent months, they stressed that “substantially more evidence of progress” was required and said that inflation was still “unacceptably high.”

So while rate cuts may be off the table this year, the Fed could opt for more modest increases, or even none at all as the year progresses. That would be welcome relief to investors after four hikes of three-quarters of a point last year.

Mortgage rates rose again last week, beginning 2023 twice as high as they were a year ago. The hike also reverses six straight weeks of falling rates.

The 30-year fixed-rate mortgage averaged 6.48{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} in the week ending January 5, up from 6.42{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} the week before, according to Freddie Mac. A year ago, the 30-year fixed rate was 3.22{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}.

Mortgage rates rose throughout most of 2022, spurred by the Federal Reserve’s unprecedented campaign of harsh interest rate hikes to tame soaring inflation. But mortgage rates dropped in November and December, following data that showed inflation may have finally reached its peak, reports my colleague Anna Bahney.

The current market is driving away would-be buyers, partially because there’s little inventory as Americans are uninterested in selling and parting ways with their ultra-low mortgage rates.

Still, this week’s drive upwards could be a fluke and as inflation begins to ease, rates are expected to also drop.

“Mortgage application activity sunk to a quarter-century low this week as high mortgage rates continue to weaken the housing market,” said Sam Khater, Freddie Mac’s chief economist. “While mortgage market activity has significantly shrunk over the last year, inflationary pressures are easing and should lead to lower mortgage rates in 2023.”

The future looks grim for Bed Bath & Beyond. The long-suffering retailer issued an ominous message on Thursday, warning about possible bankruptcy.

There is “substantial doubt about the company’s ability to continue” because of its worsening financial situation, the home goods chain said in a regulatory filing.

The company said that it was still looking into alternatives, like restructuring its debt, seeking additional cash and selling assets.

But the Wall Street Journal reported that Bed Bath & Beyond is preparing to file for bankruptcy within weeks, citing sources familiar with the matter. Bed Bath & Beyond did not immediately respond to a request for comment from CNN.

Bed Bath & Beyond’s (BBY) stock plunged nearly 30{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} Thursday. It dipped below $2 a share, an all-time low.

“Bed Bath & Beyond is too far gone to be saved in its present form,” Neil Saunders, an analyst at GlobalData Retail, said in a note to clients Thursday. “All of this points to bankruptcy as being the most likely outcome.”

411 is going out of service for millions of Americans

411 is going out of service for millions of Americans


New York
CNN
 — 

The operator is going off the hook for millions of customers.

Starting in January, AT&T customers with digital landlines won’t be able to dial 411 or 0 to reach an operator or get directory assistance. AT&T in 2021 ended operator services for wireless callers, although customers with home phone landlines can still access operators and directory help. Verizon, T-Mobile and other major carriers still offer these services for a fee.

On a notice on AT&T’s website, the company directs customers to find addresses and phone numbers on Google or online directories.

“Nearly all of these customers have internet access to look up this information,” said an AT&T spokesperson.

But a century ago, the operator functioned as Google. Everyone knew it as “Information.”

“The operator was the internet before the internet. There’s a wonderful circularity there,” said Josh Lauer, an associate professor of media studies at the University of New Hampshire who is writing a book on the cultural history of the telephone.

The human telephone operator, a job that came to be dominated by White women during the nineteenth and early twentieth centuries.

Operator services were a selling point to customers during the late 1800s and early 1900s. The operator was the essential link in the dominant Bell System, owned by American Telephone & Telegraph (AT&T), telecommunications network.

The operator became the early face of the telephone, a human behind an emerging and complex technology. The job came to be occupied mostly by single, middle-class White women, often known as “Hello Girls.” The Bell System, known as Ma Bell, advertised its mostly female ranks of operators as servile and attentive – “The Voice with a Smile” – to attract and maintain customers.

Well into the 20th century, AT&T offered weather, bus schedules, sports scores, time and date, election results and other information requests.

“Telephone users interpreted her as an efficient way to locate any information,” wrote Emma Goodmann, an assistant professor of communication at Clarke University, in her 2019 paper on the history of telephone operators.

