At the start of 2024, the minimum wage rose in 22 states. But Arizona small businesses pay well over the minimum wage, a study finds.
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Yet, many small businesses in the U.S. were already paying well above these new limits to attract talent and counter pandemic-induced staffing shortages.
A new study by OnDeck highlights significant wage differences across the country, ranking the states where small businesses pay the highest wages: https://www.ondeck.com/resources/small-business-employee-salary
Researchers at OnDeck found that small businesses in Arizona pay $50,540, on average. This is 69% over the state’s minimum wage.
Massachusetts businesses with fewer than 500 employees pay salaries averaging $72,151, making it the best state to get paid by a small business. The high cost of living and housing in Massachusetts is one factor that has driven wages up. However, small businesses are better positioned to answer this need due to low local business taxes relative to other states. Only five states have a higher minimum wage than Massachusetts, where the $15 wage floor is more than double the federal minimum wage of $7.25 per hour.
To uncover the states and metropolitan areas where small businesses pay the highest wages, OnDeck looked at data from the U.S. Census Bureau for businesses with fewer than 500 employees (the Small Business Administration’s threshold for a small business).
For every state and metro area, they calculated the average wage as the total annual payroll divided by the total employee count for businesses with under 500 employees.
