[ How the Raise the Wage Act would benefit U.S. workers, their
families, and entire communities]
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WHY THE U.S. NEEDS AT LEAST A $17 MINIMUM WAGE  
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EPI
July 31, 2023
Economic Policy Institute
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_ How the Raise the Wage Act would benefit U.S. workers, their
families, and entire communities _

, Boston University

 

The federal minimum hourly wage is just $7.25, and Congress has not
increased it since 2009. Low wages hurt all workers and are
particularly harmful to Black workers and other workers of color,
especially women of color, who make up a disproportionate share of
workers who are severely underpaid. This is the result of structural
racism and sexism, with an economic system rooted in chattel slavery
in which these workers continue to be shunted into the most underpaid
jobs.1
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The Raise the Wage Act of 2023 would gradually raise the federal
minimum wage to $17 an hour by 2028, narrowing racial and gender pay
gaps. Here is what the Act would do:

* Raise the federal minimum wage to $9.50 this year and increase it
in steps until it reaches $17 an hour in 2028.
* After 2028, adjust the minimum wage each year to keep pace with
growth in the median wage, a measure of wages for typical workers.
* Phase out the egregious subminimum wage for tipped workers, which
has been frozen at a meager $2.13 since 1991.2
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* Sunset unacceptable subminimum wages for workers with disabilities
employed in sheltered workshops and for workers under age 20.
* Increase the federal minimum wage beyond the previous benchmark of
$15 an hour to $17 by 2028, in order to adjust for inflation and the
fact that many states and localities have already moved to or beyond a
$15 minimum wage.
* The Raise the Wage Act follows the lead of the growing number of
states and cities that have adopted significant minimum wage increases
in recent years, thanks to the ‘Fight for $15 and a union’
movement led by Black workers and workers of color. Here is a summary
of the ‘Fight for $15 and a union’ movement’s impact:
* Since the Fight for $15 was launched by striking fast-food workers
in 2012,3
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12 states—California, Connecticut, Delaware, Florida, Hawaii,
Illinois, Maryland, Massachusetts, Nebraska, New Jersey, New York, and
Rhode Island—and the District of Columbia have approved raising
their minimum wages to $15 or more an hour. These states and D.C.
represent approximately 40% of the U.S. workforce.4
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* Additional states—Arizona, Colorado, Maine, Michigan, Missouri,
Nevada, New Mexico, Oregon, Vermont, Virginia, and Washington—have
approved minimum wages ranging from $12 to $14.75 an hour.
* In addition, more than four dozen cities and counties have adopted
their own minimum wage laws of $15 or more.5
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* The benefits of phasing in a $17 federal minimum wage by 2028
would be far-reaching, lifting pay for tens of millions of workers and
helping reverse decades of growing pay inequality.
* Increased wages would make a tremendous difference in the life of
a cashier, home health aide, or fast-food worker getting paid the
minimum wage. These workers today often struggle to cover the basics,
like food and rent, on less than $35,000 a year.6
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* A majority (60.4%) of workers whose total family income is below
the poverty line would receive a pay increase if the minimum wage were
raised to $17 by 2028.7
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* A $17 minimum wage would begin to reverse decades of growing pay
inequality between the most underpaid workers and workers receiving
close to the median wage, particularly along gender and racial lines.
For example, minimum wage increases in the late 1960s explained 20% of
the decrease in the Black-white earnings gap in the years that
followed, whereas failures to adequately increase the minimum wage
after 1979 account for almost half of the increase in inequality
between women at the middle and bottom of the wage distribution.8
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* A $17 minimum wage by 2028 would generate $86 billion in higher
wages for workers and would also benefit communities across the
country. Because underpaid workers spend much of their extra earnings,
this injection of wages will help stimulate the economy and spur
greater business activity and job growth.9
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* Raising the minimum wage to $17 will be particularly significant
for workers of color and would help narrow the racial pay gap. The
majority of workers who benefit are adult women.
* Nearly one-third (29.7%) of Black workers and one-quarter (24.6%)
of Hispanic workers would get a raise if the federal minimum wage were
increased to $17.10
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* African Americans are paid 10%–15% less than white workers with
the same characteristics, so the Raise the Wage Act will deliver the
largest benefits to Black workers: about $3,200 annually for a
year-round worker.11
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* Minimum wage increases in the 1960s Civil Rights Era significantly
reduced Black-white earnings inequality and are responsible for more
than 20% of the overall reduction in later years.12
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* All across the country, workers need at least $17 per hour to, at
a minimum, meet the cost of living.
* Today, in all areas across the United States, a single adult
(without children) needs at least $17 an hour—roughly $35,000
annually for a full-time worker—to achieve a modest but adequate
standard of living. By 2028, underpaid workers—especially those with
children—will need even more, according to projections based on the
Economic Policy Institute’s Family Budget Calculator.13
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* For example, in rural Missouri, a single adult without children
