Raise the Wage Act
Summary of the Economic Policy Institute Senior Economic Analyst David Cooper's report on
Summary of the Economic Policy Institute Senior Economic Analyst David Cooper's report on the Raise the Wage of 2019
The federal minimum wage is just $7.25 and has not increased since 2009. According to the Bureau of Labor Statistics, 1.7 million workers earn wages at or below the federal minimum wage.
The minimum wage needs to rise significantly. Paying workers a wage that keeps them stuck in poverty is wrong! When low-wage workers get a raise, the extra money flows to our local economies. Businesses benefit when more working people can afford to buy their products and services.
Twenty-nine states have raised their minimum wage above the federal level. But, unfortunately, the other twenty-one states are only doing the bare minimum. In 2019, the Democratic-led U.s. House of Representatives passed the Raise the Wage Act but the Republican-led U.S. Senate deliberately failed to take action.
How the Raise the Wage Act works
The Raise the Wage Act would gradually raise the federal minimum wage to $15 an hour by 2024. Here is how it would work:
Raise the federal minimum wage to $8.55 this year and increase it over the next five years until it reaches $15 an hour in 2024.
After 2024, adjust the minimum wage each year to keep pace with growth in the typical worker’s wages.
Phase-out the outdated subminimum wage for tipped workers, which has been frozen at a meager $2.13 since 1991.
Phase-out the much-criticized subminimum wages for workers with disabilities employed in sheltered workshops and for workers under age 20.
The Raise the Wage Act of 2019 would directly or indirectly lift wages for 39.7 million workers—26.6 percent of the wage-earning workforce.
The Raise the Wage Act of 2019 raises the federal minimum wage in six steps to $15 per hour by 2024. Beginning in 2025, the minimum wage would be indexed to the median wage. The bill would also gradually increase the subminimum wage for tipped workers, which has been fixed at $2.13 per hour since 1991, until it reaches parity with the regular minimum wage.
Since the minimum wage last increased in 2009, it has lost almost 15 percent of its value to inflation. In fact, America’s workers are more productive and better educated than ever, and yet many are paid less today than their counterparts 50 years ago. It is long past time that we raise the federal minimum wage to a level that affords a decent life.
The bill would directly lift the wages of 28.1 million workers earning less than $15 an hour, with the average directly affected worker who works all year receiving a $4,000 increase in annual earnings—equal to a raise of 20.9 percent. Another 11.6 million workers would benefit from a spillover effect, as employers raise wages of workers making more than $15 in order to attract and retain employees.
Over the phase-in period, the rising wage floor would generate $120 billion in additional wages, which would ripple out to low-wage workers’ families and their communities. Because lower-paid workers spend much of their extra earnings, this injection of wages would help stimulate the economy and spur greater business activity and job growth.
The Congressional Budget Office estimates the impact of the proposed minimum wage increases. Two-thirds of America’s working poor would receive a pay increase thanks to the Raise the Wage Act of 2019. The workers who would get a raise are overwhelmingly adult workers, most of whom work full time in regular jobs, often to support a family.
Other key findings include:
The average age of workers who would receive a raise is 35 years old. More than half of all affected workers are prime-age workers between the ages of 25 and 54.
Although men make up a larger share of the overall U.S. workforce, the majority of workers who would be affected by a raise to the minimum wage (57.9 percent) are women.
The bill would disproportionately raise wages for people of color, with 38.1 percent of black workers and 33.4 percent of Hispanic workers seeing their wages increase.
60.0 percent of workers who would receive a raise work full time. 44.0 percent have some college experience, and more than a quarter (28.3 percent) have children.
5.4 million single parents would benefit, accounting for 13.5 percent of affected workers. Nearly four out of every 10 single parents who work (38.9 percent) would receive higher pay, including 43.0 percent of working single mothers.
The bill would raise wages for the parents of 14.4 million children across the United States, nearly one-fifth (19.6) percent of all U.S. children.