Twenty-three states and the District of Columbia raised their minimum wage in 2019 through legislation, referendum, or because the minimum wage was indexed to inflation in those states. Low-wage workers in these states saw much faster wage growth than low-wage workers in states that did not increase their minimum wage between 2018 and 2019, as shown in EPI’s latest State of Working America Wages report. This blog post dives a bit deeper by dispelling some tempting explanations for what might be happening, such as stronger across-the-board wage growth in those states (didn’t happen) or employment losses (not borne out in the data).

Figure A shows in green the states with minimum wage increases that occurred through legislation or referendum in 2019, while states in blue had automatic increases resulting from indexing the minimum wage to inflation. Workers in states that increased their minimum wage between 2018 and 2019 account for about 55% of the U.S. workforce. The nominal minimum wage increases ranged from $0.05 (0.5%) in Alaska to $1.00 (9.1%−10.0%) in California, Massachusetts, and Maine.

Figure B compares 10th-percentile wage growth in states with minimum wage increases compared with those without increases. Growth at the 10th percentile in states without minimum wage increases was much slower (0.9%) than in states with any kind of minimum wage increase (4.1%). This result holds true for both men and women. The 10th-percentile men’s wage grew 3.6% in states with minimum wage increases, compared with 0.7% growth in states without any minimum wage increases, while women’s 10th-percentile wages grew 2.8% in states with minimum wage increases and 1.4% in states without.

Strong wage growth at the 10th percentile is not simply due to stronger overall wage growth in those states. The question is whether 10th-percentile wages in those states would have risen with or without the minimum wage increases. Figure C illustrates wage growth separately for states with and without minimum wage increases between 2018 and 2019 at the 10th, 50th, and 80th percentiles of the wage distribution. Between 2018 and 2019, the median and 80th percentile wage in states with minimum wage changes increased 0.7% and 1.5%, respectively, while they increased 2.1% and 2.4%, respectively, in non-changing states. This belies any claims that strong wage growth at the 10th percentile is simply due to stronger overall wage growth in those states and that 10th-percentile wages in those states would have risen with or without the minimum wage increases.

What about changing economic conditions? Is there any evidence of job losses in states that increased the minimum wage that could shift employment away from minimum wage jobs? Figure D compares changes in unemployment rates and the share of the population with a job—the employment-to-population ratio—between 2018 and 2019 in states that increased their minimum wage versus states that didn’t. What’s important to note is that the unemployment rate fell in both sets of states between 2018 and 2019. It fell slightly more in minimum-wage-raising states (−0.3 percentage points) than in states that didn’t increase their minimum wage (−0.2 percentage points). Similar results are found for changes in the employment-to-population ratio. Improving labor market conditions occurred in both sets of states, but there was slightly faster growth (+0.4 percentage points) in states with increases than in states without (+0.3 percentage points). While this is far from a comprehensive analysis, there doesn’t appear to be any negative economic effect from raising the minimum wage.

It’s important to note that not only are wage increases for low-wage workers larger in minimum-wage-raising states, but their pay is significantly higher. The employment-weighted average 10th percentile wage in states that raised the minimum wage was $10.98 in 2019. In states that didn’t increase their minimum wage in 2019, the 10th percentile was $9.80. For a full-time worker, this difference totals about $2,500 over a year.

State-level increases are an improvement, but stronger minimum wage policy is needed, particularly for workers in states that continue to rely on the federal minimum wage of $7.25 per hour, which hasn’t budged in over 10 years. Furthermore, raising the federal minimum wage to $15 by 2025 would disproportionately raise pay for women. Although men make up a slightly larger share of the overall U.S. workforce, the majority of workers who would be affected by a raise to the federal minimum wage (58.3%) are women. Raising the federal minimum wage would also disproportionately benefit black workers because they are overrepresented among low-wage workers and are less likely to live in states or localities that have passed a minimum wage that is higher than the current federal minimum wage. As a result, increasing the minimum wage to $15 would mean a pay increase for 38.1% of all black workers. The U.S. House of Representatives passed this minimum wage increase in 2019, but so far the Senate has failed to act.

In sum, minimum wage policy matters for millions of low-wage workers. Low-end wage growth was stronger in states that increased the minimum wage than in states that didn’t. Further, increasing the federal minimum wage has the potential to lift wages for millions more workers.