Why the U.S.

needs a $15
minimum wage
How the Raise the Wage Act would benefit U.S.
workers and their families
Fact Sheet • January 26, 2021

This fact sheet was updated February 19 with a new section on tipped workers.

The federal minimum hourly wage is just $7.25 and Congress has not increased it since 2009. Low wages
hurt all workers and are particularly harmful to Black workers and other workers of color, especially women
of color, who make up a disproportionate share of workers who are severely underpaid. This is the result of
structural racism and sexism, with an economic system rooted in chattel slavery in which workers of
color—and especially women of color—have been and continue to be shunted into the most underpaid
jobs.1

The Raise the Wage Act of 2021 would gradually raise

the federal minimum wage to $15 an hour by 2025 and
narrow racial and gender pay gaps. Here is what the Act
would do:
Raise the federal minimum wage to $9.50 this year and increase it in steps until it reaches $15 an hour
in 2025.2
After 2025, adjust the minimum wage each year to keep pace with growth in the median wage, a
measure of wages for typical workers.
Phase out the egregious subminimum wage for tipped workers, which has been frozen at a meager
$2.13 since 1991.3

Economic Policy Institute • National Employment Law Project View this fact sheet at epi.org/219045
 Sunset unacceptable subminimum wages for workers with disabilities employed in
sheltered workshops and for workers under age 20.

The benefits of gradually phasing in a $15

minimum wage by 2025 would be far-reaching,
lifting pay for tens of millions of workers and
helping reverse decades of growing pay
inequality.
The Raise the Wage Act would have the following benefits:4

Gradually raising the federal minimum wage to $15 by 2025 would lift pay for 32
million workers—21% of the U.S. workforce.
Affected workers who work year round would earn an extra $3,300 a year—enough
to make a tremendous difference in the life of a cashier, home health aide, or fast-
food worker who today struggles to get by on less than $25,000 a year.
A majority (59%) of workers whose total family income is below the poverty line
would receive a pay increase if the minimum wage were raised to $15 by 2025.
A $15 minimum wage would begin to reverse decades of growing pay inequality
between the most underpaid workers and workers receiving close to the median
wage, particularly along gender and racial lines. For example, minimum wage
increases in the late 1960s explained 20% of the decrease in the Black–white
earnings gap in the years that followed, whereas failures to adequately increase the
minimum wage after 1979 account for almost half of the increase in inequality
between women at the middle and bottom of the wage distribution.5
A $15 minimum wage by 2025 would generate $107 billion in higher wages for
workers and would also benefit communities across the country. Because underpaid
workers spend much of their extra earnings, this injection of wages will help stimulate
the economy and spur greater business activity and job growth.

Raising the minimum wage to $15 will be

particularly significant for workers of color and
would help narrow the racial pay gap.
Nearly one-third (31%) of African Americans and one-quarter (26%) of Latinos would
get a raise if the federal minimum wage were increased to $15.6
Almost one in four (23%) of those who would benefit is a Black or Latina woman.
African Americans and Latinos are paid 10%–15% less than white workers with the
same characteristics, so The Raise the Wage Act will deliver the largest benefits to

Economic Policy Institute • National Employment Law Project 2

 Black and Latino workers: about $3,500 annually for a year-round worker.7
Minimum wage increases in the 1960s Civil Rights Era significantly reduced
Black–white earnings inequality and are responsible for more than 20% of the
overall reduction in later years.8

The majority of workers who would benefit are

adult women—many of whom have attended
college and many of whom have children.
More than half (51%) of workers who would benefit are adults between the ages of
25 and 54; only one in 10 is a teenager.
Nearly six in 10 (59%) are women.
More than half (54%) work full time.
More than four in 10 (43%) have some college experience.
More than a quarter (28%) have children.

