What Does the Raise the Wage Act of 2023 Do?
The federal minimum hourly wage is just $7.25 and has not increased since 2009. The Raise the Wage Act of 2023, introduced in the U.S. House of Representatives and U.S. Senate on July 25, 2023, would gradually raise the federal minimum wage to $17 an hour by 2028. The bill would also gradually raise and then eliminate subminimum wages for tipped workers, workers with disabilities, and youth workers, so that all workers covered by the Fair Labor Standards Act (FLSA) would be at the same wage level.
What Would its Impact Be?
EPI’s analysis shows that raising the federal minimum wage to $17 by 2028 would impact 27,858,000 workers across the country, or 19% of the U.S. workforce. The increases would provide an additional $86 billion annually in wages for the country’s lowest-paid workers, with the average affected worker who works year-round receiving an extra $3,100 per year.
Who Would Be Affected?
Table 1 shows EPI’s estimates of the population of workers, by demographic and other characteristics, who would benefit from the Raise the Wage Act of 2023.
How Many Workers Would Benefit in Each State?
Table 2 shows the estimated impact of the Raise the Wage Act of 2023 by state.
Why Are Workers in Some States Less Likely to Be Affected?
In summer 2023, 19 states and localities implemented minimum wage increases based on state, local, or municipal laws that already set the minimum wage higher than the federal standard. In total, 30 states and the District of Columbia have a minimum wage above the federal minimum, and many more localities have minimum wages above their state minimum wage. Workers in most of these states will still benefit from a $17 federal minimum wage, but the effect is muted because low-wage workers in those states have already seen wage increases above the federal minimum.
California, the District of Columbia, Hawaii, and Washington all have state- or municipality-level minimum wage laws that will set minimum wages close to, or above, the Raise the Wage Act’s proposal of $17 by 2028. Because of this, only a small number of workers in those states would be directly affected by the federal policy as state/local laws will have already raised the wages of low-wage workers in those jurisdictions. Because of the smaller impacted population, more detailed impact estimates are unavailable for those states. (Cells for which data are unavailable are marked with * in Table 2.)
Why Is It Critical That the Raise the Wage Act Be Passed?
As EPI’s state-by-state minimum wage tracker shows, raising the federal minimum wage is critical to protect workers (especially in the South) who have been left behind. A higher federal minimum wage can build on existing state-level standards and lock in the wage gains made by low-wage workers in the economic recovery from the Covid-19 pandemic.
Assumptions and Documentation for EPI’s Minimum Wage Simulation Model
- The estimates are for the year 2028, when the policy’s regular minimum wage is $17 and the tipped minimum wage is $15.
- The underlying wage distribution is based on the 2022 Current Population Survey.
- The simulation assumes nominal wage growth will be at a 5.0% annual rate between 2022 and 2023, and at an annual rate of 0.5% plus projected CPI growth in subsequent years.
- The simulation accounts for estimated effects of projected state and local minimum wages between 2023 and 2028.
- To read more about the EPI Minimum Wage Simulation Model, see the description in Cooper, Mokhiber, and Zipperer (2019).
