Millions of workers—mostly women—struggle to make ends meet on minimum wage earnings. The Raise the Wage Act would increase the federal minimum wage from $7.25 to $12.00 per hour by 2020, then index it to keep pace with wages overall. The bill would also eliminate the federal minimum cash wage for tipped workers—which has been frozen at just $2.13 per hour for nearly 25 years—by gradually raising it until it is equal to the regular minimum wage. Establishing one fair minimum wage is a key step toward fair pay for women.
Who Are Minimum Wage Workers?
Low-wage working women deserve a raise.
- The minimum wage reached its peak level in 1968. Since then, Congress has raised the minimum wage only five times, and its value has dramatically eroded: at $7.25 per hour, the minimum wage is worth 24 percent less today than it was in 1968. A woman working full time at minimum wage earns just $14,500 annually, more than $4,500 below the poverty line for a mother with two children.
- The federal minimum cash wage for tipped workers is $2.13 per hour, unchanged since 1991. Tipped workers—two-thirds of whom are women—experience poverty at nearly double the rate of the workforce as a whole.
Increasing the minimum wage would boost wages for millions of working women, especially women of color.
- The Economic Policy Institute estimates that if the minimum wage were increased to $12.00 per hour by 2020, more than 35.0 million workers would get a raise—including nearly 6.7 million workers earning between $12.00 and $13.00 per hour, who would see their pay increase due to the higher floor set by the new minimum wage. Of the total affected workers, nearly 19.6 million (55.9 percent) are women.
- Women of color would especially benefit from this increase. A quarter (25.5 percent) of white, non-Hispanic working women would see a raise, compared to 36.8 percent of Black working women and 43.3 percent of Hispanic working women. Nearly half of working single moms of color (44.9 percent) would get a raise.
Increasing the minimum wage would help parents provide for their children.
- Of the more than 35.0 million workers who would get a raise under the Raise the Wage Act, more than 9.7 million are parents, including over 6.3 million working mothers—representing 27.3 percent of all working mothers with children under 18. Nearly a third of affected parents are the sole providers for their families.
- More than one-fifth of all children—17.5 million—live with a parent who would get a raise.
Raising the minimum wage would help close the wage gap.
- Since women are the majority of minimum wage workers, increasing the minimum wage could help close the wage gap. In 2013, women working full time, year round were paid only 78 cents for every dollar paid to their male counterparts. The wage gap was even larger for women of color: Black women working full time, year round made only 64 cents, and Hispanic women only 56 cents, for every dollar paid to their white, non-Hispanic male counterparts.
- The average wage gap in states with a minimum wage at or above $8.00 is 22 percent smaller than the average wage gap in states with a $7.25 minimum wage. In states where employers have to pay tipped workers the regular minimum wage before tips, the average wage gap is 14 percent smaller than the average wage gap in states with a $2.13 tipped minimum cash wage.
Raising the minimum wage would reduce poverty and strengthen the economy.
- If the federal minimum wage and tipped minimum wage were to rise to $12.00 an hour, annual earnings for a full-time minimum wage worker would increase by $9,500—and base annual earnings for a full-time tipped worker currently earning $2.13 per hour would increase by $19,740—to $24,000, enough to lift a family of three out of poverty.
- Raising the minimum wage can benefit communities and the broader economy as workers spend their higher earnings at local businesses.  Research indicates that following a $1 increase to the minimum wage, low-wage worker households spent an additional $2,800 the following year. Higher wages can also benefit employers by reducing turnover and increasing worker effort.
1 NWLC calculations based on Bureau of Labor Statistics (BLS), Characteristics of Minimum Wage Workers, 2014, available at http://www.bls.gov/opub/reports/cps/characteristics-of-minimum-wage-workers-2014.pdf [hereinafter BLS Min. Wage Characteristics] (Table 1). This is true for both those 16 and older (63 percent) and 25 and older (65 percent). The term “minimum wage workers” refers to workers making the federal minimum wage or less.
2 Sylvia A. Allegretto & David Cooper, Econ. Policy Inst. (EPI) & Ctr. on Wage & Employment Dynamics, Univ. of Ca., Berkeley, Twenty-Three Years and Still Waiting for Change, at 3 (July 2014), available at http://s2.epi.org/files/2014/EPI-CWED-BP379.pdf.
3 NWLC calculations based on BLS Min. Wage Characteristics, supra note 1 (Table 1). This figure assumes 17.0 percent of white women are Hispanic, based on NWLC calculations using U.S. Census Bureau CPS Table Creator, http://www.census.gov/cps/data/cpstablecreator.html (last visited Apr. 27, 2015) (2014 ASEC data).