The Raise the Wage Act follows the lead of the

growing number of states and cities that have
adopted significant minimum wage increases in
recent years, thanks to the ‘Fight for $15 and a
union’ movement led by Black workers and
workers of color.
Since the Fight for $15 was launched by striking fast-food workers in 2012,9 states
representing approximately 40% of the U.S. workforce—California, Connecticut,
Florida, Illinois, Maryland, Massachusetts, New Jersey, New York, Virginia, and the
District of Columbia—have approved raising their minimum wages to $15 an hour.10

Additional states—including Washington, Oregon, Colorado, Arizona, New Mexico,

Vermont, Missouri, Michigan, and Maine—have approved minimum wages ranging
from $12 to $14.75 an hour.11

Not just on the coasts, but all across the country,

workers need at least $15 an hour today.
Today, in all areas across the United States, a single adult without children needs
at least $31,200—what a full-time worker making $15 an hour earns annually—to
achieve a modest but adequate standard of living.12 By 2025, workers in these
areas and those with children will need even more, according to projections based on

Economic Policy Institute • National Employment Law Project 3

 the Economic Policy Institute’s Family Budget Calculator.13
For example, in rural Missouri, a single adult without children will need $39,800
(more than $19 per hour for a full-time worker) by 2025 to cover typical rent, food,
transportation, and other basic living costs.
In larger metro areas of the South and Southwest—where the majority of the
Southern population live—a single adult without children will also need more than
$15 an hour by 2025 to get by: $20.03 in Fort Worth, $21.12 in Phoenix, and $20.95 in
Miami.
In more expensive regions of the country, a single adult without children will need
far more than $15 an hour by 2025 to cover the basics: $28.70 in New York City,
$24.06 in Los Angeles, and $23.94 in Washington, D.C.

Workers in many essential and front-line jobs

struggle to get by on less than $15 an hour
today and would benefit from a $15 minimum
wage.
Essential and front-line workers make up a majority (60%) of those who would
benefit from a $15 minimum wage.14 The median pay is well under $15 an hour for
many essential and front-line jobs; examples include substitute teachers ($13.84),
nursing assistants ($14.26), and home health aides ($12.15).15
More than one-third (35%) of those working in residential or nursing care facilities
would see their pay increase, in addition to home health aides and other health care
support workers.
One in three retail-sector workers (36%) would get a raise, including 42% of workers
in grocery stores.
More than four in 10 (43% of) janitors, housekeepers, and other cleaning workers
would benefit.
Nearly two-thirds (64%) of servers, cooks, and other food preparation workers
would see their earnings rise by $5,800 on a year-round basis.
Ten million workers in health care, education, construction, and manufacturing
would see a raise—representing nearly one-third (31%) of the workers who would see
a raise.

Economic Policy Institute • National Employment Law Project 4

 Phasing out the egregiously low $2.13 minimum
wage for tipped workers would lift pay, provide
stable paychecks, and reduce poverty for
millions of tipped workers.
There are 1.3 million tipped workers throughout the country who are paid as little
as $2.13 per hour because Congress has not lifted the federal tipped wage in 30
years. Another 1.8 million tipped workers receive wages above $2.13, but still less than
their state’s regular minimum wage.16
Seven states (Alaska, California, Minnesota, Montana, Nevada, Oregon, and
Washington) have already eliminated their lower tipped minimum wage. In these
“one-fair-wage” states, tipped workers in these states are paid the same minimum
wage as everyone else before tips.17 For restaurant servers and bartenders, take-
home pay in one-fair-wage states is 21% higher, on average, than in $2.13 states.
Having a lower minimum wage for tipped jobs results in dramatically higher
poverty rates for tipped workers. In states that use the federal $2.13 tipped minimum
wage, the poverty rate among servers and bartenders is 13.3%—5.6 percentage
points higher than the 7.7% poverty rate among servers and bartenders in one-fair-
wage states.18
Eliminating the lower tipped minimum wage has not harmed growth in the
restaurant industry or tipped jobs. From 2011 to 2019, one-fair-wage states had
stronger restaurant growth than states that had a lower tipped minimum wage—both
in the number of full-service restaurants (17.5% versus 11.1%) and in full-service
restaurant employment (23.8% versus 18.7%).19