On Halloween eve in 1938, during Orson Welles’ radio broadcast of “War of the Worlds,” New Jersey residents believed martians were invading and frantically phoned the operator for information on the invasion and to connect them with loved ones before the world ended.

Three decades later, a Bell company said a customer called to ask the operator if he was a mammal, “like a whale,” while a woman wanted to know how to get a squirrel out of her house, according to Goodmann.

The advance of technology like the internet and smartphones, the deregulation of the telecomms industry in the 1980s, and other factors have left human operators virtually extinct. In 2021, there were fewer than 4,000 telephone operators, down from a peak of around 420,000 in the 1970s, according to Bureau of Labor Statistics data.

But there are still people who call the operator and request directory help.

“411 usage is not insignificant,” the FCC said in a 2019 report. The FCC estimated then that 71 million calls annually were placed to 411.

The first telephone exchange took place in New Haven, Connecticut, in 1878, two years after Alexander Graham Bell patented the telephone.

It was designed to handle business communication, not social calls between local residents. Physicians, police, banks and the post office were some of the first subscribers.

To connect a call, an operator at a switching office would take a request from a caller and physically plug one line into another.

Bell and other telephone exchanges spread throughout the Northeast. Initially, telephone companies hired mostly men and boys to take calls. But the operator quickly became a gendered job.

Male managers decided that women were better suited to answering and connecting calls from rude customers because they were seen as more docile and polite. Companies could also pay them less than men.

Telephone companies sought female operators who would project a “comfortable and genteel image to their customers,” Kenneth Lipartito, a professor of history at Florida International University, wrote in a 1994 paper “When Women Were Switches.”

Companies rejected Black and ethnic workers with accents, and policies barred female operators from being married. By 1900, more than 80{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} of operators were White, single, US-born women.

A 'Hello Girls'  school at the Clerkenwell telephone exchange in 1932.

Operator jobs were frenetic and repetitive.

Workers had to scan thousands of tiny jacks, always keeping an eye open for lights indicating new calls and ones that ended. During peak times, operators handled several hundred calls an hour, Lipartito said.

Training was also rigorous and procedures were strict. Women were instructed to modulate their voices to sound more polite answering calls and used approved language with callers.

“Through training in the art of inflection she gains in those gentler qualities of unfailing courtesy,” a 1926 AT&T video, “Training for Service,” says.

Although many of Bell’s independent telephone rivals began using “girlless” automated switchboards in the first decades of the twentieth century, the Bell System was committed to human operators. Automation could not provide the same level of personal service, Bell believed.

“She’s one of 250,000 girls who help to give you good service, day and night, seven days a week. She’s your telephone operator,” read one typical Bell Systems magazine ad.

Operators played a crucial function because telephone books were often inaccurate and customers could not be counted on to remember updated numbers and addresses.

During the first decades of exchanges, operators also unintentionally became a catch-all for information. It was common for people to call and ask the operator for directions, the time and weather, baseball scores and other questions.

By early part of the twentieth century, telephone companies began to separate requests for information and requests for telephone numbers.

In 1968, the Bell System changed the name of its information service to “directory assistance” because too many people were taking the name too literally.

“When she was called ‘Information,’ people kept calling her for the wrong reasons,” one Bell company ad said at the time. “Now we call her ‘Directory Assistance’ in the hope that you’ll call her only for numbers you can’t find in the phone book.”

Strikes, competition for labor, and rising wages during and after World War I drove Bell to speed up its automation plans.

In 1920, fewer than 5{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} of Bell exchanges had automated switchboards. A decade later, more than 30{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} were automated, according to a 2019 article by the Federal Reserve Bank of Richmond.

The growth of automatic switchboards led to the direct-dial telephone in the 1920s. (The “0” for operator appeared with dial phones, said Lauer from the University of New Hampshire. On the new Bell dials, “Operator” was printed in the “0” position. The use of “411” also emerged with the dial era. “0” became universal for operator assistance and “411” was the number for directory assistance. In later years, if you dialed “0 and asked for directory assistance, the operator would transfer you over to “411.”)

