Jan 10, 2022 - Business

Texas lags behind as states increase minimum wage

Data: NELR/Axios research; Map: Will Chase/Axios

The minimum wage is increasing in a record number of states and cities — but not in Texas.

  • The state-set minimum wage is $7.25 an hour, in line with the federal one, last raised in 2009.

Why it matters: Even as the cost of living is skyrocketing, especially in Austin, the floor for wages remains stagnant — causing special pain for people living on the margins and working low-paying jobs.

Driving the news: The National Employment Law Project found that 25 states and 56 cities will raise their minimum wages by the end of 2022. In many areas, the floor will meet or exceed $15 per hour.

Between the lines: A person must earn at least $27.58 an hour to comfortably make rent for a two-bedroom apartment in the Austin-Round Rock metro area, making Austin the most expensive city in Texas, per a housing report published last summer.

  • Black and Latino workers generally earn less than their white counterparts and are more likely to be employed in industries with lower median wages, the report by the National Low Income Housing Coalition found.

Measures to raise the state minimum wage went nowhere in the last legislative session.

  • Texas is one of 20 states not to raise its minimum wage above the federal one.

What they're saying: "In Texas, businesses come first over workers," Jonathan Lewis, senior policy analyst at the progressive-minded think tank Every Texan, tells Axios.

  • "Lots of jurisdictions around the country have raised the minimum wage and seen businesses thrive," he said.
  • Allowing the free market to determine labor practices, including on wages, leads to some unsavory outcomes without regulations in place, Lewis says — pointing to child labor standards.

Yes, but: Have you seen those signs advertising $17/hour starting salary at the taco spot down the street?

  • An Austin labor shortage appears to have put workers in the driver's seat — making a discussion of minimum wage appear outdated.

And even as the state-mandated floor might be $7.25, that doesn't govern the minimums at big Austin public employers.

  • The University of Texas and the City of Austin both pay a minimum of $15 per hour, officials tell Axios.

By the numbers: Workers in the greater Austin area had a mean hourly wage of $27.80 in May 2020, about 3% above the nationwide average of $27.07, per the Bureau of Labor Statistics.

  • But in lower-wage jobs like food prep, repair work and building maintenance, Austin wages trail the national average.

Still: "Raising the minimum matters," Lewis says, because "it changes the scale for everybody — not just folks at $7.25 jumping up to $15.​​"

  • Raising the minimum wage would most help "people of color and women, who bear the most impact in terms of childcare. These are people who have been most disenfranchised over the years."

The other side: Raising the minimum wage would lead to layoffs of low-wage workers, conservative-minded Texas Public Policy Foundation economist Vance Ginn has written.

  • "By artificially raising the wage without expecting more value from workers, employers have an incentive to fire them. Who will the employer fire first? The least skilled, of course," Ginn wrote.
  • Of note: Donors to and board members of the TPPF include executives of big businesses.

Zoom out: A $15 federally mandated minimum wage could mean raises for 3.5 million Texans.

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