Will Indiana’s Minimum Wage Increase in 2021?

Minimum Wage

In the United States, each state is allowed to set its own minimum wage or follow the Federal minimum wage.  Indiana is one of 21 states that uses the Federal minimum wage as their state minimum wage, currently at $7.25 an hour.  In Indiana, employers that have two or more employees must pay at least the minimum wage. 

Will Indiana increase its minimum wage this year? 

The short answer to that question is probably not. 

Most states increase their minimum wage based on calculations and estimations made through the consumer price index. Indiana had not raised the state minimum wage since 2009, when it increased by $.70 from $6.65 to $7.25.

How do the Indiana State Minimum Wage Laws work?

The Indiana Department of Labor administers the minimum wage and overtime provisions of the Indiana Minimum wage law. 

The Indiana Minimum Wage Law generally requires employers to pay employees at least the minimum wage for all hours worked and 1.5 times their regular pay rate for overtime when they work more than 40 hours per week. 

Indiana law requires that every employer subject to the Indiana Minimum Wage Law must furnish every employee a statement of the hours they worked, the wages that were paid, and a list of the deductions made.   

Exceptions to Indiana’s Minimum Wage in 2021

Here are the exceptions to Indiana’s minimum wage:

  • Tipped employees in Indiana must be paid a minimum of $2.13 an hour with tips making up $5.12, in total equaling Indiana’s state minimum wage.
  • New employees can receive a training wage of $4.25 an hour for the first 90 days of employment. However, employees must be under 20 years old. 
  • Full-time students can be paid at least 85% of the state minimum wage, which is about $6.16 per hour. Students eligible for this wage must work 20 hours a week or less and are classified as a full-time student.

What Factors Affect Changes in Minimum Wage?

Minimum wage rates are determined by poverty threshold, prevailing wage rates as determined by the Labor Force Survey, and socioeconomic indicators such as inflation, employment figures, and gross regional domestic product.  This ensures better worker protection. 

So, Will Indiana Increase Its Minimum Wage This Year?

In 2018 a bill was introduced to the Indiana General Assembly to increase the state minimum wage from $7.25 an hour to $10 an hour starting June 30, 2021.  It would increase to $13 an hour by 2022 and $15 an hour by 2023.  It did not pass.

In 2019, there were three proposals to increase Indiana’s minimum wage.  One suggestion would increase the wage to $9 an hour after December 31, 2019, then increase $.50 per year until it becomes $12 per hour in 2026. 

The second proposal would increase the minimum wage to $11.12 an hour, but it would not start until July 2020. 

A third proposal would increase the minimum wage to $15 an hour as soon as July 2020.  The minimum wage would increase annually based on the increases by the Consumer Price Index for the preceding year. 

None of these bills progressed any farther.  

In January of 2021, another bill was proposed to raise Indiana’s minimum wage to $10 an hour.  So far, in 2021, 20 states have increased their minimum wage.  As of this writing, the bill is in its early stages. 

They are also having problems raising the Federal minimum wage.  President Biden is trying to get legislation passed for a $15 an hour federal minimum wage, but it’s on hold for now.  Critics say raising the minimum wage could force employers to cut jobs.  They say it would especially hurt teens and less educated workers. 

Based on these recent trends, and concerns, it doesn’t look like Indiana will increase its minimum wage anytime soon. 

Where to Look for More Information

If you want more information on Indiana’s Minimum Wage Laws, here are some resources:

If you need help managing your payroll, contact us today to give you peace of mind.  

0 replies

Leave a Reply

Want to join the discussion?
Feel free to contribute!

Leave a Reply

Your email address will not be published. Required fields are marked *