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Notes: County-specific annual family budget thresholds for a single adult are adjusted to 2021 dollars, and hourly wage thresholds calculated assuming 40 hours per week, 52 weeks per year. The current federal minimum wage is $7.25, but the minimum can vary at the state level for example, New Jersey and Illinois have enacted legislation to increase their minimum wage to $15. Raise the Wage Act of 2021. West Hollywood's minimum wage tops $19 an hour, highest in nation - Los 1, February. 4: 268304. Had Congress continued to increase the minimum wage in line with productivity growth, the minimum wage today would be over $22 per hour. Directly affected workers will see their wages rise as the new minimum wage rate will exceed their current hourly pay. Values reflect the population likely to be affected by the proposed change in the federal minimum wage. Wages would grow over that additional yearfrom 2026 to 2027, for examplefurther reducing the effect of any given increase in the minimum wage. Senate Says No To $15 Minimum Wage For Now; Democrats Vow To Push On - NPR Even in a struggling economy, studies have shown that increasing the minimum wages doesn't damage job growthin fact, a landmark study . As we describe below, a $15 minimum wage by 2025 would disproportionately benefit Black and Hispanic workers and women, raise the pay of essential and front-line workers, and reduce the number of people living in poverty. Minimum wage gets a boost, in some states - Marketplace Minimum Wages and the Distribution of Family Incomes. Raise income for 17 million people (one in 10 workers), to . Workers have been pushing. Tipped workers in particular would benefit from having a regular paycheck so that they would not need to rely exclusively on volatile tips that can be particularly susceptible to discrimination and wage theft (Lynn et al. Totals may not sum due to rounding. And those in Maryland's Montgomery County are now paid $16.70 an hour, an increase of $1.05. Pros and cons of raising the minimum wage - Economics Help Users of this interactive tool can leave the subminimum wage unchanged, increase it by varying amounts each year until it reaches 50 percent of the federal minimum wage, or increase it by varying amounts each year until it matches the federal minimum wage. Just before the increase, 28.8% of Black workers earned at or below the 1967 minimum, compared with 13.9% of white workers. If workers lost their jobs because of a minimum-wage increase, how long would they stay jobless? In 1963, the federal minimum wage was $1.15 an hour, and there was no minimum wage at all for agriculture, nursing homes, restaurants, and other service industries that disproportionately employed Black workers. Extra dollars in the pockets of millions of working families would help by boosting aggregate demand. They will receive a raise as employer pay scales are adjusted upward to reflect the new minimum wage. That increase in productivity might occur through various channels, such as a reduction in employee turnover. Washington, DC 20005 The groups are based on CBOs projections of family income (in 2022 dollars) in 2026. Demonstrators call for a union and $15 minimum wage at a McDonald's in Charleston, S.C., in February 2020. For the default policy based on the Raise the Wage Act of 2021, the minimum wage would be $9.50 in 2023, $11.00 in 2024, $12.50 in 2025, $14.00 in 2026, and $15.00 in 2027 and would be indexed to changes in median wages thereafter. Accessed February 15, 2021. Sources: EPI analysis of the Fair Labor Standards Act and amendments and the Raise the Wage Act of 2021. 2019. Sanders Push for $17 Minimum Wage Resurrects Pay Raise Roadblock Civil rights leaders and advocates have long recognized the value of higher wage standards in reducing inequality. During the COVID-19 pandemic, essential and front-line workers have kept the economy running at great risk to their health and their families. In fact, raising the federal minimum wage to $15 would provide a raise to nearly one in three working single parents. The Economic Policy Institutes Family Budget Calculator: Technical Documentation. Indirectly affected workers have a wage rate just above the new minimum wage (between the new minimum wage and 115% of the new minimum). Raising the federal minimum wage to $15 by 2025 would lift the pay of 32 million workers, A demographic breakdown of affected workers and the impact on poverty, wages, and inequality, The economy can afford a much higher national minimum wage, Real and nominal federal minimum wages (historical and under the Raise the Wage of 2021) compared with productivity-tracking minimum wage, The Raise the Wage Act would raise the pay of more than 32 million U.S. workers, Number of workers (in millions) who would benefit if the federal minimum wage were increased to $15 by 2025, Black and Hispanic workers would disproportionately benefit from a $15 minimum wage in 2025, Share of workers in each race/ethnicity category who would get a direct or indirect pay raise under the Raise the Wage Act of 2021, The 1963 