But electronic switchboards and direct dialing were phased in gradually and did not eliminate the need for human operators.

An old dial telephone. The introduction of the dial in the 1920s eliminated the need for phone operators to connect local calls.

Automatic switchboards were mainly used for local telephone calls. For decades after the introduction of direct dialing, operators still handled long-distance calls, toll calls, and calls to the police and fire department. This meant that operator jobs continued to rise until around the 1970s.

Directory assistance was also mostly free for customers until the 1970s, when AT&T began charging customers to curb the “misuse” of the service and shift the high costs of employing operators and handling time-consuming queries for information.

“Some people just simply don’t want to bother to look the number up themselves,” AT&T’s chairman complained in 1974.

The breakup of AT&T in the 1980s and the deregulation of the telecommunications industry altered operator and directory services. Phone companies began to cut their ranks of operators, automate services and charge customers fees for calls.

As companies increased prices, demand for directory assistance plunged. Meanwhile, the internet and smartphones emerged to replace these services for most callers.

In 1984, there were 220,000 telephone operators. A decade later, there were 165,000, according to the Bureau of Labor Statistics. By 2004, at the dawn of the smartphone age, 56,000 people were employed as telephone operators.

An operator in 1988. The ranks of operators fell sharply in the 1980s and 1990s.

David McGarty, the president of US Directory Assistance, which provides services for major carriers, has watched the transformation of the operator firsthand.

Calls to operators have decreased an average of 3{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} a year and around 90{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} overall since he started in 1996, he said.

“We’re content with riding the Titanic down,” he said.

While operator services may be nearly obsolete, it’s important to consider emergency circumstances where a caller may need to reach an operator and the customers who still rely on these services, such as low-income callers, the elderly and people with disabilities, said Edward Tenner, a technology historian in the Smithsonian’s Lemelson Center for the Study of Invention and Innovation. (AT&T said it would still offer free directory assistance to elderly customers and people with disabilities.)

“Often tragedies happen when something is exceptional,” he said.

He also empathized with people who are being forced to keep up with technological change, whether they like it or not.

“There are a lot of people who, for various reasons, haven’t adapted,” Tenner said. “Why should they be forced to migrate to the web if they don’t want to?”

‘Maybe we cried too much’ over shoplifting, Walgreens executive says

‘Maybe we cried too much’ over shoplifting, Walgreens executive says



CNN
 — 

During the pandemic, significant shops have warned about surging theft and a increase in brazen shoplifting tries. But a top Walgreens govt now says the freakout may possibly have been overblown.

“Maybe we cried too significantly very last year” about goods losses, Walgreens finance main James Kehoe acknowledged Thursday on an earnings simply call. The company’s fee of shrink — goods losses due to theft, fraud, damages, mis-scanned objects and other errors — fell from 3.5{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} of whole sales very last 12 months to about 2.5{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} all through its newest quarter.

Kehoe’s message is a noteworthy shift from comments about theft from Walgreens and other suppliers like Walmart and Goal about the last just about a few several years.

Corporations and retail sector groups have tried out to attract notice to shoplifting and “organized retail crime” rings smashing windows and grabbing aisles entire of merchandise off cabinets, urging lawmakers to crack down. Incidents have unquestionably transpired: A lot of political leaders and nearby and countrywide news retailers, like CNN, have picked up on viral incidents of smash-and-seize robberies.

Walgreens says it may have gone too far on security.

So merchants took motion. Some began locking up extra goods like deodorant and toothpaste, including excess stability guards and even shuttering merchants.

Final January, Walgreens

(WBA)
claimed its shrink was up by more 50{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} from the calendar year prior. The corporation blamed aspect of that spike on arranged retail criminal offense and shut five places in the San Francisco place in 2021, boasting theft as the reason for their closure.

“This is not petty theft,” Kehoe explained previous January. “These are gangs that in fact go in and vacant our shops of attractiveness products and solutions. And it is a genuine difficulty.”

