By Shirleen Guerra | The Center Square
(The Center Square) – Virginia’s move toward a $15 per hour minimum wage is drawing warnings from small business advocates who say the policy could increase operating costs and place pressure on employers.
The legislation, which cleared both chambers of the General Assembly, is now before Gov. Abigail Spanberger. The governor has already indicated she intends to sign the measure.
“Our members aren’t surprised that the minimum wage increase passed, but they’re frustrated and worried about what will happen next,” said Julia Hammond, state director for the National Federation of Independent Business in Virginia.
Hammond said many small businesses already pay above the minimum wage but warned that state-mandated increases could still trigger broader cost adjustments.
“Raising the state minimum wage would put pressure on employers to pay more to stay competitive and force small businesses to raise prices to cover the costs of the mandate or else try to get by with fewer workers,” Hammond said.
She continued, “Our members already are contending with rising prices. Raising the minimum wage is going to make a bad situation even worse.”
Outside policy groups have also questioned the broader economic effects of minimum wage increases.
A recent report from the Employment Policies Institute points to research suggesting wage hikes are often associated with higher consumer prices. The group cited studies indicating a $1 minimum wage increase has been linked to price increases of up to 5.5%, particularly in industries with higher labor costs.
Under the legislation, Virginia’s adjusted minimum wage of $12.77 per hour would rise to $13.75 per hour beginning Jan. 1. A second increase to $15 per hour would take effect Jan. 1, 2028.
Beginning in 2029, future changes would be tied to inflation using the Consumer Price Index.
Spanberger endorsed the bill following its passage.
“I look forward to signing this legislation into law to give Virginia workers a pay raise,” the governor said in a statement.
State budget analysts say the wage increases will carry direct costs for the commonwealth. According to the Department of Planning and Budget’s revised fiscal impact statement, the bill is expected to increase state spending by $546,761 from the general fund and $489,371 from nongeneral funds in fiscal year 2027.
Once the $15 wage takes effect, projected costs rise substantially. The same analysis estimates general fund spending would increase by roughly $14 million in fiscal year 2028, along with an additional $14.6 million in nongeneral fund expenditures.
Separately, NFIB announced a statewide advertising campaign urging lawmakers to consider the cumulative effects of rising business costs, including labor mandates and regulatory policies.
