Minimum Wage Talking Points

A minimum wage increase would raise the wages of millions of workers.

• An estimated 6.9 million workers (5.8% of the workforce) would receive an increase in their hourly wage rate if the minimum wage were raised to $6.65 by 2003.
• Due to "spillover effects," the 10.5 million workers (8.7% of the workforce) earning up to a dollar above the minimum would also be likely to benefit from an increase.

Minimum wage increases benefit working families.

• The earnings of minimum wage workers are crucial to their families' well-being. Evidence from the 1996-97 minimum wage increase shows that the average minimum wage worker brings home more than half (54%) of his or her family's weekly earnings.
• In 1998, almost one million (967,000) single mothers with children under 18 would have benefited from a minimum wage increase to $6.15. Single mothers would benefit disproportionately from an increase -- single mothers are 10% of workers affected by an increase, but they make up only 5.7% of the overall workforce. More than two million married men and women with children under age 18 would also benefit from a one dollar increase.
• Adults make up the largest share of workers who would benefit from a minimum wage increase: 68% of workers whose wages would be raised by a minimum wage increase to $6.65 by 2003 are adults (age 20 or older).
• Close to half (45.3%) of workers who would benefit from a minimum wage increase work full time and another third (34.0%) work between 20 and 34 hours per week.
• Over 60% of wage earners in poor families would benefit from an increase in the minimum wage from $5.15 to $6.15.

Minimum wage increases benefit disadvantaged workers.

• Women are the largest group of beneficiaries from a minimum wage increase: 60.6% of workers who would benefit from an increase to $6.65 by 2003 are women. In 1998, an estimated 12.6% of working women would have benefited from a one dollar increase in the minimum wage.
• A disproportionate share of minorities would benefit from a minimum wage increase. African Americans represent 11.7% of the total workforce, but are 18.1% of workers affected by an increase. Similarly, 11.3% of the total workforce is Hispanic, but Hispanics are 14.4% of workers affected by an increase.
• In 1998, half of the benefits of a minimum wage increase to $6.15 would have gone to workers in households with annual incomes of less than $25,000. In fact, 18% of the benefits would go to households with annual incomes less than $10,000, and another 32% of the benefits would go to households with annual incomes between $10,000 and $25,000.
• The benefits of the increase disproportionately help those working households at the bottom of the income scale. Although households in the bottom 20% received only 5% of national income, 35% of the benefits of the 1996-97 minimum wage increase went to these workers. The majority of the benefits (58%) from the increase went to families with working, prime-aged adults in the bottom 40% of the income distribution.
• Relatively large shares of the workforce (up to 13.6%) in some Southern and Western states would benefit from an increase to $6.65 in 2003.

A minimum wage increase would help reverse the trend of declining real wages for low-wage workers.

• Between 1979 and 1989, a period in which the minimum wage lost 31% of it's real value, the inflation-adjusted wages of low-wage workers (those at the 10th percentile of the wage scale) fell 16.1%. By contrast, between 1989 and 1998, a period in which the minimum wage was raised four times and recovered about one-third of the value it lost in the 1980s, the inflation-adjusted wages of low-wage workers actually rose 6.7%.
• Wage inequality has been increasing, in part, because of the declining real value of the minimum wage. Between 1979 and 1992, the declining real value of the minimum wage contributed 22% of the growth in wage inequality between men at the 90th percentile of the wage scale and men at the 10th percentile of the wage scale and 42% of the growth in wage inequality between women at the 90th percentile of the wage scale and women at the 10th percentile of the wage scale.

A minimum wage increase is part of a broad strategy to end poverty.

• As welfare reform forces more poor families to rely on their earnings from low-paying jobs, a minimum-wage increase is likely to have a greater impact on reducing poverty.
• A recent study of a 1999 state minimum-wage increase in Oregon found that as many as one-half of the welfare recipients entering the workforce in 1998 were likely to have received a raise due to the increase. After the increase, the real hourly starting wages for former welfare recipients rose to $7.23.
• The federal Earned Income Tax Credit (EITC) combined with the minimum wage helps to reduce poverty, but the EITC is not a replacement for a minimum-wage increase. Even after a minimum wage increase to $6.15, a woman working the average number of hours worked by poor single mothers (1,164 annually in 1997) would still not reach the poverty line for a family of three ($13,000 in 1998) if she earned the minimum wage and received the EITC and food stamps.
• A minimum wage increase from $5.15 to $6.15 would lift nearly 900,000 people out of poverty.
• The minimum wage raises the wages of low-income workers in general, not just those below the official poverty line. Many families move in and out of poverty, and near-poor families are also beneficiaries of minimum-wage increases.

The inflation-adjusted value of the minimum wage is 24% lower today than it was in 1979.

• Without another increase, the real value of the minimum wage will fall to $4.75 (2000 dollars) by the year 2003 (according to inflation projections by the Congressional Budget Office).
• The wages of minimum wage workers have not kept up with the wages of other workers. In 1979, the minimum wage was 62% of the 40th percentile wage, but by 1997, the minimum wage had fallen to 56% of the 40th percentile wage.

There is no evidence of job loss from the last minimum wage increase.

• A recent EPI study failed to find any systematic, significant job loss associated with the 1996-97 minimum wage increase. These results are similar to other studies of the 1990-91 federal minimum wage increase, as well as to studies of several state minimum wage increases.
• New economic models that look specifically at low-wage labor markets help explain why there is little evidence of job loss associated with minimum wage increases. This model recognizes that employers may be able to absorb some of the costs of a wage increase through higher productivity, lower recruiting and training costs, decreased absenteeism, and increased worker morale.

The materials in this package come in large part from the past hard work of the  Center for Policy Alternatives and the  Economic Policy Institute.  We'd like to thank these groups for mapping out the high road on the minimum wage issue.

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