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22 states are raising their minimum wages in the new year

ROB SCHMITZ, HOST:

Nearly 10 million minimum wage workers will see a significant bump in their pay tomorrow, the start of the new year. That's because 22 states, plus an additional 38 cities and counties, are bumping up their minimum wage. According to the Economic Policy Institute, that adds up to nearly $7 billion per year in pay for those workers. We're joined now by Jeannette Wicks-Lim, research professor at the Political Economy Research Institute at the University of Massachusetts Amherst. Welcome to the show.

JEANNETTE WICKS-LIM: Thanks for having me.

SCHMITZ: So first, Jeannette, tell us about the demographic breakdown of minimum wage workers, the ones who will be earning a bit more in their paychecks now. And which industries do they predominantly work in?

WICKS-LIM: Women and racial minorities. You know, Black American workers and Latinx workers are concentrated in lower-wage occupations. And so those are the groups of workers that will get disproportionate shares of those raises. So it helps reduce wage inequality between those demographic groups. Usual suspects in terms of industries - low-wage industries will be primarily affected, like restaurant industry, fast food in particular, the hotel industry.

SCHMITZ: So more or less the service industry.

WICKS-LIM: Yes, exactly.

SCHMITZ: So looking at the states that are raising minimum wage, it looks like just under half did so through ballot measures and legislation. The rest were adjusting for inflation. What are the politics behind these kinds of wage adjustments?

WICKS-LIM: If you look at, you know, the roughly half of the states that have inflation adjustments to the minimum wage rates, you can see that the minimum wage increases are smaller than what you see when you have something passed on a ballot measure or through some legislative measure. So I think there's ongoing conversation about, you know, what is it that will ensure that the minimum wage is a meaningful labor standard? Do you try to guarantee that it always kicks up with inflation so at least it's not losing its real value, which is what we've seen with the federal minimum wage? It's, you know, stuck at $7.25, you know, since 2009. Or do you trust the political process to make meaningful changes?

SCHMITZ: What does that tell us?

WICKS-LIM: The federal minimum wage is really hard to move. Fourteen years is the longest stretch the federal minimum wage has gone without an increase.

SCHMITZ: And, you know, we should point out here that there are two categories of minimum wage - what many of us know as a traditional minimum wage and then a tipped minimum wage for workers who depend on tips to supplement their wages. For instance, in Delaware, the minimum wage is scheduled to go up from $11.75 to $13.25, but tipped minimum wage there will remain at $2.23. Why aren't these tipped minimum wages going up?

WICKS-LIM: Trying to reform that part of minimum wage law - it's relatively new terrain. The workers who have been advocating for moving the tipped minimum wage - they've had a lot of pushback. I think that workers who have to rely on tips are quite vulnerable to what their customers are willing and wanting to do, and they're also quite vulnerable to what the employers are willing and wanting to do.

SCHMITZ: You know, as you mentioned, the federal minimum wage of $7.25 an hour has not changed since 2009. There is a bill attempting to gradually raise that wage to $17 an hour by 2028. If this bill were to pass, what kind of impact do you think it would have on the economy?

WICKS-LIM: There was this very big push to get the federal minimum wage and state minimum wages up to $15 an hour. I'm trying to remember the exact year, but I want to say it was, like, 2015. It was - you know, there were a lot of campaigns. And there was a feeling that perhaps that was too ambitious. But my colleague Bob Polen and I did a study to see, well, what would the actual impact be of a minimum wage that high at that time at the federal level, looking at one of the most impacted industries, which is the fast food industry? And what we found was that if we adopted that over a few years, that was something that the industry could absorb.

SCHMITZ: That's interesting because, you know, we've seen businesses and employers say that if this were to happen, if we were to pay people at least 15 an hour or 17 an hour, this would result in profit losses and layoffs. You're saying that, no, many businesses could absorb this.

WICKS-LIM: In terms of its overall impact. What's been proposed, what's been debated in legislatures really are modest increases. And while 17 or 15 might sound large, it's because $7.25, that federal minimum wage, has been languishing for so long. But its wage floor at those levels, 15 or 17, I think can reasonably be absorbed by businesses without some huge shock to their profits.

SCHMITZ: That's Jeannette Wicks-Lim, research professor at the Political Economy Research Institute at the University of Massachusetts Amherst. Thanks so much for speaking to us today.

WICKS-LIM: Well, thanks a lot for having me. Transcript provided by NPR, Copyright NPR.

NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.

Rob Schmitz is NPR's international correspondent based in Berlin, where he covers the human stories of a vast region reckoning with its past while it tries to guide the world toward a brighter future. From his base in the heart of Europe, Schmitz has covered Germany's levelheaded management of the COVID-19 pandemic, the rise of right-wing nationalist politics in Poland and creeping Chinese government influence inside the Czech Republic.