Effects of proposed federal minimum wage increase, 2013-2016
| Size of increase | Total estimated workers1 | Directly affected2 | Indirectly affected3 | Total affected | Total affected as % of workers | Increased wages for directly and indirectly affected4 | GDP impact | Jobs impact: Full-time employment5 | Three-year total: job years | |
|---|---|---|---|---|---|---|---|---|---|---|
| Three-stage increase to $10.10/hour, modeled for July 2013, July 2014, and July 2015 | ||||||||||
| 2013: $8.20 | $0.95 | 127,361,000 | 8,778,000 | 5,228,000 | 14,006,000 | 11.0% | $7,858,756,000 | $ 4,974,592,000 | 43,000 | |
| 2014: $9.15 | $0.95 | 128,356,000 | 14,489,000 | 6,815,000 | 21,304,000 | 16.6% | $18,266,928,000 | $11,562,966,000 | 101,000 | |
| 2015: $10.10 | $0.95 | 129,359,000 | 21,267,000 | 8,997,000 | 30,264,000 | 23.4% | $25,365,116,000 | $16,056,119,000 | 140,000 | |
| Cumulative totals: | 30,264,000 | $51,490,800,000 | $32,593,677,000 | 140,000 | 284,000 | |||||
1 Total estimated workers is estimated from the CPS respondents who were 16 years old or older, employed, and for whom either a valid hourly wage is reported or one can be imputed from weekly earnings and average weekly hours. Consequently, this estimate represents the identifiable wage-earning workforce and tends to understate the size of the full workforce.
2 Directly affected workers will see their wages rise, as the new minimum-wage rate will exceed their current hourly pay.
3 Indirectly affected workers currently have a wage rate just above the new minimum wage (between the new minimum wage, and the new minimum wage plus the dollar amount of the increase in the preceding minimum wage). They will receive a raise as employer pay scales are adjusted upward to reflect the new minimum wage.
4 The total annual amount of increased wages for directly and indirectly affected workers assumes they work 52 weeks a year.
5 The increased economic activity from these additional wages adds not just jobs but also hours for people who already have jobs (work hours for people with jobs also dropped in the downturn). Full-time employment takes that into account by essentially taking the number of total hours added (including both hours from new jobs and more hours for people who already have jobs) and dividing by 40, to get full-time-equivalent jobs added. Jobs numbers assume full-time employment requires $115,000 in additional GDP.
Note: Annual population growth: 0.78 percent (U.S. projected average annual rate from 2010 to 2015, according to Census). Wage growth: No assumed growth from 2012 values in year one, 1.8 percent growth in years two and three (U.S. average for bottom 20 percent of wage earners in 2012, using CPS-ORG). Job impact estimation methods can be found in Hall and Cooper (2012) and Bivens (2011).
Source: Authors' analysis of 2012 Harkin/Miller proposal using Current Population Survey Outgoing Rotation Group microdata
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