March on Washingtons minimum wage demand would be $15 today, adjusted for inflation, Historical and projected federal minimum wages under the Raise the Wage Act of 2021, and the 1963 March on Washington demand indexed to inflation, Essential and front-line workers are a majority of those who would benefit from a $15 minimum wage in 2025, Levels and shares of those affected by the Raise the Wage Act of 2021 who are essential and front-line workers, using the following occupation definitions, critical infrastructure occupations (LMI Institute 2020), At $15 in 2025, the federal minimum wage would no longer be a poverty wage, Annual wage income for a full-time federal minimum wage worker compared with various poverty thresholds (2021$), 19682025, The Raise the Wage Act would significantly reduce poverty, especially for children, Range of estimates of the number of children and nonelderly adults who would no longer be in poverty in 2025 if the Raise the Wage Act of 2021 is passed, All across the country, workers need at least $15 an hour today, Full-time, full-year hourly wages and annual income required for a single adult to meet their family budget threshold in 2021, by county, A $15 minimum wage in 2025 would raise pay for workers broadly across demographic categories, Demographic characteristics of workers who would be affected by the Raise the Wage Act of 2021, Minimum wage increases are overwhelmingly popular, Shares of people who want to raise the minimum wage, by demographic group, 2016, Raising the federal minimum wage to $15 in 2025 would eliminate decades of growing wage inequality between the lowest-paid and the typical U.S. worker, Federal minimum wage as a share of the national full-time, full-year median wage, actual, and projected under the Raise the Wage Act of 2021, Program on Race, Ethnicity, and the Economy, Economic Analysis and Research Network (EARN), Program on Race, Ethnicity and the Economy (PREE), https://electionstudies.org/data-center/2016-time-series-study/. The U.S. Senate has voted to prohibit an increase in the federal minimum wage during the . Source:Authors' calculations using the following occupation definitions: critical infrastructure occupations (LMI Institute 2020); pre-pandemicteleworkableoccupations (Dingel and Neiman 2020); and during pandemicteleworking occupations(authors calculationsfrom2020 Current Population Survey data). Policy choices have tilted the playing field toward the rich and corporations. Notes:Values reflect the population likely to be affected by the proposed change in the federal minimum wage. Why Raising the Minimum Wage to $15 Is Good for the US - Business Insider It could come up for a final vote as soon as next week. The federal minimum wage hasn't risen in almost 13 years and US workers are paying the price Opinion by Gina Cummings for CNN Business Perspectives Published 11:10 AM EDT, Tue March 22, 2022. Income group. Specifically, Derenoncourt and Montialoux (2021) estimated that, in the year prior to the 1968 increase, 16.1% of the overall workforce and 28.8% of Black workers would be directly affected by the new policy. For the default policy shown here, the standard minimum wage reaches $15 per hour in 2027, four years after the first incremental increase. Gould, Cooke, and Kimball (2015) observe that official poverty rate methodology was designed in 1963 and has only been adjusted to account for overall inflation, and they contrast poverty thresholds and Family Budget thresholds. They Deserve a $15 Minimum Wage, Many U.S. Workers in Critical Occupations in the Fight Against COVID-19, https://doi.org/10.1111/j.1559-1816.2008.00338.x, Who Are Essential Workers? CBO continually seeks feedback to make its work as useful as possible. A Comprehensive Look at Their Wages, Demographics, and Unionization Rates, One Fair Wage: Women Fare Better in States with Equal Treatment for Tipped Workers, Most-recent data I found is ANES after 2016 election. How do taxes and spending work, and where do you fit in? (2021). For the default policy based on the Raise the Wage Act of 2021, the minimum wage would be $9.50 in 2023, $11.00 in 2024, $12.50 in 2025, $14.00 in 2026, and $15.00 in 2027 and would be indexed to changes in median wages thereafter. Source: Authors calculations from Census (2020), Dube (2019b), and projected state, local, and federal minimum wages in 2025. President Biden signed the order on April 27, 2021. First, that particular employment reduction estimate is not well supported by the best research or even the typical minimum wage study; in Dube (2019a), the median estimate of the own-wage elasticity was 0.04, less than one-tenth the size of the employment response. The first row summarizes findings already discussed in this report: 32.2 million of 151.7 million workers would receive a direct or indirect pay increase in 2025 if the minimum wage were raised to $15 per hour. Findings in the research literature about how changes in the federal minimum wage affect employment vary widely. Using data from low-wage counties, where minimum wage increases have raised labor costs much more than in