Governor Steve Bullock today announced Montanans earning minimum wage will see the rate increase to $8.75 per hour beginning January 1, 2021.
“By tying the minimum wage to inflation, we can ensure Montanans earning the minimum wage see a modest increase and have the same buying power, instead of falling further behind,” Governor Bullock said. “We must continue to do more to help working families succeed by bringing in quality jobs, supporting Montana businesses, and investing in education and workforce training, especially as we continue to work toward economic recovery due to the pandemic.”
In 2006 as a private citizen, Bullock led ballot initiative I-156 to raise the minimum wage and require that it be adjusted annually for inflation. Approved by Montana voters, Montana Code Annotated 39-3-409 requires the Montana Department of Labor & Industry to adjust the Montana minimum wage for inflation using the Consumer Price Index for Urban Consumers (CPI-U).
An estimated 8,000 to 10,000 Montana workers, or two-percent of the workforce, received hourly wages less than $8.75 per hour in 2020 and are likely to receive higher wages due to the 2021 minimum wage increase. In 2019, the industry with the largest number of workers earning minimum wage was the accommodations and food services industry. Many minimum-wage workers are front-line workers who are at the greatest risk of COVID-19 exposure.
The minimum wage is determined by taking the current minimum wage of $8.65 and increasing it by the CPI-U increase from August of 2019 to August 2020. The CPI-U increased by 1.31% (unadjusted) over the year ending August 2020. To keep the minimum wage at the same purchasing power as the prior year, the wage should increase by $0.11 per hour. However, since state statute requires the wage to rounded to the nearest 5 cents, the 2021 minimum wage rate will be $8.75.
In 2020, the District of Columbia and 29 U.S. states, including Montana, have minimum wage rates that exceed the federal rate of $7.25 per hour. A map of state minimum wage laws is available on the U.S. Department of Labor’s website.