But a 12 months afterwards, Kehoe said Thursday that the firm extra far too much additional security in merchants.

“Probably we put in way too substantially, and we could action back a tiny bit from that,” he explained of protection staffing. The firm has found private stability guards to be “largely ineffective” in deterring theft, so rather it is putting in more law enforcement and regulation enforcement officers.

Even though Walgreens may possibly have overblown the shoplifting menace about the final couple of many years, it’s correct that theft has usually been a challenge for vendors — and that it usually spikes for the duration of recessions and other durations of economic hardship, when persons are desperate and might really feel the need to turn to petty criminal offense to maintain themselves. What’s far more, modern factors like shortstaffed merchants and self-checkout can make it much easier for thieves to steal.

The National Retail Federation believed that shrink cost vendors $94.5 billion in 2021, up from $61.7 billion in 2019 just before the pandemic. Shoplifting usually does not go claimed to the police, but companies have stated theft has worsened through the Covid crisis.

“Along with other shops, we’ve witnessed a important raise in theft and structured retail crime across our business,” Goal

(TGT)
CEO Brian Cornell stated in November.

Walmart

(WMT)
CEO Doug McMillon mentioned past month on CNBC that “theft is an issue” and “higher than what it has traditionally been.” He warned outlets could close if it continued.

Nevertheless, it is not clear the numbers include up.

For case in point, info introduced by the San Francisco Police Department does not help the clarification Walgreens gave that it was closing five shops for the reason that of organized retail theft, the San Francisco Chronicle documented in 2021.

One of the shuttered suppliers that shut had only 7 noted shoplifting incidents in 2021 and a total of 23 given that 2018, in accordance to the newspaper. Total, the five stores that closed had much less than two recorded shoplifting incidents a thirty day period on average due to the fact 2018.

Equally, a 2021 Los Angeles Times evaluation of figures introduced by market groups on losses owing to structured retail criminal offense found “there is cause to doubt the difficulty is any place near as huge or popular as they say.”

Elon Musk has lost a bigger fortune than anyone in history

Elon Musk has lost a bigger fortune than anyone in history


New York
CNN
 — 

Elon Musk’s wealth destruction has develop into historic.

The CEO of Tesla

(TSLA)
, SpaceX and Twitter is value $137 billion, according to the Bloomberg Billionaires Index, very good sufficient for 2nd put on the checklist of the world’s richest behind LVMH

(LVMHF)
Chairman Bernard Arnault. But at its peak in November 2021, Musk’s internet really worth was $340 billion.

That will make Musk the first person ever to get rid of $200 billion in wealth, Bloomberg noted very last 7 days.

The bulk of Musk’s prosperity is tied up in Tesla

(TSLA)
, whose inventory plunged 65{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} in 2022. Demand for Tesla

(TSLA)
s weakened as levels of competition in electric powered automobiles from set up automakers surged final calendar year. The company missed its development targets and scaled again creation in China. Its fourth-quarter deliveries, declared Monday, skipped Wall Street’s estimates.

Evidence of car buyers’ sinking curiosity in Teslas turned apparent final thirty day period soon after the enterprise declared a unusual sale in a bid to very clear out inventory. Tesla made available two rebates for prospective buyers getting shipping of a car or truck right before the stop of the 12 months, at first featuring a $3,750 discounted then doubling the rebate to $7,500 with two months left in 2022.

Traders ended up rattled by the rebates, sending the inventory plunging 37{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} in December.

Critics have very long questioned whether or not Tesla was ever really worth the trillion-dollar valuation it had at the commence of 2022. At its peak, Tesla was really worth extra than the 12 most significant automakers on the earth merged, in spite of having a fraction of their income. Tesla ended the 12 months worth $386 billion — continue to significantly larger than its automaker rivals but significantly smaller sized than the tech titans — Apple

(AAPL)
, Microsoft,

(MSFT)
Google

(GOOGL)
and Amazon

(AMZN)
— with which it was staying as opposed a calendar year ago.

donie twitter ac360 vpx 2

CNN’s Donie O’Sullivan clarifies why Musk banned his Twitter account

Musk’s $44 billion purchase of Twitter has not helped Tesla’s stock or Musk’s personal wealth, either. Musk, Tesla’s major shareholder, has sold $23 billion well worth of Tesla shares due to the fact his interest in Twitter became public in April.