will need more than $41,000 (more than $20 per hour as a full-time
worker) to cover typical rent, food, transportation, and other basic
living costs.14
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* In larger metro areas of the South and Southwest, a single adult
without children will also need more than $17 an hour to get by:
$24.30 in Fort Worth, $25.70 in Phoenix, and $26.20 in Miami.
* In more expensive regions of the country, a single adult without
children will need far more than $17 an hour to cover the basics:
$36.20 in New York City, $31.20 in Los Angeles, and $33.60 in
Washington, D.C.
* Despite their indispensable roles during the COVID-19 pandemic,
many essential workers are paid too-low wages and struggle to get by.
* Essential and front-line workers would benefit the most from a
minimum wage increase.15
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The median pay for many of these jobs is well under $17 an hour;
examples include child care workers ($13.71), home health and personal
care aides ($14.51), dining room and cafeteria attendants (including
school cafeteria workers) ($14.00), and ambulance drivers and
attendants ($14.61).16
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* One in three retail-sector workers (33.5%) would get a raise.
* More than half (58.7%) of restaurant workers would see their
earnings rise.
* 5.5 million workers in health care, social assistance, and
education and 2.6 million workers in manufacturing and construction
would see a raise.
* The federal minimum wage for tipped workers is still a deplorable
$2.13 an hour. Phasing out a tipped wage would lift pay, provide
stable paychecks, and reduce poverty for millions of tipped workers.
* Congress has not lifted the federal tipped wage of $2.13 per hour
in 32 years. Phasing out the tipped wage will raise the take-home pay
of 3.3 million workers in tipped occupations.17
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* Seven states (Alaska, California, Minnesota, Montana, Nevada,
Oregon, and Washington) have already eliminated their lower tipped
minimum wage. These states are known as “one fair wage” states for
their equitable treatment of tipped workers. The cities of Washington,
D.C., and Flagstaff, Arizona, are also in the process of phasing out
their subminimum tipped wage; and pending the outcome of litigation,
the state of Michigan may soon join them.
* Tipped workers in “one fair wage” states are paid the same
minimum wage as everyone else before tips. For restaurant servers and
bartenders, take-home pay in “one fair wage” states is 24% higher,
on average, than in $2.13 states.18
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* Having a lower minimum wage for tipped jobs results in
dramatically higher poverty rates for tipped workers. In states that
use the federal $2.13 tipped minimum wage, the poverty rate among
tipped workers in restaurants and bars is 20.8%—7.6 percentage
points higher than the 13.2% poverty rate in “one fair wage”
states.19
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* Eliminating the lower tipped minimum wage has not harmed growth in
the restaurant industry or tipped jobs. From 2011 to 2019, “one fair
wage” states had stronger restaurant growth than states that had a
lower tipped minimum wage—both in the number of full-service
restaurants (17.5% vs. 11.1%) and in full-service restaurant
employment (23.8% vs. 18.7%).20
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* Our economy can more than afford a $17 minimum wage, and a higher
federal minimum wage would make our economy healthier.
* Workers earning the current federal minimum wage are paid less per
hour in real dollars than their counterparts were paid 50 years ago.
Yet businesses can afford to pay them substantially more.21
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* The economy has grown dramatically over the past 50 years, and
workers are producing more from each hour of work, with productivity
doubling since the late 1960s. If the minimum wage had been raised at
the same pace as productivity growth since the late 1960s, it would be
over $24 an hour today.22
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* The economic relief and recovery measures from the COVID-19
pandemic have helped to drive a tighter labor market, which gave many
workers more options to find better pay. But some of those effects are
wearing off as the labor market is beginning to return to more normal
levels of growth compared with the last two years. Raising the minimum
wage can help to lock in the historic pay gains that low-wage workers
made during the recovery from the pandemic economic crisis.
* Research confirms what workers already know: Raising wages
benefits us all, and those benefits are wide-ranging.
* High-quality academic scholarship confirms that modest increases
in the minimum wage have not led to detectable job losses.23
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* After the federal minimum wage was raised to its highest
historical peak in 1968, wages grew and racial earnings gaps closed
without constricting employment opportunities for underpaid workers
overall.24
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* Comprehensive research on 138 state-level minimum wage increases
shows that all underpaid workers benefit from minimum wage increases,
not just teenagers or restaurant workers.25
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* Multiple studies conclude that total annual incomes of families at
the bottom of the income distribution rise significantly after a
minimum wage increase.26
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Workers in underpaid jobs and their families benefit the most from
these income increases, reducing poverty and income inequality.
* The benefits of minimum wage increases are not limited to income
gains for affected workers. By providing families with higher incomes,
minimum wage increases have improved a range of important health,
well-being, and educational outcomes—including infant health, mental
health, children’s math and reading scores, and educational
attainment—and have also reduced “deaths of despair,” child
abuse, and teenage pregnancy.27
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*
Notes

