Earlier this year, the Legislature of the Virgin Islands approved an increase of the minimum wage in the territory to $8.35 per hour, pursuant to Act No.7856, which by June 1, 2018 will increase up to $10.50 per hour.

The $8.35 increase takes into effect on June 21, 2016.  Aside from the initial minimum wage increase, the minimum wage will increase again on June 1, 2017 to $9.50 and $10.50 per hour on June 1, 2018.

Business owners across the U.S. Virgin Islands are likely wondering how increases in minimum wages over the next couple of years will affect their business. The best basis for comparison is to look at states that have also recently hiked their minimum wage rates.

Case studies across the United States

The biggest story in terms of minimum wage rate hikes over the past couple years came in July 2015, when Governor Andrew Cuomo of New York announced the state would implement a plan to increase the minimum wage for employees in the foodservice industry to $15 an hour. The increases will be implemented gradually over the course of the next few years. As those increases are still in progress, there is not yet a clear picture of what impact they have had on the state’s economy.

Other states, however, have approved smaller minimum wage hikes more comparable to what’s happening in the U.S. Virgin Islands. In 2014 and 2015, the following states increased their minimum wages: Alaska, Arkansas, Connecticut, Delaware, Hawaii, Maryland, Massachusetts, Michigan, Minnesota, Nebraska, Rhode Island, South Dakota, Vermont, West Virginia and the District of Columbia. D.C. was the only place to raise the minimum wage to more than $10 an hour (it is now $10.50).

A study of raised minimum wages performed by the Congressional Budget Office analyzed the impact of raising minimum wage to $9 and $10.10. A state raising the minimum wage to $10.10 was more likely to experience a drastic reduction of workers, but low-wage workers across the country would receive much greater gains in their earnings every week.

To that end, as a business owner, it is important to consider all of the possibilities that the ongoing minimum wage rate hikes will bring and to be prepared for them. If you need more information and guidance on your obligations, consult a trusted labor and employment attorney.

Attorney Ravi S. Nagi chairs the BoltNagi, PC Labor & Employment Practice Group, a widely respected and established labor and employment law firm serving clients throughout the U.S. Virgin Islands.