Growing numbers of business owners and

organizations have backed a $15 minimum
wage.
In states that have already approved $15 minimum wages, business organizations
representing thousands of small businesses have endorsed a $15 minimum wage.
Business groups that have endorsed a $15 minimum wage include Business for a Fair
Minimum Wage,20 the American Sustainable Business Council,21 the Patriotic
Millionaires,22 the Greater New York Chamber of Commerce,23 the Long Island African
American Chamber of Commerce,24 and others.
Growing numbers of employers have responded to pressure from workers and
raised their starting pay scales to $15 or higher. These include retail giants
Amazon,25 Whole Foods26 (owned by Amazon), Target,27 Walmart,28 Wayfair,29
Costco,30 Hobby Lobby,31 and Best Buy;32 employers in the food service and
producing industries, such as Chobani,33 Starbucks,34 Sanderson Farms
(Mississippi),35 and the Atlanta-area locations of Lidl grocery stores;36 health care

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 employers including Michigan’s Henry Ford Health System37 and Trinity Health
System,38 Ohio’s Akron Children’s Hospital39 and Cincinnati Children’s Hospital
Medical Center,40 Iowa’s Mercy Medical Center and MercyCare Community
Physicians,41 Missouri’s North Kansas City Hospital and Meritas Health,42 and
Maryland’s LifeBridge Health;43 insurers and banks such as Amalgamated Bank,44
Allstate,45 Wells Fargo,46 and Franklin Savings Bank in New Hampshire47; and tech
and communications leaders such as Facebook48 and Charter Communications.49

Our economy can more than afford a $15

minimum wage.
Workers earning the current federal minimum wage are paid less per hour in real
dollars than their counterparts were paid 50 years ago.50
Businesses can afford to pay the most underpaid worker in the U.S. today
substantially more than what her counterpart was paid half a century ago.51
The economy has grown dramatically over the past 50 years, and workers are
producing more from each hour of work, with productivity nearly doubling since the
late 1960s. If the minimum wage had been raised at the same pace as productivity
growth since the late 1960s, it would be over $20 an hour today.52

Research confirms what workers know: Raising

wages benefits us all.
High-quality academic scholarship confirms that modest increases in the minimum
wage have not led to detectable job losses.53
After the federal minimum wage was raised to its highest historical peak in 1968,
wages grew and racial earnings gaps closed without constricting employment
opportunities for underpaid workers overall.54
Comprehensive research on 138 state-level minimum wage increases shows that all
underpaid workers benefit from minimum wage increases, not just teenagers or
restaurant workers.55
Multiple studies conclude that total annual incomes of families at the bottom of the
income distribution rise significantly after a minimum wage increase.56 Workers in
low-wage jobs and their families benefit the most from these income increases,
reducing poverty and income inequality.
By providing families with higher incomes, minimum wage increases have improved
infant health and also reduced child abuse and teenage pregnancy.57

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 An immediate increase in the minimum wage is
necessary for the health of our economy.
Raising the minimum wage now will tilt the playing field back toward workers who
have dangerous jobs and little bargaining power during the pandemic.58
Providing underpaid workers with more money will directly counter the consumer
demand shortfall during this recession.59
Even the Congressional Budget Office’s 2019 study of the impact of raising the
federal minimum wage to $15 by 2025 clearly showed that the policy would raise
incomes of underpaid workers overall and significantly reduce the number of families
in poverty.60

Low wages threaten the economic security of

workers and their families, who then turn to
social benefits programs to make ends meet.
In states without laws to raise the minimum wage to $15, nearly half (47%, or 10.5
million) of families of workers who would benefit from the Act rely on public supports
programs in part because they do not earn enough at work.61
These workers and their families account for nearly one-third of total enrollment in
one or more public supports programs.62
In states without a $15 minimum wage law, public supports programs for underpaid
workers and their families make up 42% of total spending on Medicaid and CHIP (the
Children’s Health Insurance Program), cash assistance (Temporary Assistance for
Needy Families, or TANF), food stamps (Supplemental Nutrition Assistance Program,
or SNAP), and the earned income tax credit (EITC), and cost federal and state
taxpayers more than $107 billion a year.63

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 Notes and Sources
This fact sheet is an update of Why America Needs a $15 Minimum Wage, published by EPI and the
National Employment Law Project, February 2019.

