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Should minimum wage increase? A look at key data points

Lawmakers propose raise in federal minimum wage

Dollar bills are deposited in a tip box, Sept. 9, 2020 in New York. (AP Photo/Mark Lennihan)
Dollar bills are deposited in a tip box, Sept. 9, 2020 in New York. (AP Photo/Mark Lennihan) (2020 The Associated Press)

This first appeared in the Data Drop Newsletter, a periodical newsletter offering a deep-dive into the data around local news stories and beyond. Sign up for it here, or by using the form at the end of this article.


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📊 Minimum wage debate

A hot topic right now surrounds the push to increase the federal minimum wage. Why? House and Senate Democrats introduced legislation this week to raise the minimum wage from $7.25 to $15 by 2025. (Read the Raise the Wage Act here)

A 2019 report from the Congressional Budget Office projected that boosting the federal minimum wage to $15 an hour gradually by 2025 would increase pay for 17 million workers but could also cost 1.3 million workers their jobs. In addition, it would lift 1.3 million people above the poverty line.

While federal minimum wage hasn’t increased since 2009, more than half of the states in the country have minimum wages above the federal floor.

Michigan’s minimum wage is currently $9.65 an hour. In September 2018, the Michigan Legislature passed a raise of the wage to $12 by 2022, but lawmakers gutted the bill in the lame-duck session of Gov. Rick Snyder’s final year in office.

Minimum wage facts and figures

Poverty line comparison

Federal minimum wage, as it stands, at $7.25 per hour, working 40 hours per week, amounts to $15,080 per year (gross income). The U.S. poverty line for a single person under 65 is $12,760; It’s $26,200 for a family with two children.

Who is making minimum wage? (It’s not just teens)

  • 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.
  • 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.
  • Almost one in four (23%) of those who would benefit is a Black or Latina woman.

(Data from Economic Policy Institute)

Living wage vs. minimum wage

Living wage depends on where you live -- we’ll use Wayne County for this example. Living wage is defined as the hourly rate that an individual in a household must earn to support themselves and/or their family.

The living wage in Wayne County for a single person without kids is $11.47; If this person is supporting one child, it goes up to $24.32.

A two-adult household with both adults working, with one child -- the livable wage is $13.47; It goes up to $16.23 for two children.

According to this data, from Massachusetts Institute of Technology (MIT), livable wages across Michigan are higher than the state or federal minimum wage.

Minimum wage value

According to analysis from the EPI, the federal minimum wage is worth 17% less than 10 years ago -- and is 31% less than in 1968, when adjusted for inflation.

Source: EPI analysis of historical minimum wage data in the Fair Labor Standards Act and amendments. (EPI)

The percentage of workers earning the federal minimum wage or less today is well below the 15.1 percent recorded in 1980. It’s around 2% now.

Impact to employers

If the minimum wage goes up at the state or federal level, it will undoubtably have an impact on businesses. Exactly how much of an impact is hard to predict.

Some economic experts say the increase would result in closed businesses, increased consumer prices and a harder job market for inexperienced workers. Some think it would spur on more automation.

Ben Zipperer, an economist at the Economic Policy Institute (EPI) told Business Insider that the negative impacts could offset: “What happens is that yes, it is true that when you raise the minimum wage employers hire fewer low wage workers, that is correct,” Zipperer said. “On the other hand, the factor that’s really offsetting that is that, even though employers are hiring fewer workers, fewer workers are leaving their jobs.”

So, hypothetically, employers would spend less time looking for and training new employees. Employees would gain more experience because they could stay at a job longer.


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