A new report from the Economic Policy Institute finds raising the federal minimum wage to $10.10/hour would help reverse the ongoing erosion of wages that has contributed significantly to growing income inequality. It would also provide a modest stimulus to the entire economy, as increased wages would lead to increased consumer spending, which would contribute to GDP growth and modest employment gains.
445,000 Washingtonians – 87% of whom are over 20 years old – would benefit from such an increase, which would put increase total annual wages by $387 million (an average $2600 per year). Over half of those benefiting from the increase are full-time workers, and just over 20% of Washington’s kids would have at least one parent bringing home a bigger paycheck as a result.
EPI’s paper begins by examining the minimum wage in context, noting where the minimum wage would be today had it grown at the same rate as other important benchmarks over the last few decades. It then provides a demographic overview of the workers who would benefit from the proposed minimum-wage increase, examining characteristics such as their gender, age, race and ethnicity, educational attainment, work hours, family income, and family composition. Next, it details the estimated GDP and job creation impacts that would result from increasing the federal minimum wage to $10.10.
Key findings include:
- Increasing the federal minimum wage to $10.10 by July 1, 2015, would raise the wages of about 30 million workers, who would receive over $51 billion in additional wages over the phase-in period.
- Across the phase-in period of the minimum-wage increase, GDP would increase by roughly $32.6 billion, resulting in the creation of approximately 140,000 net new jobs (and 284,000 job years) over that period.
- Those who would see wage increases do not fit some of the stereotypes of minimum-wage workers.
- Women would be disproportionately affected, comprising 56 percent of those who would benefit.
- Over 88 percent of workers who would benefit are at least 20 years old.
- Although workers of all races and ethnicities would benefit from the increase, non-Hispanic white workers comprise the largest share (about 54 percent) of those who would be affected.
- About 44 percent of affected workers have at least some college education.
- Around 55 percent of affected workers work full time, 70 percent are in families with incomes of less than $60,000, more than a quarter are parents, and over a third are married.
- The average affected worker earns about half of his or her family’s total income.