The numbers, from the state
The Department of Industrial Relations' FAQ on minimum wage says that for employers of any size the statewide minimum is $16.90 per hour from January 1, 2026, up from $16.50 in 2025, $16.00 in 2024 and $15.50 in 2023. The state adjusts the rate each year based on the national CPI-W, capped at 3.5 percent, and the rate cannot go down. Higher minimums apply to fast food workers (from April 1, 2024) and to certain health care workers, and some cities and counties set higher local minimums. Tips cannot be counted toward the minimum wage, and learners may be paid 85 percent of the minimum for their first 160 hours.
Because local minimums and special rules exist, check the DIR and your own city or county before setting wages.
A worked example, for illustration
These are made-up round figures to show the arithmetic. They are not our terms and not a typical business.
| Item | Figure |
|---|---|
| Staff on minimum wage | 10 |
| Hours per person per week | 30 |
| Increase per hour ($16.50 to $16.90) | $0.40 |
| Extra cost per week | 10 x 30 x $0.40 = $120 |
| Extra cost per year (52 weeks) | $6,240 |
That $6,240 is before payroll taxes and any other costs that rise with wages. It also assumes nobody else gets a matching raise, which is often not the case: when the bottom of the pay scale rises, the people just above it often expect to keep their gap.
Where the increase shows up
- Direct wages. The obvious cost.
- Payroll taxes. Employer-paid taxes that scale with wages.
- Compression. Raises for experienced staff to preserve the gap above the minimum.
- Prices. A business may decide to raise prices, which has its own effect on volume.
Planning ahead
Because the state adjusts the minimum annually and the figure cannot go down, the direction is predictable even if the size is not. A simple practice is to budget a small increase each year and review it when the state announces the new rate, rather than treating each increase as a surprise.
Seasonal businesses should look at the timing, too. An increase that takes effect on January 1 lands in the lean months of many retail and tourism businesses.
Where funding fits
A wage increase is a recurring cost and is better handled in pricing and budgeting than by borrowing. A timing gap can still occur, such as when payroll rises before revenue does. Working capital from $25,000 to $5,000,000 is available, funded in as little as 24 hours. FICO scores of 500 and up are considered, the file centres on about three months of bank statements, and no tax returns are required. The credit pull is soft and sole proprietors can apply. The application takes about five minutes.