high-wage labor markets, Godoey and Reich (2021) found that the policies significantly reduced poverty and had essentially no employment impact. If employment is more responsive than CBO expects, then increases in the minimum wage would lead to larger declines in employment. In general, increasing the federal minimum wage would raise the earnings and family income of most low-wage workers, lifting some families out of povertybut it would cause other low-wage workers to become jobless, and their family income would fall. (More detailed demographic statistics are available in Appendix Table 3.). Several years later, Congress expanded the coverage of the minimum wage and eventually raised it to its historical high point of $1.60 in 1968, or $10.59 in 2021 dollars. Users of this interactive tool can index minimum wages to the consumer price index (CPI, a common measure of the cost of living) or index minimum wages to median hourly wages. The federal minimum wage in 2023 is $7.25 per hour. 11. Derenoncourt and Montialoux (2021) describe how the new standard raised wages overall but had its largest effects on Black workers. In CBOs assessment, there is a two-thirds chance that the effect would be within that range. The default option in this interactive tool is based on the Raise the Wage Act of 2021 (S. 53), which CBO analyzed in The Budgetary Effects of the Raise the Wage Act of 2021. A network of state and local organizations improving workers' lives through research and advocacy. As a consequence, indexing the minimum wage to median hourly wages would lead to slightly larger effects on employment, wages, and family income. Directly affected workers would see their wages rise as the new minimum wage rate will exceed their current hourly pay. Employers Steal Billions from Workers Paychecks Each Year. 2008; Cooper and Kroeger 2017).1. Specifically, we define indirectly affected workers as those with a wage rate between the new minimum wage and 115% of the new minimum wage. The act proposes to increase the minimum wage from $7.25 per hour to $15 per hour by 2025, and institute automatic raises to keep pace with median wages. Values calculated using the listed states share of total U.S. nonfarm employment in calendar year 2019 (prior to the COVID-19 pandemic). Will there be a Federal Minimum Wage Raise in 2023? There, food service workers must make $15 an hour , but up to $5 can be made from tips, meaning . 2021. Minimum wage: Federal raise to $15 would reduce poverty but - CNN 9 Introduction of this legislation, along with support from the Biden . The minimum wage went up in 23 states on Jan. 1, 2023 . Blau, Francine D., Josefine Koebe, and Pamela A. Meyerhofer. Wage increase totals are cumulative of all preceding steps. In CBOs analysis, the size of the effects depends on the number of workers affected by the increase in the minimum wage, the changes in wages induced by the higher minimum, and the responsiveness of employment to those changes in wages. Rising costs of living imply that, in 2025, workers all across the country will need even more to support themselves and their families. Current Population Survey Extracts, Version 1.0.13, https://microdata.epi.org. Why give to EPI Dorman, Peter, and Lawrence Mishel. Exploring how race, ethnicity, and class intersect to affect economic outcomes in the United States. Ballotpedia. 78% of unemployed jobseekers in the U.S. favored raising the minimum wage, Inequities Exposed: How COVID-19 Widened Racial Inequities in Education, Health, and the Workforce, Racial Inequality and Minimum Wages in Frictional Labor Markets, Program on Race, Ethnicity, and the Economy PREE, Economic Analysis and Research Network EARN. At the other extreme, a large group of workers might shuffle regularly in and out of employment, experiencing short spells of joblessness but receiving higher wages during the weeks they were employed. Despite some historical progress, in 2019 Hispanic workers were being paid 10.8% less than white workers with similar ages and education levels, and Black workers were being paid 14.9% less than comparable white workers (Gould 2020). How would increasing the minimum wage affect family income? Currently, about four in 10 workers in the United States live in a state where minimum wages are eventually scheduled to rise to $15 per hour.11 Yet without a stronger federal standard, most low-wage workers in this country will continue to experience the hardships and indignity of low pay. Minimum wage workers in Chicago received a 40-cent boost, bringing their hourly pay to $15.80. Estimates from Derenoncourt and Montialoux (2021) suggest that the 1968 policy directly affected an estimated 16.1% of the overall workforce and 28.8% of Black workers.9 Above we estimate similar shares for a $15 minimum wage in 2025: 14.5% of all workers and 23.2% of Black workers would be directly affected. Economic Policy Institute (EPI). A Majority of Workers are Fearful of Coronavirus Infections at Work, Especially Black, Hispanic, and Low- and Middle-Income Workers. Minimum Wages and Racial Inequality. Quarterly Journal of Economics 136, no. The bill sets forth a schedule of annual increases in the federal minimum wage for individuals with disabilities. Wilson, Valerie, and William M. Rodgers III. How certain are these outcomes? 