Quantifying the Impact of the Fight for $15: $150 Billion in Raises for 26 Million Workers, with $76 Billion Going to Workers of Color

Introduction

In late November 2012, a small group of fast-food workers in New York City walked out of their jobs in response to low wages[1] and the challenges of organizing a union in a high-turnover and high-exploitation industry.[2] These workers—many of them Black and brown—would launch one of the most successful worker movements of the 21st century, as their demands echoed across the country, spreading the call for a $15 minimum wage and a union.

The Fight for $15, as the movement inspired by these walkouts would be called, sparked waves of action to raise the minimum wage in the ensuing years, leading dozens of states, cities, and counties to raise their wages; putting pressure on some of the world’s largest corporations to raise their pay scales; and informing the national conversation on living wages, workplace democracy, and equity.

This report quantifies the wage impact of the Fight for $15. Using U.S. Census data, we estimate that 26 million workers have been boosted by higher minimum wage policies passed by all levels of government since 2012—winning over $150 billion in additional annual income.[i] We also find that the Fight for $15 has helped raise the earnings of nearly 12 million workers of color and 18 million women—likely helping narrow the racial and gender wage gaps (though a wage gap analysis is beyond the scope of this report).

Crucially, this worker-led movement delivered these additional earnings despite the racist, sexist, and anti-worker system of laws and political climate in the United States—with laws in place around the country that permit forced arbitration,[3] wage preemption,[4] misclassification,[5] wage theft,[6] and ongoing attacks on the few parts of our system that actually aid working people.[7]

THE ECONOMIC CONTEXT

Since the end of the Great Depression, U.S. productivity has grown rapidly—an indication that workers are producing more goods and services and creating more wealth. Yet, worker pay has barely budged, while CEO pay has soared. In the four decades between 1978 and 2018, inflation-adjusted CEO compensation (base salary and realized stock options) grew by 940 percent, while median worker pay grew just 12 percent.[8] According to an analysis commissioned by the New York Times, in 2020 alone CEO pay grew by 14 percent, while median worker pay grew by less than 2 percent.[9]

Between 1948 and 1973, real hourly wages increased in proportion to the overall growth in productivity. As the U.S. economy grew, the gains were shared with workers on a roughly proportional basis.  However, since 1973, wages for the most underpaid workers have not kept pace with growth of our economy and total labor productivity.[10] In essence, corporations have not equitably shared the returns of our formidable growth in national productivity with the underpaid workers who made those gains possible.

By 2017, productivity was growing more than twice as fast as the growth in real median wages.[11] Many economists have interpreted this trend as an example of the diminishing power of workers relative to employers.[12] Increased globalization and the declining power of unions have contributed to the loss of bargaining power. But another factor is the declining value of the federal minimum wage, which places a floor on wages in the labor market.

The federal minimum wage was last raised to $7.25 per hour in 2009. In 2021, it remains at that level.

The federal minimum wage was last raised to $7.25 per hour in 2009. In 2021, it remains at that level, making this twelve-year period the longest in which the federal minimum wage has remained unchanged since the U.S. first enacted a federal minimum wage in 1938. The real value of the federal minimum wage is now only 59 percent of its peak value in 1968.[13]

Thirty states and Washington, D.C. have minimum wage levels that currently exceed $7.25 per hour—however, twenty other states follow the federal rate or do not have a state minimum wage at all. Of the states with minimum wages higher than the federal minimum, eleven states[ii] and Washington D.C. have legislated additional increases to $15 over the next few years.

The Fight for $15 has highlighted the disconnect between state and U.S. legislators who refuse to raise wages—most of whom represent states with $7.25 minimum wages—and their constituents, many of whom support a $15 minimum wage. As worker-activists in states stuck at $7.25 have made clear, zip codes should not determine whether workers are able to earn a baseline living wage.

Main Findings

In this report, we find:

  • General Impact: From 2012 to January 2021, an estimated 26 million workers have won over $150 billion[iii] in additional income through a combination of state and local minimum wage increases[iv] and an executive order for federal contractors. The affected workers comprise nearly 16 percent of the U.S. labor force. To put the $150 billion in perspective, this figure is more than 94 times the impact ($1.6 billion) of the last federal minimum wage increase to $7.25, which took effect in 2009.[14]
  • Impact on Workers of Color: Of the 26 million workers, nearly 12 million (46 percent) are Black, Latinx, or Asian American. Their additional annual income totals $76 billion—approximately 50 percent of the total for all workers.
  • Impact on Women: Women comprise approximately 13 million (50 percent) of all impacted workers. Their share of the additional annual earnings is nearly $70 billion—46 percent of the total.
  • Impact of $15 Minimum Wage Laws: Of the $150 billion in additional income for affected workers, the overwhelming share (73 percent, or nearly $111 billion) is the result of minimum wage increases in states and localities that are either on a path to $15 or have already reached a $15 or higher minimum wage. Workers affected by these laws make up 69 percent of the total.

