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Wage Growth at Bottom Is Strongest in States With Minimum Wage Increases

Topics: Current Events

New data from the Economic Policy Institute shows that low-wage workers benefit significantly in states that increase their minimum wage.

On March 15, the Economic Policy Institute (EPI) released data that explores the impact of minimum wage increases on the economy and wage growth. When comparing states that have increased their minimum wage in recent years with those that have not, the Institute found that the impact of minimum wage increases was significant, especially for those who struggle the most economically, and for women.

The impact of minimum wage increases is significant

The impact of minimum wage increases on wage growth was found to be noteworthy. The EPI found this to be true whether states raised their minimum wage because of new legislation or because of automatic inflation related increases. When they compared states that had raised their minimum wage since 2013 – for any reason – with states that had not, the differences were substantial.

Minimum wage increases impacted those at the bottom the most. Wage growth at the 10th percentile in states with at least one increase between 2013 and 2017 was more than twice as fast than in states that hadn’t raised their minimum wage, 5.2 percent vs 2.2 percent respectively.

As researchers predicted, because women earn less than men in general, women were more impacted than men by minimum wage increases. Wages rose 5.8 percent for women when there was an increase, but just 0.8 percent when there was not.

Raising the federal minimum wage would benefit women and families

The EPI also released data on how a federal minimum wage increase would impact the economy, specifically on how an increase would significantly affect women. Although men make up a larger share of the workforce, if the minimum wage were raised, 55.6 percent of positively impacted workers would be women.

Thirty-two percent of all working mothers would receive a raise as a result of an increase, as would 16.8 percent of working fathers, having a tremendous impact on children and families across the country. The impact is particularly significant for single parents. Nearly half, 44.6 percent, of all single mothers would receive a raise if the federal minimum wage was increased to $15; One-third of single fathers would also see an increase.

Minority workers would also benefit significantly from this increase, with women of color receiving raises at a rate of 37.1 percent. Twenty-nine percent of men of color would also benefit from a federal minimum wage increase.

Raising the federal minimum wage would be a significant step toward shrinking the persistent pay gaps that currently exist. This new data demonstrates the important economic benefits such a change would bring.

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