4 NWLC calculations based on U.S. Census Bureau, CPS, 2014 ASEC, Table PINC-05, available at http://www.census.gov/hhes/www/cpstables/032014/perinc/pinc05_000.htm (last visited Apr. 27, 2015).
5 Econ. Policy Inst. (EPI), Data Tables: Raising the Minimum Wage to $12 by 2020 Would Lift Wages for 35 Million Workers (May 2015), available at http://www.epi.org/publication/data-tables-raising-the-minimum-wage-to-12-by-2020-would-lift-wages-for-35-million-workers/ (Table 2A).
6 NWLC calculations based on BLS Min. Wage Characteristics, supra note 1 (Table 7). Fifty-four percent of female minimum wage workers are 25 or older.
7 More than three-quarters of women 16 and older and 60 percent of women over 25 earning the minimum wage or less do not have household income from a spouse. NWLC calculations based on BLS Min. Wage Characteristics, supra note 1 (Table 8).
8 EPI, supra note 5 (Table 2A).
10 EPI, It’s Time to Raise the Minimum Wage (Apr. 2015), available at www.epi.org/publication/its-time-to-raise-the-minimum-wage. Figure compares the federal minimum wage in 1968 and 2014.
11 Throughout this analysis NWLC calculations regarding full-time earnings assume 40 hours per week, 50 weeks per year.
12 U.S. Census Bureau, Poverty Thresholds for 2014, https://www.census.gov/hhes/www/poverty/data/threshld/index.html (last visited Apr. 23, 2015). The poverty line in 2014 for a mother and two children is $19,073.
13 Allegretto & Cooper, supra note 2, at 1.
14 Id. at 14, 23.
15 EPI, supra note 5 (Table 2A).
16 Id. (Tables 2B-2F). By comparison, 33.3 percent of white, non-Hispanic working single mothers would get a raise.
17 Id. (Table 2A).
19 A higher minimum wage generally would narrow the wage distribution, effectively narrowing the wage gap. See Nicole M. Fortin & Thomas Lemieux, Institutional Changes and Rising Inequality, 11 J. Econ. Perspectives 75, 78 (1997), available at https://www.aeaweb.org/atypon.php?return_to=/doi/pdfplus/10.1257/jep.11.2.75. See also Francine D. Blau & Lawrence M. Kahn, Gender Differences in Pay, 14 J. Econ. Perspectives 75, 93 (2000), available at http://econ2.econ.iastate.edu/classes/econ321/orazem/blau_wages.pdf.
20 Joan Entmacher et al., NWLC, Insecure and Unequal: Poverty Among Women & Families 2000-2013 (2014), available at http://www.nwlc.org/sites/default/files/pdfs/final_2014_nwlc_poverty_report.pdf.
21 Julie Vogtman & Katherine Gallagher Robbins, NWLC, Higher State Minimum Wages Promote Fair Pay for Women (May 2015), available at http://www.nwlc.org/sites/default/files/pdfs/higher_state_minimum_wages_promote_fair_pay_for_women_may_2015.pdf.
22 Katherine Gallagher Robbins et al., NWLC, States with Equal Minimum Wages for Tipped Workers Have Smaller Wage Gaps for Women Overall and Lower Poverty Rates for Tipped Workers (Nov. 2014), available at http://www.nwlc.org/sites/default/files/pdfs/tipped_minimum_wage_worker_wage_gap_nov_2014.pdf. Figures are for 2013.
23 Supra notes 11 & 12. Twenty-four thousand dollars is above both today’s poverty line for a family of three ($19,073) as well as the estimated poverty line for 2020, which NWLC calculates to be less than $22,000 based on the Congressional Budget Office’s predictions regarding the CPI-U (the inflation measure used to increase the Census Bureau’s poverty thresholds annually) for 2015 through 2020.
24 See generally T. William Lester et al., Ctr. for Amer. Progress, Raising the Minimum Wage Would Help, Not Hurt, Our Economy (Dec. 2013), available at https://www.americanprogressaction.org/issues/labor/news/2013/12/03/80222/raising-the-minimum-wage-would-help-not-hurt-our-economy/. See also John Schmitt, Ctr. for Econ. & Policy Research, Why Does the Minimum Wage Have No Discernible Effect on Employment? (Feb. 2013), available at http://www.cepr.net/publications/reports/why-does-the-minimum-wage-have-no-discernible-effect-on-employment (reviewing research demonstrating that minimum wage increases historically do not cause job loss, even during periods of recession).
25 Daniel Aaronson, Sumit Agarwal & Eric French, Fed. Reserve Bank of Chicago, The Spending and Debt Responses to Minimum Wage Increases, at 10 (Rev. Feb. 2011), available at http://www.chicagofed.org/digital_assets/publications/working_papers/2007/wp2007_23.pdf.
26 See, e.g., Lester et al., supra note 24.