Compiled from a presentation by Jim Carroll, Executive Director, Hampton Roads SBDC

On May 1, 2021, the minimum wage in Virginia increased from $7.25 an hour to $9.50 an hour.

Over the next five years, the minimum wage will increase in increments until it reaches $15 an hour on Jan 1, 2026.

[Note: The minimum wage increase is only guaranteed up to $12 on hour on Jan 1, 2023. To increase beyond that this bill must be authorized by the General Assembly by July 1, 2024]

The impact of this change will affect small business owners and retailers in our community. To prepare for this change we have compiled a list of key details business owners need to be aware of.


  • May 1, 2021 – Wage increases $7.25 – $9.50 (31% increase)
  • Jan 1, 2022 – Wage increases $9.50 – $11 (15.8% increase)
  • Jan 1, 2023 – Wage increases $11 – $12 (9.1% increase)
  • Jan 1, 2025 – Wage increases $12 – $13.50 (12.5% increase) *
  • Jan 1, 2026 – Wage increases $13.50 – $15 (11.1% increase) *

*Must be approved by General Assembly on July 1, 2024

Department of Labor and Industry Exemptions (DOLI)

The following is a list of DOLI exemptions to paying the minimum wage.

  • Caddies on gold courses
  • Children under 18 employed by their parent/guardian
  • Summer camp counselors
  • Children under 16 regardless of employer
  • Student work/study program employees
  • Babysitters who work less than 10 hours per week
  • Farmworkers and laborers

How do tips factor into the new minimum wage?

Currently, a server’s base salary is $2.13. The total earnings of a server (base salary + tips) must equal the minimum wage. If it does not, it is the employer who must make up the difference for their server. This will not change with the increase in the minimum wage.

“Pro” and “Con” considerations via


  • Current wages do not cover the cost-of-living expenses
  • Wages will increase for more than 1.27 million Virginias
  • Buying power will improve
  • A decrease in public assistance rolls will lower government costs
  • Will create additional incentive to work and stay in school
  • Potential for more part-time employees


  • New financial models for businesses will have to be developed
  • Increase in joblessness due to businesses scaling back hours/positions, eliminating entry-level positions, and the potential rise in automation
  • Potential for lower employee benefits as a cost-cutting measure to cover the increase in wages
  • Wage scale compression causing currently higher salary employees to want an equivalent pay raise as minimum wage workers.
  • Negative impact to small business owners
  • Regional cost-of-living difference not being considered

Relevant results from the Retail Alliance May Retail Pulse Survey

When asked how they might respond to the minimum wage increase, business owners said:

  • 6% would consider automation
  • 17% would reduce staff
  • 17% would cut overhead
  • 20% would reduce staff hours
  • 42% would increase product/service prices
  • 39% would face no impact as they already pay above minimum wage
Grocery shop employee helps customer