Unless otherwise indicated, the figures presented in this fact sheet come from a forthcoming EPI analysis
of the 2021 Raise the Wage Act.

1. Kate Bahn and Carmen Sanchez Cumming, “Four Graphs on U.S. Occupational Segregation by Race,
Ethnicity, and Gender,” Washington Center for Equitable Growth, July 1, 2020.

2. The analysis is based on the 2021 Raise the Wage Act.

3. Sylvia Allegretto and David Cooper, Twenty-Three Years and Still Waiting for Change: Why It’s Time to
Give Tipped Workers the Regular Minimum Wage, Economic Policy Institute, July 2014.

4. Estimated effects of the 2021 Raise the Wage Act throughout this fact sheet are from a forthcoming
Economic Policy Institute analysis of the legislation and include benefits for both directly affected workers
(those who would otherwise earn less than $15 per hour in 2025) and indirectly affected workers (those
who would earn just slightly above $15 in 2025).

5. Ellora Derenoncourt and Claire Montialoux, “Minimum Wages and Racial Inequality,” Quarterly Journal
of Economics 136, no. 1 (February 2021); David Autor, Alan Manning, and Christopher L. Smith, “The
Contribution of the Minimum Wage to U.S. Wage Inequality over Three Decades: A Reassessment,”
American Economic Journal: Applied Economics 8, no. 1 (January 2016).

6. See also Laura Huizar and Tsedeye Gebreselassie, What a $15 Minimum Wage Means for Women and
Workers of Color, National Employment Law Project, December 2016.

7. For racial/ethnic wage gaps, see Appendix Table 1 of Elise Gould, State of Working America Wages
2019, Economic Policy Institute, February 2020.

8. Ellora Derenoncourt and Claire Montialoux, “Minimum Wages and Racial Inequality,” Quarterly Journal of
Economics 136, no. 1 (February 2021).

9. Alina Selyukh, “‘Gives Me Hope’: How Low-Paid Workers Rose up Against Stagnant Wages,” National
Public Radio’s All Things Considered, February 26, 2020; Kimberly Freeman Brown and Marc Bayard,
“Editorial: The New Face of Labor, Civil Rights is Black & Female,” NBC News, September 7, 2015; Amy B.
Dean, “Is the Fight for $15 the Next Civil Rights Movement?” Al Jazeera America, June 22, 2015.

10. Economic Policy Institute calculation using Current Employment Statistics data from the Bureau of
Labor Statistics. Values calculated using the listed states’ share of total U.S. nonfarm employment in
calendar year 2019 (prior to the COVID-19 pandemic). For recent minimum wage changes, see the
Economic Policy Institute Minimum Wage Tracker, https://www.epi.org/minimum-wage-tracker/. We include
the District of Columbia in this list even though it is not a state.

11. Yannet Lathrop, Impact of the Fight for $15: $68 Billion in Raises, 22 Million Workers, National
Employment Law Project, November 2018.

12. Based on calculations from the Economic Policy Institute’s Family Budget Calculator, which measures
the income a family needs to attain a secure yet modest standard of living in all counties and metro areas
across the country.

13. Congressional Budget Office projections for the consumer price index were applied to the Economic
Policy Institute’s Family Budget Calculator.

Economic Policy Institute • National Employment Law Project 8

 14. Economic Policy Institute analysis of the legislation, forthcoming.

15. Bureau of Labor Statistics, Occupational Employment Statistics, May 2019 National Occupational
Employment and Wage Estimates United States (online database).

16. Economic Policy Institute analysis of Current Population Survey outgoing rotation group microdata,
2017–2019

17. Economic Policy Institute analysis of Current Population Survey outgoing rotation group microdata,
2017–2019

18. Economic Policy Institute analysis of Current Population Survey outgoing rotation group microdata,
2017–2019

19. Quarterly Census of Employment and Wages, 2011–2019.

20. Business for a Fair Minimum Wage, “Federal Business for a Fair Minimum Wage—$15: Signatories List
in Formation,” accessed January 22, 2021.

