- The fight to raise the federal minimum wage to $15 an hour is gaining major traction.
- Insider has been covering the potential impacts, value, and current wages.
- These five graphics show the current state of the minimum wage and what a $15 minimum could mean.
- Visit the Business section of Insider for more stories.
The fight for a $15 minimum wage is not a new one.
But it’s increasingly gained traction as Democrats push for it amidst other pandemic recovery measures, and the House and Senate are under Democratic control for the first time in years. President Joe Biden has been an outspoken supporter, reiterating his views again on Tuesday.
Biden talked about his support for a gradual raise to a federal $15 minimum wage during a CNN town hall on Tuesday after an audience member expressed concern on what raising the minimum wage would mean for business owners like himself, particularly in the Midwest.
“I do support a $15 minimum wage,” Biden said during the town hall. “I think there is equally as much, if not more, evidence to dictate that it would grow the economy and, long run and medium run, benefit small businesses as well as large businesses, and it would not have such a dilatory effect. But that’s a debatable issue.”
Biden said the concerns of business owners for how this rate changes are “totally legitimate,” but stressed the importance of a gradual raise.
“We’re at $7.25 an hour. No one should work 40 hours a week and live in poverty,” he said.
While a majority of Americans support the $15 minimum wage, per Insider polling, it’s still a contentious measure. There are concerns over potential employment losses and the big picture impacts.
A minimum wage increase would raise pay for 32 million workers, according to the Economic Policy Institute. Although it would likely be beneficial for millions of Americans, the Congressional Budget Office found that this hike would lift 900,000 Americans out of poverty but could also mean a loss of 1.4 million jobs.
A recent small business poll by CNBC and SurveyMonkey of over 2,000 small business owners also found that one-third of owners reported that they would have to lay off workers if the federal minimum wage rose to this hourly rate.
There is some opposition to the minimum wage being part of the $1.9 trillion federal relief package, including from two Democratic senators. If the increase is not part of the American Rescue Plan, then it could still be a standalone bill.
To get a closer look at the benefits of raising the minimum wage, Insider looked at the minimum wage as it currently stands and when it may be $15 using various metrics, such as a state’s cost of living or the ratio between a minimum wage and a median wage.
The following maps and table take a closer look at the value of the current minimum wage and a proposed $15 minimum wage:
Currently, 29 states have wages above the federal minimum, and 16 states are at the federal minimum. Five states default to the federal minimum, since they don’t have any minimum wage requirements.
The last time a state saw a minimum wage increase varies. Some minimum wage workers haven’t been paid a higher wage since the last time the federal raise was increased on July 24, 2009 as part of a three-step increase mandated by the Fair Minimum Wage Act of 2007.
Other states have been increasing their minimum wages over the years. Nineteen states raised their minimum wages on January 1, and New York state raised its minimum wage on December 31.
Read Insider’s full story on the last time every state had a minimum wage increase here.
A common way to look at the minimum wage is to compare it to the median wage.
The median wage is the wage at which half of workers are paid more, and half are paid less. Comparing the minimum wage to the median wage can help identify how states will benefit from a boost to the minimum wage.
The ratio of the minimum wage to the median wage is called the Kaitz index. The higher the ratio — meaning the more people making close to the minimum wage — the more people will benefit from a minimum wage raise, since those near-minimum wage workers are likely to see their pay increase.
To estimate this ratio, we used current minimum wages and the median wages in 2019 from the Bureau of Labor Statistics’ Occupational Employment Statistics program.
For example, New York’s median wage per the Bureau of Labor Statistics in 2019 was $22.44, and the current minimum wage is $12.50, meaning the minimum wage in New York is 55.7% of its median wage.
Meanwhile, Texas’ minimum wage is much smaller than its median wage compared to New York. Texas’ minimum wage of $7.25 is 39.7% of its median wage of $18.28.
Read Insider’s full story on the Kaitz index here.
It is possible to also look at this ratio with a $15 minimum wage to see how that rate would stack up against what a typical worker earns in every state.
Insider similarly used the median wage of every state to calculate the ratio of a $15 minimum wage to the state’s median wage. If the minimum wage was raised to $15, it would be over 60% of the median wage in every state.
For instance, a $15 minimum wage in Massachusetts would be 62.1% of its median wage in 2019 of $24.14, the lowest ratio among the states because Massachusetts has the highest median wage.
Read Insider’s full story on the Kaitz index here.
But $15 wouldn’t go as far in states with higher costs of living compared to states with lower costs of living.
A $15 minimum wage will mean something different depending on where you live and work. Some states and cities are more expensive to live in than others. This map shows how much a $15 minimum wage will be worth in each state, based on an adjusted value using regional price parities.
The Bureau of Economic Analysis’ regional price parities show the price of goods and services relative to the national average.
This means states with higher regional price parities than the national average, like Hawaii and California, would mean the value of $15 is worth less than the US average value of $15. On the other hand, states with lower regional price parities, like Mississippi and New Mexico, would mean the value of $15 is worth more than $15 at the national average.
Read Insider’s full story on how much $15 is worth in every state here.
Assuming a 2% inflation rate over the next few years, a $15 minimum wage in 2025 would be the same as around $13.90 today.
Even if an increase to the federal minimum wage isn’t passed soon, there are several states that have scheduled increases rising to an eventual $15 minimum wage. In California, minimum wage workers at places with 26 or more employees will see a $15 minimum wage as soon as next year.
Florida, where a supermajority of voters supported a ballot measure during the election that would raise the minimum wage to $15, will see annual increases that will reach that level in 2026.
Target inflation is 2%, and under this scenario, a federal minimum wage of $15 in 2025 is the same as about $13.86 in 2021.
“I think that under all current forecasts of how inflation is going to play out over the next four years, it wouldn’t be worth that much less in 2025 than it’s worth now,” Harvard PhD scholar Anna Stansbury told Insider.
Read Insider’s full story on what a $15 minimum wage would be in 2021, for the federal minimum wage and several states gradually increasing the minimum wage to $15, here.