Story at a glance
- The Urban Institute published a new analysis on what would happen if the federal minimum wage was increased to $15.
- The annual family earnings of nearly 56 million affected workers nationwide would rise by an average of $5,600.
- If no workers lose their jobs with a $15 minimum wage, 7.6 million people would be lifted out of poverty.
Raising the minimum wage stands to benefit millions of American workers, supporters say, lifting them out of poverty and increasing workers’ family resources, but it has remained untouched for over a decade.
A new analysis by the Urban Institute looked at the different ways a $15 hourly wage could impact working families, including the debate over whether a higher minimum wage would end up taking jobs away from the very workers it is purported to help.
The current federal minimum wage is $7.25 and was established in 2009, though thirty states and Washington, D.C. have set higher minimum wages along with other cities across the country. Over the past decade, there’s been a growing demand for increasing the federal minimum wage as someone working full-time at only $7.25 does not earn enough to keep a family out of poverty.
Researchers at Urban found that if a $15 federal minimum wage was adopted, the annual family earnings of nearly 56 million affected workers nationwide would rise by an average of $5,600.
America is changing faster than ever! Add Changing America to your Facebook or Twitter feed to stay on top of the news.
Hispanic workers are set to see the largest increases in earnings and reductions in poverty, which could rise by $5,900 and net family resources could increase by almost $4,500, while 2.5 million would be lifted out of poverty.
Black workers would also benefit greatly, with Urban estimating 1.2 million people would be lifted out of poverty.
Certain states would also see the largest reductions in poverty in the country, including Louisiana which would see a 3.2 percentage point reduction, Texas a 3 percentage point reduction and Florida and Mississippi would both see a 2.8 percentage point reduction.
Louisiana, Texas and Mississippi do not have their own state minimum wage laws — which means they rely on the federal $7.25 rate. Florida has a $10 state minimum wage rate.
About 20 percent of affected workers currently earn less than $9 an hour and another 18 percent earn between $9 and $12 — which means they stand to see the largest increases in their hourly earnings if a federal $15 minimum wage was adopted.
However, not everyone is on board with an increase, with Urban noting that opponents of raising the federal minimum wage argue it could lead to labor costs that are higher than the economic value of a worker’s production. That could lead to a drop in employment, as higher wages could put pressure on the prices of goods and services, contributing to inflation.
Employers may find alternatives to manage the cost of raising worker wages, like cutting back hours. But even the Congressional Budget Office (CBO) in 2019 found that a minimum wage increase may not change the average hours worked among workers who kept their jobs.
It’s not clear how employment could be impacted, as Urban explained it depends on how much an affected worker’s wage changes — a worker who currently makes $8 an hour and is bumped up to $15 will be more likely to lose their job than a worker who is going from a $12 wage to $15.
Despite the risk of workers losing their jobs, Urban concluded that they would still see their annual family earnings rise under a $15 federal minimum wage by a more modest average of $1,600 — instead of $5,600.
If no workers lose their jobs with a $15 minimum wage, 7.6 million people would be lifted out of poverty.
Sen. Bernie Sanders (I-Vt.) has been one of the country’s loudest proponents for raising the federal minimum wage and the senator introduced legislation last year that would establish a $15 wage by 2025. It has yet to be taken up by the House.
“We can no longer tolerate millions of workers not being able to afford to feed their families or pay the rent. The time for talk is over. No more excuses. It is time for Congress to act to raise the minimum wage to at least $15 an hour,” Sanders said in a statement.
Copyright 2023 Nexstar Media Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.