Recently, President Joe Biden included a measure in his $1.9 trillion coronavirus relief package to increase minimum wage to $15 per hour to help the U.S. economy recover from the pandemic.
This renewed push for a $15 federal minimum wage includes Democrats reintroducing the Raise the Wage Act at the end of January, which would increase the federal minimum wage from its current rate of $7.25 per hour to $15 per hour by 2025. If this change takes place, it's estimated that nearly 32 million workers will see an increase in their pay, according to the Economic Policy Institute.
The majority of these workers, according to EPI data, will be women and people of color. Right now, 59% of workers who would benefit from a $15 minimum wage are women, with nearly one in four of these women being Latina or Black. African Americans make up 31% of the workforce that would benefit from a minimum wage increase and Latinos make up 26%, reports EPI.
With women, on average, paid $0.82 for every dollar paid to men, and many women of color paid even less, data shows that an increase in pay for low-wage workers could have a significant impact on the gender and racial pay gap. In fact, minimum wage increases in the late 1960s explained 20% of the decrease in the Black-White income gap in the years that followed, reports EPI. Meanwhile, failure to adequately raise minimum wages between 1979 and 2009 accounted for almost 50% of the increase in inequality between women at the middle and bottom of the wage distribution scale.
"This is due to a lot of historical discrimination," says David Cooper, senior economic analyst at EPI, in regards to the ongoing gender and racial pay gap. "It's also due to what economists call occupational segregation."
Cooper explains to CNBC Make It that historically women and people of color have been locked out of high-earning occupations due to sexism and racism, with many of the roles that these workers hold today still being low-wage jobs.
For example, in the home health aide sector, where EPI reports the median pay is $12.15 per hour, women make up 92.7% of the workforce, according to the National Women's Law Center. In nursing assistant roles, where EPI reports the median pay is $14.26 per hour, women make up 88.9% of the workforce. And in other roles where the pay is typically less than $15 per hour, such as retail cashiers, and maids and housekeepers, women make up 77% and 88% of the workforce, respectively.
"When you lift wages for women, who would be the majority of those getting a raise, that helps to shrink race and gender wage gaps," says NWLC's VP for education and workplace justice Emily Martin. In addition to the Raise the Wage Act lifting pay for all minimum wage workers, Martin explains that the act would also increase pay for tipped workers. Currently, women account for more than two-thirds of tipped workers, which include restaurant servers and waitresses. These workers earn a federal minimum wage of just $2.13 per hour without additional income from tipping customers. For a full-time worker, this equates to just $4,260 per year, according to NWLC, which reports 16 states currently upholding the federal minimum wage standard for tipped workers.
"And that hasn't gone up since 1991," Martin says in regards to this pay. "So that really has an outsize effect on the poverty rates for women and women of color specifically."
Full-time workers who earn the current $7.25-per-hour minimum federal wage rate, make a total of $14,500 per year, according to NWLC, which leaves a family of three thousands of dollars below the federal poverty line of $21,960 per year.
"I think it's important to point out that more than a quarter of the workers that would benefit [from a $15 minimum wage] are parents," Cooper says. "We know that these are folks who are providing key incomes for their families and this isn't money that's just going to, you know, teens who are working after school for spending cash. These are jobs that are supporting families and people are relying on them to pay the bills."
Right now, 29 states, and the District of Columbia, have minimum wages that are above the federal level, with the remaining states having minimum wages that have remained stagnant at $7.25 per hour.
While raising the minimum wage amid a pandemic has been met with skepticism, Martin says "one of the reasons that raising the minimum wage really makes sense at this moment" is because it puts money into the pockets of the people who really need it, which is "an important stimulus for the economy overall."
"If you are giving more money to working people and families who are struggling to get by, they will spend that money and that money will go into the economy," she explains. "It doesn't go into a long-term savings account and disappear. So that helps to stimulate the broader economy and it helps to move us out of a recession."