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News from EPI The Raise the Wage Act of 2019 would give nearly 40 million workers a raise

In a new report, EPI Senior Economic Analyst David Cooper shows that 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.

“It has now been nearly ten years since Congress last raised the minimum wage,” said Cooper. “In that time, the minimum wage 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.”

According to Cooper’s analysis, 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.

Cooper’s analysis employs the new Economic Policy Institute Minimum Wage Simulation Model, which uses data from the American Communities Survey, the Current Population Survey, and the Congressional Budget Office to estimate the impact of proposed minimum wage increases. The model introduces new layers of sophistication and accuracy—accounting for all existing state and local minimum wage laws, and allowing for more detailed analysis of the demographic and economic characteristics of affected workers and their families.

Importantly, the new model tells us that 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.