WORKERS OF COLOR HAVE SEEN STRONG GAINS FROM FIGHT FOR $15 MINIMUM WAGE WINS

Workers of color and their economic and political demands played a significant role in shaping the movement for higher wages. [xvi] These workers have been among the most impacted by the Fight for $15, as our analysis shows.

Higher wages benefit all workers, but they can have a greater impact in communities that have been historically underpaid due to structural racism, sexism, and the enduring occupational segregation that pushes workers of color into the most underpaid jobs in the economy. This means that changes to minimum wage policies can have a profound effect in reducing racial inequity, as the workers of color leading the Fight for $15 and a union have emphasized.

A recent study by University of California economists estimates that minimum wage increases from 1990 to 2019 reduced the Black-white wage gap by 12 percent.[xvii] A separate study estimates that the 1966 amendment to the Fair Labor Standards Act—which expanded minimum wage protections to previously excluded occupations in which workers of color were overrepresented—explains more than 20 percent of the reduction in the racial earnings and income gaps between 1967 and 1980.[xviii]

In addition to narrowing the racial wage, earnings and income gaps, higher minimum wages can also substantially increase the earnings of workers of color. Table 2, above, shows that workers of color represent 46 percent of all workers impacted by minimum wage increases between 2012 and 2021. Of the more than $150 billion in annual additional income resulting from Fight for $15-influenced minimum wage increases, the share going to workers of color was nearly $76 billion (50 percent).

Tables 5 and 6 provide further details of the impact of the Fight for $15 for workers of color. They show that state minimum wage increases boosted the earnings of Black workers by $5,100 annually on average; and that local minimum wage increases raised their earnings by $7,300. The incomes of Latinx and Asian American workers rose faster: State-level minimum wage policies boosted their annual earnings by $6,300; and local increases raised their annual earnings by $8,300 and $8,200, respectively. By comparison, state and local minimum wage increases raised the earnings of white workers by $4,900 and $7,200, respectively—below the averages for workers of color and for all workers.

Black and brown worker-leaders in the Fight for $15 have not only advocated for higher wages, but have also pointed to worker power and workplace democracy as essential to increasing racial equity. These workers are now fighting to strengthen other workplace protections, such as just-cause job protections, union recognition, stronger health and safety standards, and wage theft protections.

THE FIGHT FOR $15 HAS BOOSTED WOMEN’S EARNINGS BY $70 BILLION

Since the 1970s, women’s educational attainment has increased substantially[xix], which typically correlates to higher earnings. Yet, women continue to earn less than men,[xx] and continue to be overrepresented among the underpaid workforce.

According to a 2018 analysis by the National Women’s Law Center (NWLC), women comprise nearly two-thirds of workers earning at or under $11.50 per hour.[xxi] In a separate analysis, NWLC finds that women make up 60 percent or more of the workforce in four of the five fastest-growing occupations. Of these, three occupations—personal care aides, home health aides, and combined food preparation and serving workers (including fast food)—pay low wages.[xxii] Women’s overrepresentation in underpaid occupations is one of the factors that drive the gender wage gap. Yet, research shows that higher minimum wages can help narrow this gap.[xxiii]

Of the more than $150 billion in annual additional income resulting from Fight for $15-influenced minimum wage increases, the share going to women was nearly $70 billion (46 percent).

The tables below provide further details of the impact of the Fight for $15 on women. Table 7 shows that state minimum wage increases boosted the annual earnings of affected female workers by $5,100 per worker on average, and by over $58 billion in the aggregate. Table 8—which reflects the impact of minimum wage increases in nine cities and counties for which we have data—shows that local minimum wage increases raised women’s earnings by $7,400 per worker, and by more than $11 billion in the aggregate. (More detailed figures can be found in Appendix Tables E-1 to F-2).Table 3, above, shows that women represent 50 percent of all workers impacted by minimum wage increases between 2012 and 2021. Of the more than $150 billion in annual additional income resulting from Fight for $15-influenced minimum wage increases, the share going to women was nearly $70 billion (46 percent). (The slightly lower income gains for women, compared with men, are likely the result of women’s overrepresentation among part-time workers[xxiv]—a reflection of gender roles that are slow to change, which have been shown to impact women’s career decisions).[xxv]