1.
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Kate Bahn and Carmen Sanchez Cumming, “Four Graphs on U.S.
Occupational Segregation by Race, Ethnicity, and Gender
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Washington Center for Equitable Growth, July 1, 2020.

2.
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Sylvia Allegretto and David Cooper, _Twenty-Three Years and Still
Waiting for Change: Why It’s Time to Give Tipped Workers the Regular
Minimum Wage
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Economic Policy Institute, July 2014.

3.
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Alina Selyukh, “‘Gives Me Hope’: How Low-Paid Workers Rose Up
Against Stagnant Wages
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National Public Radio’s _All Things Considered_, February 26, 2020;
Kimberly Freeman Brown and Marc Bayard, “Editorial: The New Face of
Labor, Civil Rights Is Black & Female
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NBC News, September 7, 2015; Amy B. Dean, “Is the Fight for $15 the
Next Civil Rights Movement?
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Al Jazeera America, June 22, 2015.

4.
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Economic Policy Institute calculation using employment shares from the
2022 Basic Monthly Current Population Survey. For recent minimum wage
changes, see EPI’s _Minimum Wage Tracker_
[[link removed]]. We include the District
of Columbia in this list even though it is not a state.

5.
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Economic Policy Institute (EPI), _Minimum Wage Tracker_
[[link removed]], last updated July 1,
2023.

6.
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The median annual wage for these occupations is about $30,000
according to the May 2022 National Occupational Employment and Wage
Estimates [[link removed]] from the U.S.
Bureau of Labor Statistics.

7.
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Ben Zipperer, _The Impact of the Raise the Wage Act of 2023_
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Economic Policy Institute, July 2023.

8.
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Ellora Derenoncourt and Claire Montialoux, “Minimum Wages and Racial
Inequality
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_Quarterly Journal of Economics_ 136, no. 1 (February 2021); David
Autor, Alan Manning, and Christopher L. Smith, “The Contribution of
the Minimum Wage to U.S. Wage Inequality over Three Decades: A
Reassessment
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_American Economic Journal: Applied Economics_ 8, no. 1 (January
2016).

9.
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Ben Zipperer, _The Impact of the Raise the Wage Act of 2023_
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Economic Policy Institute, July 2023.

10.
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Ben Zipperer, _The Impact of the Raise the Wage Act of 2023_
[[link removed]],
Economic Policy Institute, July 2023.

