5 maps and charts show what a $15 minimum wage would really mean for workers across America

minimum wage protest
A group of BLM demonstrators protest the Federal Reserve Bank about $15 minimum wage in NYC to solidarity nationwide in Lower Manhattan at the financial district in New York, United States on July 20, 2020

  • 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:

The federal minimum wage has been $7.25 since 2009; here’s when every state last increased their 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. 

On Tuesday, minimum wage workers in 15 cities held a Black History Month strike for a $15 minimum wage. Almost one-third of Black workers in America would get a raise from the proposed increase.

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

Read the original article on Business Insider

This map shows how much the $600 stimulus check is worth in every state

New York City
$600 at the national average price level translates into just $516 in New York State, after adjusting for cost-of-living.

Over the weekend, Congress finally came to an agreement on a new stimulus package intended to fight the ongoing economic turmoil stemming from the coronavirus pandemic. One of the major features of the bill, which is expected to see a vote late Monday, is a $600 direct payment to most adults in the US, along with an extra $600 per child to families.

Of course, $600 will go a lot further in some parts of the country than others.

The US Bureau of Economic Analysis recently released its latest cost-of-living estimates across US as of 2019. These “regional price parities” show how expensive goods and services are in different states, relative to the national average.

We can use the regional price parities to get an idea of how much $600 is actually worth to consumers in each state. The BEA releases price parities every year, indexed to a national average of 100, with values for a state below 100 indicating a lower cost of living than the national average and values higher than 100 meaning more expensive than average goods and services.

In 2019, the most recent year for which data is available, New York State had a regional price parity of 116.3, meaning that prices in the state tended to be about 16.3% higher than average. Given that, $600 at the national average price level would be worth just $516 in the Empire State.

Meanwhile, Arkansas had a regional price parity of 84.7, meaning that prices in that state were about 15.3% lower than the national average. So, a $600 stimulus check at the national average price would be worth $708 in Arkansas after this cost-of-living adjustment.

Following the same logic, this map shows how far a $600 stimulus check would go in each state. Hover over a state to see the regional-price-parity-adjusted value of $600 in that state:

 

Read the original article on Business Insider