The benefit of higher wages for women and their dependents cannot be understated. With existing conditions and a government and corporate response rooted in systemic racism and sexism, the COVID-19 pandemic harmed women—particularly women of color—more than men. In the first ten months of the pandemic, women lost 1 million more jobs than men, and in the month of December 2020, alone, all of the job losses were borne by women of color.[xxvi] According to research by the National Women’s Law Center and the Center on Poverty and Social Policy at Columbia University, women are more likely than men to experience poverty during their working years, particularly, if they are raising children as single mothers.[xxvii] Children raised by single mothers are also more likely (33 percent) to experience poverty than children raised by single fathers (21 percent).[xxviii] Higher incomes resulting from minimum wage increases are likely to have some mitigating impact on poverty for women and families.[xxix]

MOST OF THE GAINS STEM FROM STATE AND LOCAL MINIMUM WAGE INCREASES TO $15 OR MORE

Since 2012, eleven states[6] and 45 localities have adopted laws that put them on a path to $15. As Table 4, above, shows, these laws account for the bulk of the impacts on workers: 18 million workers (69 percent of the total) and nearly $111 billion in additional income (73 percent of total). Appendix Tables G and H list state and local jurisdictions on a path to $15.

Although state-level $15 minimum wage laws have had the most impact—accounting for 56 percent of all worker impacts, and 55 percent of all income increases—local jurisdictions have led the way in raising wages to $15 or more. The Fight for $15 was initially a local effort—a fast-food worker strike in New York City. However, it quickly spread, winning the first of many victories in SeaTac, Washington in 2013, followed by Seattle and San Francisco in 2014.

From there, the movement was able to scale up to states, with California and New York adopting gradual increases to $15 in 2015, around the same time as additional local jurisdictions were considering their own $15 minimum wage laws. The leadership of cities and counties in raising wages—pushed by local workers and communities—has been one of the main forces behind state action for higher wages to $15;[xxx] and now they are leading the way for even higher wages beyond $15.

Conclusion

Since 2012, the Fight for $15—a worker- and people of color-led movement—has achieved what our elected representatives in Washington, D.C. could not: Raise wages in dozens of states, cities, and counties, winning $150 billion in raises for 26 million workers. The impact of these raises is 94 times that of the last federal minimum wage increase, which took effect in 2009. These are real, material gains for millions of people—affecting workers’ ability to buy groceries, pay rent, attend school, and care for their families.

Despite this incredible achievement, the need for higher wages remains. Twenty states follow the federal minimum wage of $7.25 or do not have a minimum wage law of their own.[xxxi] Many of these states are located in the South, where a majority of African Americans live and work.[xxxii] These 20 states have not only failed to raise wages, but most also prohibit cities and counties within their borders from adopting their own minimum wage laws.[xxxiii]

It is crucial that the U.S. Congress finally pass a federal baseline wage of $15 an hour or higher, with One Fair Wage for tipped workers, young workers, and workers with disabilities.

That is why it is so crucial for the U.S. Congress to finally pass a federal baseline wage of $15 an hour or higher, with One Fair Wage for tipped workers, young workers, and workers with disabilities. With the Raise the Wage Act, Congress has an opportunity to raise the federal minimum wage to $15.00 over five years,[xxxiv] a proposal that enjoys wide support from voters.[xxxv] Without congressional action, underpaid workers in states that follow the federal minimum wage will continue to be guaranteed only a poverty wage of $7.25. These workers, who are disproportionately workers of color, will fall further and further behind other workers around the country.

The success of the movement for higher wages—demonstrated so clearly by the impact numbers highlighted in this report—only reaffirms how far out of step lawmakers in Congress are from their constituents, as they continue to refuse to raise the federal minimum wage. But just as the Fight for $15 and a union movement has won raises in cities, counties, and states nationwide, it is only a matter of time before workers win a $15 minimum wage on the federal level, and other labor protections at all levels of government—including just cause, union rights, and even wages above $15, which are increasingly necessary around the country.

Crucially, all of these policies are also essential to increasing racial equity. Structural anti-Black racism is at the core of why workers are so underpaid nationwide.[xxxvi] Illustrative of anti-Black racism are the segregation of the labor market that pushes many workers of color into underpaid jobs;[xxxvii] the original exclusion of whole categories of workers from minimum wage protections in the Fair Labor Standards Act;[xxxviii] and voting discrimination[xxxix] and wage preemption laws[xl] that prevent Black workers in these states from having a fair say in the policies that determine their lives.

Congressional lawmakers can either put their weight behind the worker activism and the racial and gender justice imperative of raising wages now, or they can bury their heads further into the sand, as workers win in spite of them.

