Mar 5, 2020 - Economy & Business

Government minimum wage hikes pay off for low-wage workers

Reproduced from: Economic Policy Institute; Chart: Axios Visuals
Reproduced from: Economic Policy Institute; Chart: Axios Visuals

American low-wage workers increased their earnings significantly in 2019, seeing higher wage growth than workers at the higher end of the income spectrum. And that growth was largely fueled by increases in state minimum wages, a new study from the Economic Policy Institute shows.

Details: The left-leaning think tank's report finds that low-wage workers in the 23 states (plus Washington, D.C.) that raised their minimum wage last year saw "much faster wage growth than low-wage workers in states that did not increase their minimum wage between 2018 and 2019."

  • Workers in the 10th percentile, or the lowest 10% of wage earners in the country, had significantly different levels of income growth depending on where they lived, the report found.
  • Workers in states with increased minimum wages saw their earnings grow by more than four times what those in states without the minimum wage increase did.
  • For a full-time worker, the difference adds up to about $2,500 a year.

By the numbers: Improving labor market conditions occurred in both states that did and did not raise their minimum wages, but the report found slightly faster growth (+0.4 percentage points) in states with increases than in states without (+0.3 percentage points).

  • "While far from a comprehensive analysis," EPI senior economist Elise Gould notes, "there doesn’t appear to be any negative economic effect from raising the minimum wage."

Between the lines: Wages rose more quickly for workers in states with no minimum wage increases at higher income levels.

  • "This belies any claims that strong wage growth at the 10th percentile is simply due to stronger overall wage growth in those states and that 10th-percentile wages in those states would have risen with or without the minimum wage increases," Gould says in the report.

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