Summary List PlacementDemocrats are pushing for a $15 federal minimum wage, over double the current rate of $7.25 (which was enacted in 2009).
Under the proposed wage increase, nearly 32 million Americans — 21% of America’s total workforce — would get a raise, according to a report from the Economic Policy Institute (EPI). As Insider’s Grace Dean reported, the raise would benefit nearly one-third of Black workers, and six out of 10 working women. Overall, 23% of those who would benefit from the raise are Latino and Black women.
And almost half of the families who would be impacted by the raise rely on at least one safety net program. Higher wages would provide more relief for families. According to the EPI report, increases to the minimum wage reduce child abuse and teenage pregnancy, and improve infant health.
The relief to families would also lead to some relief for safety net programs. A study from the UC Berkeley Labor Center found that nearly half of families who would see a pay bump rely on at least one such program like SNAP or Medicaid, and $100 billion in taxpayer money goes towards those families. A higher minimum wage would both put more money in families’ pockets, and provide some relief for those programs as those families would rely on them less.
Read more: How Bernie Sanders hopes to make the $15 minimum wage a reality — whatever happens with Joe Biden’s stimulus
How far $15 would actually go
The value of $15 really depends on where you live. It is more expensive to live in some states than others.
To look at how much $15 is worth across the US, we can use regional price parities from the US Bureau of Economic Analysis. According to the BEA website, this “allows comparisons of buying power” among different places in the US. That is, we can look at how expensive goods and services are in a state or city, relative to average national prices.
Based on 2019 data, the most recent year available, 17 states have regional price parities above the national average. For instance, Hawaii has the highest regional price parity of 119.3. That is, Hawaii’s state price level is 19.3% higher than the overall national average and $15 would really be worth $12.57 in the state. In Florida, which is gradually raising its minimum wage to $15 by 2026, the value of $15 is $14.85, given that its regional price parity is 101, meaning prices are 1.0% above the national average.
The following map shows what $15 really means where you live, based on an adjusted value using regional price parities.
Among the states and DC, the price level in Delaware is closest to the national average. The value of $15 in that state is $15.09.
“In the most expensive states costs are 15%-20% above the national average, while these costs are 15%-20% lower than average in the most affordable states,” Felix Koenig, assistant professor of economics at Carnegie Mellon University’s Heinz College told Insider in an email. Koenig said that implied that $1 “buys approximately 40% more in the cheapest states compared to spending it in the most expensive state.”
Read more: Florida residents voted for a $15 minimum wage. Here’s how much $15 is really worth in the Sunshine State and other states and cities that have increased their minimum wage.
Koenig also noted that cost of living changes over time and “inflation typically increases living costs and thus erodes the value of the [minimum wage] over the years.”
“How much workers will benefit from $15 [minimum wage] thus depends on how soon this policy is introduced, how much prices rise in the meantime, and how often it gets uprated in subsequent years,” Koenig said.
Despite the varying cost of living throughout the nation, a $15 per hour minimum wage would help millions of workers, and the Economic Policy Institute writes that the average affected worker who works year-round would receive “an extra $3,300 a year.”
And EPI notes about 3 in 5, or 59%, of “workers whose total family income is below the poverty line would receive a pay increase if the minimum wage were raised to $15 by 2025.”
Read more: Workers lost $3.7 trillion in earnings during the pandemic. Women and Gen Z saw the biggest losses.
A $15 minimum wage as a salary floor, not ceiling
But even with some states being more expensive to live in, one economist said having a federal floor is a good start.
“I actually think our current system is appropriate: we set a federal floor, and then states can set wages above that. The federal floor is the absolute minimum an employer should be allowed to pay someone for an hour’s worth of labor,” Ben Zipperer, an economist with EPI, wrote in an email to Insider. “In fact, EPI’s Family Budget Calculator shows that this year a single adult in virtually every area of the country will need at least $15 per hour in wages in order to make ends meet.”
And even the Raise the Wage Act would only incrementally increase the minimum wage over time; it wouldn’t reach $15 an hour until 2025. In 2021, it would only rise to $9.50 from $7.25, although several states have raised their respective minimum wages this year.
Someone working full-time at $9.50 an hour would make $19,760 an year — nearly $7,000 above the poverty line for a single-person household. SEE ALSO: How Bernie Sanders hopes to make the $15 minimum wage a reality — whatever happens with Joe Biden’s stimulus
DON’T MISS: A $15 minimum wage would barely hurt business and be life-changing for many workers
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