WASHINGTON—A gradual increase in the federal minimum wage to $15 an hour would increase the pay of low-income workers across the U.S. but particularly in much of the South, researchers and experts predict.
Florida recently voted to increase its state minimum wage to $15 an hour by 2026, but the Sunshine State is an outlier. Georgia, Louisiana, North Carolina, Virginia and Tennessee all follow the current federal minimum wage of $7.25 an hour for businesses.
The long-running debate over a federal wage boost has emerged again as House Democrats work on a $1.9 trillion COVID-19 relief package that House Speaker Nancy Pelosi said Thursday will include the $15-an-hour federal minimum by 2025 when it’s sent to the Senate.
Whether the wage increase survives there is unclear, with at least two Senate Democrats now opposed to including it in the package.
White House Press Secretary Jen Psaki said in a press briefing Wednesday that President Joe Biden is supportive of an increase to the federal minimum wage, but that ultimately the Senate’s parliamentary rules will decide if the measure can be folded into the relief bill.
For both low-wage employees and the businesses in the South that employ them, the debate in the nation’s capital hits home.
“About 1 in 3 workers in the South would be impacted by a federal minimum wage,” said Yannet Lathrop, a senior researcher and policy analyst at the National Employment Law Project, a left-leaning think tank, including in some states that lack their own minimum wage standard.
Currently 29 states and the District of Columbia have a minimum wage that is higher than the federal, which has not changed since 2009, leading advocates to argue that workers are falling far behind. Corporations such as Amazon, Costco and Target have already bumped up their minimum wage to $15 an hour.
Black, Latino, immigrant and women workers living in the South and also in parts of the Midwest such as Iowa, Kansas and Ohio would benefit from an increase to the federal minimum wage, said Kali Grant, a senior policy analyst at the Georgetown Center on Poverty and Inequality’s Economic Security and Opportunity Initiative.
But it’s the South where it may matter the most.
“Southern states stand out among other states in terms of (not) having … a minimum wage of their own,” she said, adding that Florida is the exception. “That leaves a lot of workers in Southern states without access to jobs that pay living wages.”
A report released Monday from the nonpartisan Congressional Budget Office said that under the boost to a $15-an-hour wage by 2025, nearly a million people would be lifted out of poverty and more than 17 million workers would experience a wage increase by 2025.
It also found that $54 billion would be added to the deficit—and 1.4 million jobs would be lost.
But Grant contended that the report overestimated how much the increase in a federal minimum wage would cost the government and it “underestimated some of the ripple effects of the minimum wage.”
She said the model used in the study was more pessimistic in its estimates than other research, which has found that an increase in the minimum wage does not lead to detectable losses in employment for workers.
Democrats are hoping the report will help them make a strong case for including a gradual raise in the minimum wage as part of the COVID-19 relief package. That package will require just a simple majority for passage in the Senate because it’s been assembled under a special process called reconciliation.
It’s not known yet whether an increase to the minimum wage will pass muster as part of reconciliation, as only legislation that affects the federal deficit qualifies. But Democrats argue the CBO report shows that the minimum wage increase does that.
“It’s gonna be in reconciliation if I have anything to say about it,” Senate Budget Committee Chairman Bernie Sanders, a Vermont independent, told reporters on Capitol Hill after a budget hearing. “We’re not gonna get the 60 votes we need and the only way we’re gonna do it (is) with 50 votes.”
Sanders has been a champion for raising the minimum wage in the Senate for years. But not all Senate Democrats agree, and with a 50-50 Senate, Democrats are going to need to get some Republicans on board.
Sen. Joe Manchin, a West Virginia Democrat, has said he doesn’t support a $15-an-hour federal minimum wage, but would settle for $11 an hour. West Virginia currently has a $9.50 an hour minimum wage and that will go up to $10.25 this year.
Sen. Kyrsten Sinema (D-Ariz.) also said in an interview with Politico that she doesn’t support a $15 federal minimum wage. She argued that including a federal minimum wage proposal in COVID relief talks should not be considered under reconciliation.
Arizona has a state minimum wage of $12 an hour and the city of Flagstaff plans to increase the minimum wage to $15.50 an hour by 2022.
But two new Senate Democrats, Georgia Sens. Jon Ossoff and Raphael Warnock, in their runoff elections campaigned to raise the federal minimum wage to $15 an hour, a promise they said could only be kept if they were elected. Both co-sponsored legislation in late January that would raise the federal minimum wage to $15 by 2025.
“For too long, the federal minimum wage has not had the same purchasing power it once had and many of Georgia’s hardworking families bear the brunt of that gap,” Warnock said in a statement.
Republicans have argued that an increase to the federal minimum wage to $15 should not be approved during a pandemic. However, the wage increase would not be fully in effect until 2025.
Sen. Joni Ernst, an Iowa Republican, attached an amendment to the budget resolution in the Senate during a marathon series of quick votes to prevent an increase to $15 during a pandemic. It was approved by a voice vote.
“Tonight I got the entire Senate—Democrats and Republicans—to agree not to hike the federal minimum wage to $15 per hour during a global pandemic, which would kill jobs and destroy small businesses,” she said in a statement.
But Lathrop from NELP argues that those essential workers that have continued to work during a pandemic in restaurants, retail stores and supermarkets, would be the ones to benefit the most from an increase in the federal minimum wage.
“They are putting their life on the line,” she said. “They are the ones who are keeping the economy running in the middle of a pandemic.”
“To pay them a low wage is both a slap in the face to these workers and also very exploitive, in my opinion,” Lathrop said.
She added that a federal minimum wage should be the base and that states and localities should move to increase wages based on the cost of living. Lathrop said she wonders if $15 an hour will even be a livable wage in 2025.
Some states like California and New York and cities like D.C. might want a higher minimum wage than $15. One of the highest minimum wage requirements in a city is in Seattle, at $16.39 an hour.
“I think the federal minimum wage should be seen as the baseline above from which states and localities should be able to approve upon to make sure that their workers and their families are able to put food on the table, buy medicine,” Lathrop said.