2021a. 21 states will see minimum wage increases by January 1 - CNN The immediate benefits of a minimum wage increase are in the earnings boost for the lowest-paid workers, but increasing the minimum wage to $9.50 this year and the increases thereafter would deliver broader benefits to the economy, particularly now. If we assume the age distribution of poverty reduction is similar to the actual poverty distribution, the Raise the Wage Act would raise 1.3 million children out of poverty.4. Changes in employment would be seen in the number of jobless, not just unemployed, workers. Wage increase totals are cumulative of all preceding steps. Figure 1. Accessed at https://electionstudies.org/data-center/2016-time-series-study/. Potentially affected workers. Source: Authors calculations from American National Elections Studies (2019). Raising The Minimum Wage Hurts The Most Disadvantaged - Forbes There have been 27 state-level ballot initiatives since 1996, and only two failed in that year. A stronger preference for minimum wage increases holds for other demographic groups who face greater obstacles in the labor market. Pitts, Steven C., and Sylvia Allegretto. The economy is still reeling from the stunning collapse of economic activity during the COVID-19 pandemic. How does the default policy option differ from the Raise the Wage Act? Copy the code below to embed this chart on your website. The federal minimum wage would rise by varying amounts each year until it reached the target amount in the year specified for full implementation. Godoey, Anna, and Michael Reich. Given that the 1968 policy raised the incomes of the low-wage workforce without substantial job loss, we should feel confident that a phased-in $15 minimum wage in 2025 would do the same. According to new analysis by the EPI and NELP, women working year-round, on average, would see . 2021. Many U.S. Workers in Critical Occupations in the Fight Against COVID-19. Database, Version April 3, 2020. 1. Cooper and Kroeger (2017) explain how the tipped minimum wage is supposed to work and the problems with it: In most states and under federal law, employers of workers who customarily receive tipssuch as restaurant servers and nail salon attendantsmay credit workers tips against their required minimum wage. The bill, introduced last month by Rep. Jason Dawkins and Rep. Patty Kim, would gradually raise the state's minimum wage over the next three years, beginning with a jump to $11 per hour in 2024 . Cengiz, Doruk, Arindrajit Dube, Attila Lindner, and Ben Zipperer. Wage changes resulting from scheduled state and local minimum wage laws are accounted for by EPIs Minimum Wage Simulation Model. The 1963 March on Washington for Jobs and Freedom (the March on Washington) called for a $2.00 minimum wage (Pitts and Allegretto 2013). Using already scheduled state and local minimum wage increases, we estimate the employment-weighted minimum wage (with no change in the federal minimum) will be $11.53 in 2025. Nabeel Alsalam, William Carrington, Justin Falk, and Kevin Perese produced the initial estimates for this interactive tool with guidance from Molly Dahl and Joseph Kile. Increase the hourly minimum wage for federal contractors to $15. Just calculated the inflation-adjusted natl MW demanded by the March on Washington in August 1963 ($2/hr). Twitter, @EDerenoncourt, July 23, 2020, 3:42 p.m. Derenoncourt, Ellora, and Claire Montialoux. FACT SHEET: Biden- - The White House At the peak purchasing power of the minimum wage in 1968, a minimum wage worker earned $10.59 per hour (in 2021 dollars), 46% more than a worker at the $7.25 federal minimum wage today. Family Budget Calculator(interactive tool). Tech companies block wage increase for New York City delivery workers (2019) found that both the typical minimum wage increases and also the highest state-level minimum wage increase significantly raised wages without reducing the employment of low-wage workers. 2021. 2020. A Comprehensive Look at Their Wages, Demographics, and Unionization Rates. Working Economics Blog (Economic Policy Institute), May 19, 2020. First, a $15 minimum wage would lead . Users of this interactive tool can leave the minimum wage unchanged after the end of the phase-in period or change it in one of two ways. Past increases in the federal minimum wage have not been indexed, so the value of those increases has been eroded by inflation. To put these concerns in perspective, consider the predictions of CBO (2021), which estimated that a $15 minimum wage by 2025 would reduce low-wage employment by about 1.4 million. 2021. Who are the Essential and Frontline Workers? NBER Working Paper 27791, September 2020. Under these definitions of essential and front-line work, the number of workers affected by raising the minimum wage grows. Families are grouped on the basis of their income relative to the poverty threshold. No More Lies: The Truth About Raising the Minimum Wage