Minimum Wage Levels, by state

Political Calculations has a great post with some interactive maps that allow you to compare minimum wage levels and cost of living among the 50 states.

This map is interactive at Political Calculations

I have been a little worried, because it seems as though a decent number of states are starting to increase minimum wages above the Federal level.  As Political Calculations has pointed out, they were starting to do that about 15 years ago, before the national level caught up with most of them in 2007-2009.

But, looking at his recent post, it seems that most of the increases are in states with higher costs of living.  A comparison of minimum wage employment as a proportion of the labor force suggests that at levels below about 28% of the average wage, at the national level, the legal minimum wage mostly appears to stop being a binding constraint.  We are probably nearing that level now at the national level.  So, if states with high average wages raise their legal minimum wage levels moderately, it may not create a significant amount of labor dislocation.

As shown in this map, many of the high-wage/high-cost states have relatively low minimum wage levels, when adjusted for cost of living.  Washington and Oregon are the only states with grossly inflated minimum wage levels, adjusted for cost.

This might signal a build up to an eventual national hike in the next few years.  And, if that does happen, the effect of the minimum wage on employment might be similar to past experience, even with a few states already above the new minimums, because it would be having an effect in the states where it is the most binding.