Solvency – Racial Inequality

Derenoncourt, Montialoux, Bahn and 20 [Ellora Derenoncourt; Ellora Derenoncourt is an assistant professor of economics at Princeton University and a member of the Industrial Relations Section of Princeton Economics, he received her Ph.D. in economics from Harvard, Claire Montialoux is an assistant professor at the University of California, Berkeley. Montialoux earned her Ph.D. in economics from CREST in Paris, France. Her research interests include topics in labor economics, public finance, and political economy, Kate Bahn is the chief economist at The Urban Institute. Previously, she was the director of labor market policy and chief economist at the Washington Center for Equitable Growth. Her areas of research include gender, race, and ethnicity in the labor market, care work, and monopsonistic labor markets. Before Equitable Growth, Bahn was an economist at the Center for American Progress, and she served as the executive vice president and secretary for the International Association for Feminist Economics. Bahn received her Ph.D. in economics from the New School for Social Research and her B.A. from Hampshire College.; 10/29/20; “Why minimum wages are a critical tool for achieving racial justice in the U.S. labor market”; https://equitablegrowth.org/why-minimum-wages-are-a-critical-tool-for-achieving-racial-justice-in-the-u-s-labor-market/]

A higher federal minimum wage would help regional wage dispersion and reduce the racial wage gap In the United States, earnings across states and territories range from the highest median wage of $35.74 in the District of Columbia to $15 in Mississippi to the lowest median wage of $10.13 in Puerto Rico. This is due to a wide variety of factors, including differences city and state minimum wage statutes above the federal minimum wage and industrial composition between states that influence median earnings in those states. Twenty-nine states boast minimum wages today that are higher than the current federal minimum wage of $7.25 per hour, and 48 localities have adopted minimum wages higher than their state minimum wage or the federal minimum wage. Wages are also lower in states that have so called right-to-work laws and have lower union density. These states also tend to have more resistance to minimum wage increases. A higher federal minimum wage would help establish a floor across the nation, rather than institutionalize regional wage dispersion. Variations in wages across states and regions immediately lead to arguments over whether a higher federal minimum wage will actually harm workers in states with lower median wages, since the increase to the minimum wage would be a more substantial relative increase, compared to states that have independently raised their minimum wages above the federal floor. But as Derenoncourt and Montialoux’s research on the history of the federal minimum wage increase in 1967 shows, a significant national wage increase may be sustainable since the expansion of minimum wages to previously uncovered industries was, in effect, an infinite increase above the prior minimum of $0. The ability to significantly increase minimum wages without roiling U.S. regional labor markets is further supported by additional research. This research finds that increases of nearly 40 percent in the federal minimum wage, which would be similar in magnitude to the increases in the minimum wage that Seattle enacted between 2013 and 2016, would likely not have had a disemployment effect at the time on a national scale while also alleviating the worst earnings losses experienced during the Great Recession of 2007–2009 and afterward. This finding points to the conclusion that a higher minimum wage would be an effective tool for mitigating the racially disparate negative economic consequences of the coronavirus recession, too. A higher federal minimum wage would reduce poverty rates for Black and Latinx families Black and Latinx workers are significantly more likely to be paid poverty-level wages than White workers. This is why minimum wage levels are an especially important tool for raising the earnings and decreasing the economic precarity of the working poor. And it is no surprise that states with the highest poverty rates are also among those that have not independently increased their minimum wage above the federal floor. Amid the coronavirus recession, millions of families fell into poverty after the financial relief provided by the Coronavirus Aid, Relief, and Economic Security, or CARES, Act largely diminished with the expiration of the $600 plus-up in unemployment benefits at the end of July. These patterns will persist unless robust and inclusive economic policies, including an increased federal minimum wage, are part of the efforts to rebuild the economy centering racial justice. Furthermore, the real value of the federal minimum wage declined beginning in the late 1970s to the late 1980s, just as the convergence of the racial wage gap began to stutter. Currently, the minimum wage has not been increased since 2009, when it rose from $6.55 per hour to its current level of $7.25 per hour. In fact, the highest value of the minimum wage was at the time of the 1967 expansion. At that time, the federal minimum wage was nearly $10 per hour in 2017 dollars. (See Figure 2.) Expansion in minimum wage coverage and real values of the minimum wage, 1938-2018 (2017 dollars) The U.S. economy, of course, is much larger and more productive than it was in the 1960s, yet low-wage workers are not sharing in those gains. Had the 1968 minimum wage kept up with inflation and productivity growth, it would actually be $24 per hour today. Raising the minimum wage would turn back the declining real value of the minimum wage, reduce racial wage gaps as long as Black and Latinx workers are more likely to be low-wage workers, and reduce the higher likelihood of poverty for Black and Latinx families.

The CP disproportionately increases the pay of gender and racial minorities

Center for American Progress 18 (independent, nonpartisan public policy research organization), “Blueprint for the 21st Century; A Plan for Better Jobs and Stronger Communities,” 05/14/2018, https://www.americanprogress.org/article/blueprint-21st-century/#:~:text=The%20Blueprint%20for%20the%2021st%20Century%2C%20or%20Jobs%20Blueprint%2C%20proposes,of%20bargaining%20power%20of%20those

Such a minimum wage increase would also help to close gender and racial pay gaps that currently exist in U.S. society. As shown in the below figure, more than one-third of women would see a pay increase (compared to one-quarter of men) and a greater share of black and Hispanic workers would receive pay raises than their white counterparts.