21. Business for a Fair Minimum Wage, “Federal Business for a Fair Minimum Wage—$15: Signatories List in
Formation,” accessed January 22, 2021.

22. Patriotic Millionaires, “Endorsed Bill: The Raise the Wage Act,” accessed January 22, 2021.

23. Greater New York Chamber of Commerce, “Celebrating Juneteenth,” June 18, 2020.

24. Kate King, “New York Boosts Minimum Wage and Some Businesses Balk,” Wall Street Journal, January
4, 2021.

25. Arjun Panchadar, “Amazon Raises Minimum Wage to $15, Urges Rivals to Follow,” Reuters, October 2,
2018.

26. Abha Bhattarai, “Amazon Boosts Minimum Wage to $15 for All Workers Following Criticism,”
Washington Post, October 2, 2018.

27. Melissa Repko, “Target Raises Minimum Wage to $15 an Hour Months Before its Deadline,” CNBC, June
17, 2020.

28. Michael Grothaus, “Walmart Is Giving 165,000 Employees a Pay Raise Between $15 and $30 per Hour,”
Fast Company, September 18, 2020.

29. Lucia Maffei, “Wayfair Sets $15 Minimum Wage for All U.S. Workers,” MassLive, January 8, 2021.

30. Sarah Nassauer and Micah Maidenberg, “Costco Raises Minimum Wage to $15 an Hour,” Wall Street
Journal, March 6, 2019.

31. Hobby Lobby, “Hobby Lobby Raises Minimum Wage” (press release), September 14, 2020.

32. Gillian Friedman, “Best Buy to Join Retailers Paying a $15 Minimum Wage,” New York Times, July 22,
2020.

33. Chobani, “Chobani Increases Employees’ Starting Wage to at Least $15/Hour,” (PR Newswire release),
Vending Marketwatch, October 30, 2020.

34. Janine Puhak, “Starbucks to Raise Minimum Wage to $15 for US Employees over Next Three Years,”
WDRB.com, December 12, 2020.

35. Sanderson Farms, “Sanderson Farms Increases Pay Rates for Hourly Employees” (press release), June
3, 2019.

Economic Policy Institute • National Employment Law Project 9

 36. Kara McIntyre, “Lidl to Raise Atlanta-Area Starting Pay to $15 An Hour,” Patch (Atlanta, Ga.), January 5,
2021.

37. Henry Ford Health System, “Henry Ford Among the First Michigan Health Systems to Raise Minimum
Pay Rate to $15 Per Hour” (press release), October 9, 2020.

38. Michael Kransz, “Michigan Health System with 8 Hospitals Increases Minimum Wage to $15 an Hour,”
MLive.com, October 19, 2020.

39. Betty Lin-Fisher, “Akron Children’s Hospital to Raise Its Minimum Wage to $15,” Akron Beacon Journal,
October 3, 2019.

40. Kelly Gooch, “Ohio Children’s Hospital to Boost Minimum Pay for 3,000 Employees,” Becker’s Hospital
Review, October 3, 2019.

41. Michaela Ramm, “Mercy Announces Minimum Wage Increase, General Pay,” The Gazette, December
22, 2020.

42. North Kansas City Hospital, “North Kansas City Hospital and Meritas Health Raise Minimum Base
Wage,” December 21, 2020.

43. LifeBridge Health, “Lifebridge Health Raises Minimum Living Wage for Hospital Team Members to $15
an Hour” (press release), Greater Baltimore Committee, January 8, 2021.

44. Amalgamated Bank, “Fight for $15” (web page), accessed January 22, 2021.

45. Amanda Mull, “Corporations’ Social Crusades Often Leave Out Workers,” The Atlantic, June 28, 2019.

46. Wells Fargo, “Wells Fargo to Raise Minimum Hourly Pay Levels in a Majority of Its U.S. Markets” (news
release), March 4, 2020.

