A $15 minimum wage would hit differently now than when it was first widely discussed some years ago. The share of Americans earning less than $15 has fallen steadily over the past six years — and become increasingly female and increasingly Black and Hispanic.
About 39 million people earned less than $15 in 2019. That is a substantial decline from more than 61 million in 2014, and it fell further — to around 30 million — after the covid-19 crisis as the closures of countless low-wage employers erased millions of jobs. Black and Hispanic women are more than twice as likely as White men to fall into this low-wage category, and their share of the low-wage workforce has increased even as the U.S. economy enjoyed its longest expansion in history.
We looked at 2019 data in this story, as the catastrophic recession of 2020 is unlikely to be representative of the years to come. The calculations included tips, overtime and commissions as part of hourly earnings, though the results do not tend to change when those are excluded. By that measure, the typical (median) American worker earned about $20.20 an hour in 2019.
The 39 million workers earning less than $15 in 2019 represented about 28 percent of the workforce. As recently as 2007, most workers in the United States earned less than $15 — about $19 in today’s dollars. In 2020, very few workers earned the federal minimum wage of $7.25, according to the Bureau of Labor Statistics: Just 247,000. Another 865,000 earned less than that, probably due to a combination wage theft and exceptions for tipped workers and others.
Perhaps two facts are the most striking about people who earn less than $15 an hour. First, the share of this group of workers actually fell rapidly in recent years, as an increasingly competitive labor market, and state-and-local minimum wage hikes, pushed major employers to raise wages.
As a rule, women are more likely than men to earn less than $15 an hour, and Black and Hispanic people are more likely to fall below that threshold than their White and Asian peers, The Washington Post found. About 46 percent of Hispanic women and almost as many Black women (39 percent) still earn less than $15 an hour. On the other side of the economy, 18 percent of White and Asian men would fall below that threshold.
Bucknell University economist Nina Banks says the preponderance of women of color among the low-wage workforce is the cumulative result of centuries of discrimination.
After the end of slavery, Banks said, “White women were socially valued as mothers and expected to be caregivers at home, while Whites expected Black women to be gainfully employed regardless of their marital status and caregiving needs.”
Until the Civil Rights era, women of color were typically confined to the domestic-service and agriculture sectors. Those sectors today contain many of the lowest-wage workers.
Other groups are also more represented among workers earning less than $15 per hour. More than 85 percent of workers under age 18 earned less than $15 an hour, but teens make up only a small share of the low-wage workforce. They are outnumbered by workers over age 60 — more than a quarter of these older workers earn less than $15, and they make up a tenth of the low-wage workforce.
The typical Hispanic worker is five years younger than the typical White worker, but youth alone does not explain why Hispanic Americans are overrepresented in low-wage jobs. At almost every age, Hispanic men and women are more likely to be doing low-wage work than their White friends. (In this analysis, “White” always refers to non-Hispanic White.)
Hispanic workers are also overrepresented in many of the occupations with the highest share of low-wage workers, particularly in agriculture and cleaning. Whites make up a majority of the workforce, but a minority of those in many low-wage occupations.
Rent is by far the biggest budget line for low-income workers, according to the Bureau of Labor Statistics. A 2020 National Low Income Housing Coalition analysis showed that workers earning $15 an hour can afford a two-bedroom apartment in just four states: Arkansas, Kentucky, Mississippi and West Virginia.
In a working paper circulated by the Federal Reserve Bank of Philadelphia, University of Southern California assistant professor Moussa Diop and his collaborators analyzed almost 1 million rental leases. They found when states raised their minimum wage, low-income renters in those states became 10 percent less likely to default.
The state minimum-wage increases they analyzed were small compared to a federal hike from $7.25 to $15, Diop said, and thus the proposed federal move could be expected to have a larger effect.
“When you raise the minimum wage, the rental market goes through an adjustment process over time causing rents to edge up,” Diop said. “But it doesn’t capture everything. People earning minimum wage are still much better off.”
Of course, $15 is still on the low end of the wage distribution. Comparing each group’s overall distribution to the national average highlights a tremendous wage gap between Black and Hispanic workers and the highest-earning group, White men. White men are underrepresented among the lowest earners and enormously overrepresented among those who earn $70 or more an hour.
“Minimum wages disproportionately benefit women and people of color because they are paid such poor wages otherwise,” said EPI economist and minimum-wage expert Ben Zipperer. “Infrequent and inadequate increases to the minimum wage over the last few decades have to some degree aggravated racial pay gaps,” he added later.
The states with the highest share of workers earning less than $15 an hour, such as Mississippi and West Virginia, tend to be familiar sights atop lists like these. At the other end of the ranking, a number of states have already raised their minimum wage — plus an outlier, New Hampshire. Workers there can still legally earn as little as $7.25 an hour — but few do.
A simple total of the number of people earning less than $15 throughout the country is not quite the same as estimating the effect of raising the minimum wage to $15 by 2025.
To do that, one must account for the probable wage growth between now and then: Someone earning around $13.30 an hour right now is likely to be earning around $15 by 2025, assuming their earnings slightly outpace inflation.
You also need to factor in the effect of planned state- and local-government minimum-wage hikes. For example California, the most populous state in the union, plans to raise its minimum wage to $15 on Jan. 1, 2022, nine months from now.
Finally, you will need to account for research which shows that, when a government raises the minimum wage, you also raise earnings for workers earning slightly above the minimum wage. Those workers, earning up to around $17 an hour, are likely to see smaller spillover raises as the minimum-wage hike ripples up the organizational chart. CBO and EPI estimate as many as 10 million workers will benefit from these spillovers.
Put all that together, and you get estimates that as many as 32 million Americans — particularly Black and Hispanic women — will gain from a $15 minimum wage.
Alyssa Fowers contributed to this report.
