July 24 will mark 14 years since the last time the $7.25 federal minimum wage was raised—extending by yet another year the longest period in its history without an increase. This column charts what could happen to annual wages if all workers earned at least $15 per hour, a wage floor that advocates have long fought for, including in the Raise the Wage Act of 2021. New estimates from the Center for American Progress show that raising the floor to a $15 minimum wage could increase the wages of 1 in 4 workers—nearly 40 million—and lead to an annual wage increase as large as $8,000 for some of the lowest-wage workers. A $15 minimum wage would also help reduce stubborn gender, racial, and ethnic wage gaps for women, Black, and Latino workers, who are overrepresented among those earning less than $15 per hour. Most notably, if a $15 minimum wage had been in place in 2021, Black women would have experienced the largest reduction in their pay gap on record.*

Inclusive economy
Learn more about CAP's work to build an economy for all.
Email Address

SIGN UP
For more than 10 years, advocates have sought to raise the federal minimum wage to $15, but even that standard has lost its purchasing power over a decade of inaction. More recently, advocates have begun calling on Congress to raise the minimum wage to $17. In 2021, a minimum wage of $17 would have benefitted 51 million workers—nearly one-third of all workers. It would have provided the typical worker with a wage boost of around $1,000, which would have equated to a typical household’s average expenditures on either their meats, poultry, fish, and eggs or medical services and supplies. But while a $17 minimum wage would produce far greater income gains, this analysis primarily examines the implications of a $15 federal minimum wage on 2021 wages, as $15 was the policy goal at that time.

Raising the minimum wage would be an investment in growing the middle class and a clear way to build the economic security of workers and their families. With higher wages, millions of Americans would be closer to economic stability and peace of mind. Policymakers must work to raise the federal and state minimum wages to benefit workers; help employers attract and retain them; boost consumption spending; and stimulate local economies.

For the typical white, Black, and Latino worker,** a $15 minimum wage could increase their annual wage by an average of $800, with the largest gains for Black women, Black men, and Latinas. (see Figure 1) An $800 increase in annual wages could help workers cover their expenses, particularly those that are often unexpected. In 2021, 3 in 10 adults could not cover a $400 emergency expense, but if a $15 minimum wage had been in place, with the typical worker receiving an $800 increase in their annual wage, many more would likely have been able to meet unanticipated costs. For example, $800 is equivalent to what the median household spends on average on medical services or on vehicle maintenance and repairs.
Working for less than $15 is extremely common in the labor market, even as states and cities raise their wages to partially compensate for federal inaction. In 2021, 1 in 4 workers—40 million—earned less than $15 per hour. Women, Black, and Hispanic or Latino workers are overrepresented among minimum wage earners as well as among those earning less than $15 per hour. (see Figure 2) In aggregate, about 1 in 5 white, non-Hispanic workers earns less than $15 per hour, while nearly 1 in 3 Black, non-Hispanic workers and about 1 in 3 Latino workers earns less than $15 per hour. Even more startling, about 2 in 5 employed Latinas earn less than $15 per hour, putting them at greater risk of poverty and financial hardship.

40M
Number of U.S. workers who could directly benefit from a minimum wage of $15 per hour

The fact that women and Black and Latino workers are overrepresented among low-wage earners is not an accident. Factors such as occupational segregation and gender and racial discrimination have played a role in creating and perpetuating these disparities. Additionally, there are many workers who are exempt from the Fair Labor Standards Act (FLSA): Workers with disabilities, workers who receive tips, the self-employed, farm workers, full-time students, and youth workers can be paid a subminimum wage. Historically, these groups have disproportionately been made up of Black people, women, and Latinos. Many of the groups excluded from the FLSA have also been excluded from other federal policies that protect workers, such as the National Labor Relations Act and the Occupational Safety and Health Act.

Can you summarize this article in four sentences?