Raise the Wage Act

The State of American Women: The Impact of the Raise the Wage Act (Part I of a two-part series)
By: Rebecca Petras

When the at-work gender gap is discussed, the well-reported difference in pay between men and women is the most common reference. In 2018, women earned 81.1 cents on the dollar compared to men, according to US Census Bureau statistics.

The earning gap is a simple way to measure and communicate the glaring issues faced by women in the workforce. One of the main reasons for the gap is that women make up the majority of minimum wage earners. 

The minimum wage: A women’s right issue

One of the most effective ways to reduce the earning gap is by raising the minimum wage. The economic health of women is directly linked to the minimum wage. According to the National Women’s Law Center analysis of Census Bureau data, women make up an average of two-thirds of minimum wage earners across the county. In some states, eight out of ten minimum wage earners are women; in no state are men the majority of minimum wage earners. Moreover the vast majority of subminimum earners – those who rely on tips – are women.

The federal minimum wage level has stood at $7.25 since 2009 (and $2.13 for tip earners) and, as with previous small raises in the wage, it has not kept up pace with inflation. According to the Economic Policy Institute (EPI), a minimum wage earner in 2018 makes 14.8 percent less in real dollars than they would in 2009, and 28.6 less than a minimum wage earner in 1968 when the rate was $10.15 in 2018 dollars. 

There is now a major push to raise the minimum wage at the federal level. In July 2019, the Democrat-led US House of Representatives passed the Raise the Wage Act that would bring the minimum to $15 by 2025. According to EPI, which analyzed data from the Census Bureau, Bureau of Labor Statistics and the Congressional Budget Office, the Raise the Wage Act would increase income for more than a quarter of US workers. Of those who would benefit, 57.9 percent would be women (when women make up 48.5 percent of the total workforce).

The Raise the Wage Act did not pass through the US Senate under the previous administration, but it now has a shot to pass as part of the budget reconciliation bill Congress has been working on since late January; President Biden has indicated support for including it in the bill. There is also a bit more evidence of its impact. In early February, the Congressional Budget Office review suggested that the act as part of the reconciliation bill would lift 900,000 people out of poverty. It also did suggest it would increase unemployment by 1.4 million by 2025. That number is now being disputed and some economists call it far too pessimistic. 

The debate continues and as of writing, it is not clear whether the increase will be included in the reconciliation bill.

Stay tuned for the next part of the State of American Women Project, that will consider another area of work-related security for women: the renaissance of labor unions.