His consistent tweeting and progressively erratic conduct, particularly immediately after getting over as CEO at Twitter, has angered Tesla buyers who want Musk to shell out more notice to his appreciably larger and more useful company. Musk has defended himself in opposition to critics, declaring he hasn’t missed a important Tesla conference due to the fact having on obligation for Twitter.

Tesla’s inventory could rebound, and Musk could after yet again turn into the world’s richest particular person. But Musk’s track record as a genius took some really serious harm in 2022 — almost as a lot injury as his personalized wealth.

A 39-year-old who makes $160,000/month in passive income shares his best advice

A 39-year-old who makes $160,000/month in passive income shares his best advice

When starting a business, it really is in some cases difficult to know what to prioritize, and heading at it on your own can be mind-boggling. But there are techniques you can use to keep away from prevalent pitfalls.

My mission is to teach people today how to get paid income from their passions. It really is what I did: I went from living on food stamps to making two on-line corporations.

These days, I run a songs blog, The Recording Revolution, and a entrepreneurship coaching enterprise. I get the job done just five hours a 7 days from my dwelling workplace and make $160,000 a month in passive profits.

This is what I notify my 3,000 shoppers to assume about in the 1st 30 days of starting off a small business:

1. Be obvious about how you want to invest your time.

Many new business enterprise entrepreneurs I fulfill know only one particular point: how a lot dollars they want to make. 

While that is a wonderful beginning place, it is really incomplete. Your small business must provide your everyday living, not the other way all around. So make absolutely sure it aligns with your hopes, dreams and objectives.

To get very clear about the variety of company and daily life you want, question three questions:

  1. What does a ideal working day look like to you? Will not just believe about your common workday. Take into account other lifetime activities you want to healthy into your day, like doing exercises or investing time with family members.
  2. How several several hours do you want to operate a week? You do not have to stick to the conventional 40-hour workweek. Being aware of accurately how numerous several hours you want to get the job done will assistance you superior prioritize duties.
  3. How vital is time off? Some men and women never treatment a great deal about using time off, as extended as they appreciate what they do. Many others worth extended time off. In buy to have money flowing in when you are not functioning, you may need to have some form of passive money stream.

2. Simplify your small business model.

When I commenced my new music education and learning small business, folks told me I needed to examination my revenue webpages, toss launch parties and pre-history a bunch of adverts in purchase to increase.

Instead than stretching myself skinny accomplishing factors that did not make sense to me, I stored it uncomplicated and concentrated on three issues: creating weekly information for my web site and YouTube channel, developing my electronic mail listing from that audience, and endorsing the paid solutions I established to that listing.

If you happen to be just setting up out, establish articles about your abilities to mature an audience. It doesn’t have to be great. You can iterate as you go and design and style new products based on what your shoppers want more of.

3. Lower out pointless day-to-day duties.

Establish what day-to-day functions will assistance you make much more. Really don’t waste time or burn you out focusing on unimportant tasks.

It could feel very good to get to inbox zero or transform the colour of the buttons on your site, especially in the early days in which you want to sense like you’ve got obtained a goal. But neither of all those things will make you funds.

Prior to you start out a new undertaking, check with on your own a few questions:

  1. What is actually the anticipated result for performing this undertaking? 
  2. Does it lead to more cash?
  3. Can I level to a direct connection amongst executing that task and earning earnings?
  4. What is the price of undertaking this as an alternative of anything else? 

4. Prioritize possessing enjoyable.

I quit my $35K job to grow my side hustle — now it brings in $141 million a year

These states are raising their minimum wage in 2023

These states are raising their minimum wage in 2023


Minneapolis
CNN
 — 

The current period of high inflation that has significantly impacted the US economy will also influence a New Year’s tradition: The annual state minimum wage increases.