11.
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Ben Zipperer, _The Impact of the Raise the Wage Act of 2023_
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Economic Policy Institute, July 2023.

12.
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Ellora Derenoncourt and Claire Montialoux, “Minimum Wages and Racial
Inequality
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_Quarterly Journal of Economics_ 136, no. 1 (February 2021).

13.
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Based on Congressional Budget Office projections for the Consumer
Price Index and calculations from the Economic Policy Institute’s
Family Budget Calculator [[link removed]],
which measures the income a family needs to attain a secure yet modest
standard of living in all counties and metro areas across the country.

14.
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The EPI Family Budget threshold for the least expensive county in
Missouri is $41,558 in projected 2028 dollars.

15.
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David Cooper, Zane Mokhiber, and Ben Zipperer, _Raising the Federal
Minimum Wage to $15 by 2025 Would Lift the Pay of 32 Million Workers_
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Economic Policy Institute, March 2021.

16.
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U.S. Bureau of Labor Statistics, May 2022 National Occupational
Employment and Wage Estimates: United States
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17.
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Ben Zipperer, _The Impact of the Raise the Wage Act of 2023_
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Economic Policy Institute, July 2023.

18.
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EPI analysis of 2022 Current Population Survey Outgoing Rotation
Groups.

19.
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EPI analysis of the 2015–2019 American Community Survey.

20.
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EPI analysis of 2011–2019 Quarterly Census of Employment and Wages
data.

21.
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David Cooper, Sebastian Martinez Hickey, and Ben Zipperer, “The
Value of the Federal Minimum Wage Is at Its Lowest Point in 66 Years
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_Working Economics Blog_ (Economic Policy Institute), July 14, 2022.

22.
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The 2023 federal minimum would be $24.14 had the 1968 minimum wage of
$1.60 been indexed to net productivity, defined as net national
product divided by total economy hours.

23.
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Arindrajit Dube, Impacts of Minimum Wages: Review of the International
Evidence
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report prepared for Her Majesty’s Treasury (UK), November 2019.

24.
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Ellora Derenoncourt and Claire Montialoux, “Minimum Wages and Racial
Inequality
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_Quarterly Journal of Economics_ 136, no. 1 (February 2021).

25.
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Doruk Cengiz, Arindrajit Dube, Attila Lindner, and Ben Zipperer,
“The Effect of Minimum Wages on Low-Wage Jobs: Evidence from the
United States Using a Bunching Estimator,” _Quarterly Journal of
Economics_ 134, no. 9 (May 2019).

26.
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Arindrajit Dube, “Minimum Wages and the Distribution of Family
Incomes [[link removed]],”
_American Economic Journal: Applied Economics_ 11, no. 4 (October
2019); Kevin Rinz and John Voorheis, “The Distributional Effects of
Minimum Wages: Evidence from Linked Survey and Administrative Data
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U.S. Census Bureau Center for Administrative Records Research and
Applications Working Paper 2018-02, 2018.

27.
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George L. Wehby, Dhaval M. Dave, and Robert Kaestner, “Effects of
the Minimum Wage on Infant Health
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and Management_ 39, no. 2 (Spring 2020); Kerri M. Raissian and Lindsey
Rose Bullinger, “Money Matters: Does the Minimum Wage Affect Child
Maltreatment Rates?
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Youth Services Review_ 72 (January 2017); Lindsey Rose Bullinger,
“The Effect of Minimum Wages on Adolescent Fertility: A Nationwide
Analysis [[link removed]],” _American
Journal of Public Health_, March 2017; William H. Dow, Anna Godoy,
Christopher Lowenstein, and Michael Reich, “Can Labor Market
Policies Reduce Deaths of Despair?
[[link removed]]” _Journal of Health
Economics_ 74 (December 2020); Anna Godøy and Ken Jacobs, “The
Downstream Benefits of Higher Incomes and Wages
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Federal Research Bank of Boston Community Development Discussion
Papers 21-1, 2021.

* Minimum Wage
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* $15 Minimum Wage
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