A $12 Minimum Wage Would Give More Than One in Four Working Moms a Raise

This post is crossposted on the National Women’s Law Center’s Womenstake Blog.

Here’s a Mother’s Day gift idea for Congress: Rather than getting mom flowers or chocolate, how about passing a policy that increases economic security for families, injects billions of dollars into communities, and ensures that women and people of color are paid more fairly?

That’s just what the Raise the Wage Act would do. Introduced last week by Sen. Patty Murray (D-WA) and Rep. Robert “Bobby” Scott (D-VA), the Raise the Wage Act would increase the minimum wage from $7.25 to $12 per hour by 2020 and then “index” it to median wages, so that the minimum would automatically go up as overall wages rose, beginning in 2021. It also would gradually phase out the lower tipped minimum cash wage so that tipped workers would be paid the regular minimum wage before tips—something that only happens in a handful of states today. Federal law currently allows employers to pay tipped workers a pre-tip wage of just $2.13 per hour, a policy that leaves tipped workers nearly twice as likely to live in poverty as other workers.

Passing the Raise the Wage Act would especially help women, particularly women of color. Women are the majority (56 percent) of workers who would benefit from increasing the federal minimum wage to $12 by 2020. As shown in the figure below, 30 percent of working women—roughly 20 million—would get a raise. The gains are even more substantial for working women of color, 37 percent of whom—8.6 million—would see their pay increase. (All of these statistics are available in EPI’s analysis of the proposal.)

Fig. 1

Share of selected groups that would get a raise by increasing the federal minimum wage to $12 by 2020

Share of each group that would get a raise by increasing the federal minimum wage to $12 by 2020
Women 29.6%
Working moms 27.3%
Single moms 39.6%
Women of color 37.1%
ChartData Download data

The data below can be saved or copied directly into Excel.

Source: EPI analysis of Raise the Wage Act using Current Population Survey Outgoing Rotation Group microdata

Copy the code below to embed this chart on your website.

Importantly, millions of these working women are moms—6.3 million, to be exact. That means more than one in four working mothers with children under 18 would see bigger paychecks under the Raise the Wage Act; among working single mothers, 40 percent (3.1 million) would get a raise. At the current minimum wage, a single mom who works full time to support two children is left more than $4,500 below the poverty line. At $12 per hour in 2020, that full-time working mother of two would earn enough from her job to safely be out of poverty.

The Raise the Wage Act also would help close the gender wage gap. Not only would more women than men get a raise under the bill, but because women are especially concentrated in the very lowest-paying jobs (and are paid less, even within these jobs), they also would see the largest increases in their pay. Analysis by the National Women’s Law Center shows that the average wage gap is 22 percent smaller in states with minimum wages of $8 per hour or more than it is in states that follow the federal minimum wage of $7.25 per hour. Similarly, in states where tipped workers are entitled to the regular minimum wage before tips, the average wage gap is 14 percent smaller than in states where employers can pay tipped workers just $2.13 per hour.

This Mother’s Day, we hope Congress will give 6.3 million working moms what they need most: a raise.

  • stichmo

    When you consider the loss of other assistance provided to low income mothers, raising the minimum wage won’t help working moms much if at all. And that is before you consider the potential loss of jobs due to increasing the minimum wage.

    According to the chart at p 7 of this CBO report, the effective tax and loss of assistance rate for a single parent with one child and an income increase from $10,000 to $23,000 ranges from 65% to 95%. In other words, not much (between 5% and 35%) of the additional income from increasing the minimum wage will stay with mom. http://www.cbo.gov/sites/default/files/11-15-2012-MarginalTaxRates.pdf

    Here in Illinois, a study was done on a single parent with two children. Basically, it showed that the effective tax and loss of assistance rate for an increase in the minimum wage to $12 is 100%. In other words, NONE of the additional income will stay with mom. https://www.illinoispolicy.org/illinois-warped-welfare-system-traps-families-in-poverty/

    Raising the minimum wage may help individuals whose families don’t qualify for assistance, but it won’t do much to help moms.

  • someotherguy

    I respectfully disagree. While I applaud the sentiment, the economics are wrong. We should improve the conditions of the working poor by expanding and fixing the EITC, not by increasing the minimum wage. Doing the latter at a national level will cause significant job losses in poorer areas and harm many of the mothers that we wish to help.

    There are two mothers that served as the Chair of the President’s Council of Economic Advisors. Listen to them. Here are Janet Yellen’s comments:

    “I think almost all economists think that the minimum wage has two main effects,” Chair Yellen said. One is to boost pay for low-wage workers and the second is that “there would be some amount of negative impact on employment.”

    Here is what Christina Romer had to say:

    “SO where does all of this leave us? The economics of the minimum wage are complicated, and it’s far from obvious what an increase would accomplish. If a higher minimum wage were the only anti-poverty initiative available, I would support it. It helps some low-income workers, and the costs in terms of employment and inefficiency are likely small.

    But we could do so much better if we were willing to spend some money. A more generous earned-income tax credit would provide more support for the working poor and would be pro-business at the same time. And pre-kindergarten education, which the president proposes to make universal, has been shown in rigorous studies to strengthen families and reduce poverty and crime. Why settle for half-measures when such truly first-rate policies are well understood and ready to go?”

  • thesafesurfer

    Right now we have over half of the Democrats in Congress refusing to approve a free trade deal because lower wages overseas will take jobs from Americans. Then we have this article that claims raising the minimum wage does not cause us to lose jobs.

    Which is it! Do higher wages effect employment or not.

  • Derek

    Did you hear the NPR story yesterday about restaurants in Seattle? An aggressive rise in the minimum wage over two or three years. Restaurants are cutting hours or even closing because they can’t raise prices enough to cover their costs. So a lot of folks who were making $8 to $10 per hour are now out of a job. Great deal for them, eh?

  • David Crosby

    This law is a bitter pill that small business could not and would not swallow. Raising the minimum wage to $12 an hour and then indexing it to inflation would ensure that small businesses hire as few people as humanly possible and lay off those on the rolls as soon as business slows down. Most politicians and activists seem to not understand that a $12 a hour employee costs much more than $12 an hour. The employer must pay FICA and Medicare taxes on the employee; federal and state unemployment taxes; worker’s compensation; health insurance; administrative costs (the national average is 10% right now); and sick time. For an employer a $12 an hour employee really costs around $18 an hour.
    Another fact that seems to escape politicians and activists is that an employer can only pay an employee a percentage of what their labor brings into the business as profit. So let’s put things in hard numbers. According to the WSJ, McDonald’s earns $0.06 profit on a hamburger. Paying a burger flipper $12 an hour or $96 for a days work (although that employee really would cost $18 an hour or $144 for a days work) would require them to produce and sell 1,600 burgers in an 8 hour shift just to break even. The fact is that raising the minimum wage would force most of these businesses to close down or drastically raise their prices. Many can’t raise prices because the consumer is so price conscious. The bottom line is employment will plunge because if prices are raised business slows down and fewer employees are needed and if many businesses close down and the survivors can then raise prices and stay in business, business remains slow perpetually reducing employment long term. The numbers don’t lie. This bill and effort is bad for business and bad for employment.

    • Jim

      Except for unemployment and workers compensation, employees would still pay the other withholding taxes out of their $12. And workers have always paid unemployment and workers comp. so it’s not much of an adjustment. Yes businesses will raise prices somewhat but not much with no losses. Regardless the minimal rise in wages to $12 or even $15 will be eaten up in inflation over the 4 to 5 years of implementation, something that’s not mentioned. Ultimately all workers pay either way, 1. as consumers and 2. as tax payers funding assistance programs for struggling workers.