Methodology

Our methodological approach follows one originally created by researchers at the University of California-Berkeley,[xli] who first forecasted the impact of the proposed $15-per-hour Los Angeles citywide minimum wage.[xlii]

This approach relies upon estimating what would have happened to wages if no minimum wage increases were ever passed. Specifically, we estimate the wage distribution in each state and selected localities for each year from 2012—when the Fight for $15 began—up to 2021 to establish a baseline scenario. This is referred to as a “counterfactual” wage distribution. To do this, we reconstructed what the minimum wage was in each state in 2011 and assume that minimum wages were kept at this level (i.e., without the Fight for $15-influenced minimum wage increases). The starting point for the counterfactual wage projection was the observed total wage income from the 2011 American Community Survey (ACS) public use microdata.  Reported wages were then inflated by the average rate of inflation as measured by the CPI-U in the period from 2012 to 2020.

To capture the impacts of Fight for $15-influenced minimum wage increases, we constructed the actual minimum wage stepped increases by states and localities. We define an affected worker as an individual respondent with a projected baseline wage below the mandated minimum wage in 2021. Since the ACS does not report wage income on an hourly basis, we estimate the hourly wage for each worker by dividing total annual wage income by the product of usual hours worked per week and number of weeks worked per year.

To determine the number of affected workers, we first calculated the hourly wage for each employed respondent in the baseline scenario (as described above). Then we estimate the total number of employed workers with baseline wages below the mandated minimum wage in 2021 by state and locality. To calculate the income increases for workers, we first calculate the earnings difference per hour between the baseline wage and the mandated minimum wage for affected workers. Then, we convert the hourly earnings difference to a 2021 annual figure by multiplying the difference by the usual hours worked per week and the usual weeks worked per year (from the ACS).  The 2021 figures for workers affected and income increases for workers were adjusted based on the total population change in states and localities to reflect change in the population bases that have been impacted by Fight for $15-influenced minimum wage increases.

Cities and counties included as local areas in this analysis were determined by data availability in the 2011 ACS public use microdata sample (PUMS). The 1-Year ACS sample does identify smaller cities and/or larger cities in cases where disclosure rules would be violated. (The U.S. Census maintains disclosure controls to protect the privacy of survey respondents).[xliii] Therefore, in order to comply with disclosure rules, our analysis using the methods described above were only applicable to nine local areas. To estimate the number of workers affected in the other 43 local jurisdictions we used a quasi-elasticity for the share of total population affected relative to the average minimum wage increase between 2012 and 2021 for the nine (larger) cities available in the ACS. For example, across the nine cities available in the ACS, the average share of the 2011 population affected was 17 percent, while the average change in minimum wage was 80.5 percent. We then applied this ratio for the remaining cities using their actual percent change in minimum wage and 2011 population based on either the 3-year (2010-2012) or 5-year (2009-2013) ACS summary data. To calculate the estimate annual increase, we applied the average increase per-worker in the observed sample of nine cities ($7,816) to the estimate number of workers calculated for each city. We refer to the estimate from the set of cities that lack identification in the 1-year ACS PUMS sample as “imputed” figures and are intended to be approximations. The figures presented in this report are rounded.

Race and ethnicity categories are constructed using the ACS’s classifications for race and ethnicity. For this analysis, white represents individuals that identified as white alone (non-Hispanic or Latino), Black represents Black or African-American alone (non-Hispanic or Latino), Asian represents Asian alone (non-Hispanic or Latino), and Latinx represents Hispanic or Latino of any race. Because of the possibility of inflating possible errors, we do not report breakouts by race/ethnicity and gender for the set of cities where imputations were used for estimating the total number of workers affected.

A Note on Disemployment Effects                                 

Scholarly debates on the empirical and theoretical impact of raising the minimum wage on job losses have been raging for decades. For the purposes of the analysis presented here, we do not separately account for the so-called disemployment effect of raising the minimum wage. Historically, older studies found a consensus that raising the minimum wage had a negative impact on employment levels (a negative elasticity between 10 and 20 percent). However, more recent empirical research , using a more geographically detailed methodology, has shown convincingly that minimum wage increases do not lead to significant disemployment effects.[xliv]  This finding has held up to numerous replications and methodological changes and newer studies have confirmed the overall finding of no significant job losses.[xlv]

While these large-scale national studies of minimum wage impacts, which pool together many modest (ranging from 10 percent to 50 percent) state-level increases in minimum wage over a long time period, have consistently found employment effects close to zero, it is still possible that very large and rapid increases in the minimum wage would cause negative effects. However, the experience of Seattle, which was the first major city to raise its minimum wage to $15 per hour, shows evidence that largely confirms the finding of no significant employment losses.

This report originally appeared at NELP on July 27, 2021. Reprinted with permission.

About the author: Yannet Lathrop is a passionate advocate for economic and social policies that advance the common good. She joined NELP in 2014, after completing a public policy fellowship under the sponsorship of the Center on Budget and Policy Priorities.

The post Quantifying the Impact of the Fight for $15: $150 Billion in Raises for 26 Million Workers, with $76 Billion Going to Workers of Color first appeared on Today’s Workplace.

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