47. Scott Souza, “Franklin Savings Bank Raises Minimum Wage in NH To $15,” Patch (Merrimack, N.H.),
October 31, 2019.

48. Tomi Kilgore, “Facebook Raising Minimum Wage to $20 Per Hour for Bay Area, New York and D.C.”
MarketWatch, May 13, 2019.

49. Charter Communications, “Charter Statement Regarding Plans to Permanently Raise Minimum Wage to
$20/Per Hour over Next Two Years for All Hourly Employees,” April 6, 2020.

50. David Cooper, Raising the Federal Minimum Wage to $15 by 2024 Would Lift Pay for Nearly 40 Million
Workers, Economic Policy Institute, February 2019.

51. David Cooper, Raising the Federal Minimum Wage to $15 by 2024 Would Lift Pay for Nearly 40 Million
Workers, Economic Policy Institute, February 2019.

52. David Cooper, Raising the Federal Minimum Wage to $15 by 2024 Would Lift Pay for Nearly 40 Million
Workers, Economic Policy Institute, February 2019.

53. Paul J. Wolfson and Dale Belman, “15 Years of Research on U.S. Employment and the Minimum Wage,”
Tuck School of Business Working Paper no. 2705499, 2016.

54. Ellora Derenoncourt and Claire Montialoux, “Minimum Wages and Racial Inequality,” Quarterly Journal
of Economics 136, no. 1 (February 2021).

55. Doruk Cengiz, Arindrajit Dube, Attila Lindner, and Ben Zipperer, “The Effect of Minimum Wages on Low-
Wage Jobs: Evidence from the United States Using a Bunching Estimator,” Quarterly Journal of Economics
134, no. 9 (May 2019).

56. Arindrajit Dube, “Minimum Wages and the Distribution of Family Incomes,” American Economic

Economic Policy Institute • National Employment Law Project 10

 Journal: Applied Economics 11, no. 4 (October 2019); Kevin Rinz and John Voorheis, “The Distributional
Effects of Minimum Wages: Evidence from Linked Survey and Administrative Data.” U.S. Census Bureau
Center for Administrative Records Research and Applications Working Paper 2018-02, 2018.

57. George L. Wehby, Dhaval M. Dave, and Robert Kaestner, “Effects of the Minimum Wage on Infant
Health,” Journal of Policy Analysis and Management 39, no. 2 (Spring 2020); Kerri M. Raissian and Lindsey
Rose Bullinger, “Money Matters: Does the Minimum Wage Affect Child Maltreatment Rates?” Children and
Youth Services Review 72 (January 2017); Lindsey Rose Bullinger, “The Effect of Minimum Wages on
Adolescent Fertility: A Nationwide Analysis,” American Journal of Public Health, March 2017.

58. Peter Dorman and Lawrence Mishel, “A Majority of Workers Are Fearful of Coronavirus Infections at
Work, especially Black, Hispanic, and Low- and Middle-income Workers,” Working Economics Blog
(Economic Policy Institute), June 16, 2020.

59. Cristian Alonso, “Beyond Labor Market Outcomes: The Impact of the Minimum Wage on Nondurable
Consumption,” Journal of Human Resources, forthcoming.

60. Ben Zipperer, “Low-Wage Workers Will See Huge Gains from Minimum Wage Hike, CBO Finds,”
Working Economics Blog (Economic Policy Institute), July 9, 2019.

61. Ken Jacobs, Ian Eve Perry, and Jenifer MacGillvary, The Public Cost of a Low Federal Minimum Wage,
University of California Berkeley, Labor Center, January 2021.

62. Ken Jacobs, Ian Eve Perry, and Jenifer MacGillvary, The Public Cost of a Low Federal Minimum Wage,
University of California Berkeley, Labor Center, January 2021.

63. Ken Jacobs, Ian Eve Perry, and Jenifer MacGillvary, The Public Cost of a Low Federal Minimum Wage,
University of California Berkeley, Labor Center, January 2021.

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