The impact of raising the minimum wage to $15 by 2025, by congressional district: Mapping the impact of the Raise the Wage Act of 2021 on workers |

According to the Economic Policy Institute:

The federal minimum hourly wage is just $7.25 and has not increased since 2009. The Raise the Wage Act of 2021, introduced in the U.S. House of Representatives on January 26, 2021, would gradually raise the federal minimum wage to $15 an hour by 2025.

EPI research shows that raising the federal minimum wage to $15 an hour by 2025 would lift pay for nearly 32 million workers across the country—that’s 21% of the U.S. workforce. The increases would provide an additional $107 billion in wages for the country’s lowest-paid workers, with the average affected worker who works year-round receiving an extra $3,300 a year.

Source: The impact of raising the minimum wage to $15 by 2025, by congressional district: Mapping the impact of the Raise the Wage Act of 2021 on workers | Economic Policy Institute

Shouldn’t we ask where the $107 billion in higher wages plus higher payroll costs) will come from?

It seems like there are limited choices or combinations thereof.

  • More automation and fewer MW jobs
  • Higher prices for goods and services (mostly services) – inflation
  • Less net income/ profit for mostly small and medium businesses

Increased demand for goods and services drives inflation. Surely there is more to this equation than just the minimum wage workers.

8 comments

  1. The raise to $15 per hour is going to be in stages and is going to take 5 years, I think most will adjust their budgets accordingly as they do now, when prices increase for whatever reasons. It is the right thing to do in a country as rich as the USA.

    Like

  2. All things that you have brought up considered, we still should have a higher minimum wage than $7.25 per hour. 107 billion is just 5.35 percent of our 20 trillion dollar economy, I think we and the workers will be just fine. More tax dollars going into the Social Security system, better retirements for low income workers. Also, maybe we can cut some of our social safety net programs with higher wages paid to low income workers.

    Like

    1. But the point is if a person in a minimum wage job gets a raise and all those between $7.25 and $15 get a raise and those earning $16, $17, etc. expect a raise too to keep parity, more demand will be created and more inflation. Then as you say safety net programs should less needed and eligibility should adjust to the higher incomes. So, when all this happens the MW worker is exactly where they were before, at the bottom. What has been accomplished? In lower income areas of the Country, such as some southern states with low household incomes compared with say the Northeast, imposing a national $15 will greatly disrupt their economies.

      Like

      1. ‘So, when all this happens the MW worker is exactly where they were before, at the bottom. ‘

        Not necessarily, with more income comes more choices, everyone does not spend money on the same exact things and a minimum ware increase may not cause prices of everything to go up the same, many things affect prices not just wages. I say raise the minimum wage and see how things go. I have heard the same argument about minimum wage increases for years. In 2007 when MT voted to raise their minimum wage, all the business owners were on TV, saying unemployment would go up, prices would go up, businesses would close, none of it happened. There are now more new businesses in Great Falls, MT since then, so minimum wage increases do not seem to affect business decisions as much as people think. Sure someone making $15.90 per hour, might think they deserve a raise, but the workers making between $7.25 to $14 per hour will see a nice increase, before any prices rise. I think we are a rich enough country to give it a try.

        Like

    2. I agree that the minimum wage needs to be raised. I don’t think $15 / hr is the correct number. Also minimum wage is for entry level jobs not for raising a family. Wages are based on the skills and the labor supply. When people stop working for minimum wage, the wages will rise. Also, illegals and other people who work under the table help keep the minimum wage low. The cost of living is much different in the Northeast where it is cold and housing is expensive compare to warmer areas of the South. So one size fits all will not work in our very large nation.
      Now as a point of reference, the US poverty income for one person is $12,760 / yr or $6.13 / hr in 2020. This would suggest that the minimum wage is already 18% above poverty wages.
      My question is how much would one person have to make not to receive any government support? Many programs allow up to 150% of poverty based on family size. Maybe the poverty wage is too low to start with. At 150% one person should be making $10.88 / hr.
      In my opinion $15 / hr is too much and maybe $10.88 / hr would be the correct wage.
      When I retired, I was at the top of my wage scale and classification in my career field without being in management. I retired making 7.5 times minimum wage. If minimum wage is raised to $15 /hr, did I just become less skilled or stupid that my wages become only 3.6 times the minimum wage? Should I demand that my wages be doubled? Could those costs be passed onto the customers? Is all my education and skills now only worth 3.6 times or should I just look for a less stressful job since I would not being paid “fairly”.
      If all wages rise do to raising the bottom of the ladder, will the wages of everybody else have to go up? In retirement everything will now just cost me more. My pension will not double.

      Like

      1. You have to remember that many low wage workers are part time and do not work 40 hours per week or get any other benefits from their employer. So, to say that minimum wage is already above the poverty level is not always true. Raising the minimum wage is going to be a bigger benefit to the full time workers in jobs that have eight full hours of work per day. My Mom at age 65 only worked 4 hours per day because that was all that was available at the Super 8 Motel in our town.
        I do not think raising the minimum wage to $15 per hour over 5 years is going to have as big an affect as many think. Or, if we find out that it is to high, then it may stay at that level for 10 to 20 years. Maybe the top 20 to 40 percent will not see their income go up as fast because of a higher minimum wage, but if we have a more stable workforce, it just might be worth it. I am not even sure that a minimum wage increase will happen, because 10 republicans would have to vote for it to overcome a filibuster in the Senate. But even without congressional action, labor activists said they would keep pushing their campaign at the state and local levels. By 2026, 42 percent of Americans will work in a location with a minimum wage of at least $15 an hour, according to an Economic Policy Institute estimate cited in the NELP report.

        Like

  3. I work in the staffing industry in Indianapolis. Currently, we have zero jobs, of hundreds that we fill, that pay minimum wage. We have zero jobs which pay $10.00 or $12.00 hr. We have zero jobs that pay $13.00 hr. Our average pay rate for entry level labor positions is $15.58 hr. The private sector seems to take great care of addressing wages apart from the federal government.

    Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s