By January 1, hourly minimum wages in 23 states will rise as part of previously scheduled efforts to reach $15 an hour or to account for cost-of-living changes. The increases account for more than $5 billion in pay boosts for an estimated 8.4 million workers, the Economic Policy Institute estimates.

Additionally, nearly 30 cities and counties across the US will increase their minimum wage, according to the EPI, a left-leaning think tank.

The larger-than-typical increases for a dozen states come after inflation hit a 40-year high this summer, leaving families struggling to keep up with the rising costs.

“The fact that there’s high inflation really just underscores how necessary these minimum wage increases are for workers,” said Sebastian Martinez Hickey, a research assistant at the EPI. “Even before the pandemic, there was no county in the United States where you could affordably live as a single adult at $15 an hour.”

The pandemic and the subsequent period of economic recovery has further revealed the growing chasm in America’s wealth gap. During the past two years, working conditions and low pay contributed to a swelling of labor movement activity and actions by many large corporations to raise their wage floor.

RaiseUpNY Coalition, including the Laborers Internation Union 79 and 32BJ SEIU, hold a rally at City Hall Park to fight for a higher minimum wage in Manhattan, New York, on November 15, 2022.

The pandemic also led to a structural upheaval in the nation’s labor market, creating an imbalance of worker supply and demand that still persists. Employers have found themselves short of workers for most of the year, which has pushed up average annual hourly wages in the battle to recruit and retain staff. While some workers in competitive industries such as retail and dining have found their new salary outpaces inflation, most pay has been outpaced by rising prices.

“The story is different because wages have been increasing at the low-end, much faster than inflation and much faster than in middle- or high-wage jobs,” said Michael Reich, economics professor at the University of California at Berkeley. “And that means that many workers, even in the $7.25 states, are already getting paid above the minimum wage.”

In other words, he said, the minimum wage “has become less and less binding.”

“Even though minimum wages might go up by 7{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}, in many states and cities, labor costs aren’t going to go up anywhere as much as they have in the past, because they already have gone up,” he said. “That also means that prices aren’t going to go up at [places like] restaurants.”

The federal minimum wage of $7.25 per hour hasn’t budged since 2009, and 20 states have a minimum wage either equal to or below the federal level, making $7.25 their default baseline. The value of the federal minimum wage peaked in 1968 when it was $1.60, which would be worth about $13.46 in 2022, based on the Bureau of Labor Statistics’ inflation calculator.

  • Delaware: $10.50 to $11.75
  • Illinois: $12 to $13
  • Maryland: $12.50 to $13.25
  • Massachusetts: $14.25 to $15
  • Michigan: $9.87 to $10.10
  • Missouri: $11.15 to $12
  • Nebraska: $9 to $10.50
  • New Jersey: $13 to $14.13* (scheduled increase also includes inflation adjustment)
  • New Mexico: $11.50 to $12
  • New York: $13.20 to $14.20 (Upstate New York); $15 (in and around NYC)
  • Rhode Island: $12.25 to $13
  • Virginia: $11 to $12
  • Alaska: $10.34 to $10.85
  • Arizona: $12.80 to $13.85
  • California: $14.50 (firms with 25 or fewer employees) /$15 (firms with 26+ employees) to $15.50
  • Colorado: $12.56 to $13.65
  • Maine: $12.75 to $13.80
  • Minnesota: $8.42 to $8.63 (small employer); $10.33 to $10.59 (large employer)
  • Montana: $9.20 to $9.95
  • Ohio: $9.30 to $10.10
  • South Dakota: $9.95 to $10.80
  • Vermont: $12.55 to $13.18
  • Washington: $14.49 to $15.74
  • Connecticut (effective July 1): $14 to $15
  • Florida (September 2023): $11 to $12
  • Nevada (effective July 1): $9.50 to $10.25 (firms that offer benefits); $10.50 to $11.25 (no benefits offered)
  • Oregon: $13.50 (effective July 1, indexed annual increase to be based on the CPI)

Sources: State websites, National Conference of State Legislatures, Economic Policy Institute