The Economic Case for Increasing the Minimum Wage: State by State Impact

The minimum wage is a critical tool for ensuring that hard work is rewarded with fair pay, but its real value has been allowed to erode substantially despite decades of economic growth. The president believes raising the minimum wage will help ensure opportunity for all Americans, and that’s why he has led by example signing an Executive Order to raise the minimum wage to $10.10 for new federal contract workers.  Now Congress should act to raise the minimum wage for all workers and pass the Harkin/Miller bill which would raise incomes for millions of Americans in every state and reduce poverty.

In real terms, the minimum wage is worth less today than it was at the beginning of 1950.

• Since 1950, real per capita gross domestic product (GDP) has increased 246 percent, and labor productivity has grown 278 percent, but the minimum wage’s real value has fallen.
• Relative to the mean wage, the minimum wage peaked in 1968 at 54 percent but had fallen to only 35 percent in February 2014.

If no action is taken, the real value of the minimum wage will decline even further.

• In 2014 alone, the minimum wage is projected to lose 1.7 percent of its value. For a full-time worker, that represents nearly $250, enough to pay for a month of groceries or a month of utilities.
• Over the next five years, the real value of the minimum wage is projected to decline by 10 percent, or over $1,400 dollars of purchasing power for a full-time worker.
• Increasing the purchasing power of minimum wage workers helps stimulate the economy. Research has shown that these workers spend the additional income they receive when the minimum wage is increased.

Over 28 million workers would benefit from the Harkin-Miller proposal to increase the minimum wage to $10.10 an hour.

• Women (55 percent) and people with family income below $35,000 (46 percent) would make up substantial shares of the beneficiaries. One quarter of potential beneficiaries are caring for children.
• The vast majority of people who would see their wages go up are adults in the prime of their working years, not teenagers, as some have claimed. Only 12 percent of beneficiaries would be under 20 years old.
• About 12 million people in poverty would see their families’ incomes increase due to this proposal. It would lift 2 million of those people out of poverty.
• At least 30,000 workers in every state would benefit from raising the Harkin-Miller proposal. In eighteen states, at least half a million workers will benefit.

Number of Workers Benefiting from Increasing the Minimum Wage to $10.10, by State
State	Number Affected	State	Number Affected
Alabama	482,900	Montana	96,800
Alaska	46,400	Nebraska	216,400
Arizona	541,000	Nevada	253,000
Arkansas	313,600	New Hampshire	108,500
California	2,161,300	New Jersey	803,200
Colorado	416,900	New Mexico	197,900
Connecticut	228,400	New York	1,705,800
Delaware	83,200	North Carolina	1,065,000
District of Columbia	33,000	North Dakota	64,200
Florida	1,732,000	Ohio	1,075,200
Georgia	963,900	Oklahoma	397,600
Hawaii	118,200	Oregon	257,400
Idaho	176,000	Pennsylvania	1,133,900
Illinois	1,122,400	Rhode Island	89,300
Indiana	666,000	South Carolina	481,800
Iowa	332,600	South Dakota	93,400
Kansas	314,700	Tennessee	669,500
Kentucky	497,500	Texas	2,982,100
Louisiana	500,200	Utah	303,800
Maine	134,800	Vermont	38,300
Maryland	466,000	Virginia	717,200
Massachusetts	453,100	Washington	393,300
Michigan	972,100	West Virginia	179,700
Minnesota	493,500	Wisconsin	595,700
Mississippi	292,800	Wyoming	52,800
Missouri	599,600	Total	28,113,400
Source: 2013 Current Population Survey and CEA calculations