Exploring the Effects of a $15 an Hour Federal Minimum Wage on Poverty, Earnings, and Net Family Resources

Increasing the federal minimum wage to $15 an hour would lift 7.6 million people in the United States out of poverty.

The Issue

Advocates for raising the federal minimum wage note that someone working full-time at the current federal minimum wage does not earn enough to keep a family out of poverty. Critics of a higher minimum wage argue that raising it would end up taking jobs away from the very workers it is meant to help because employers could not afford the higher labor costs.

Key Findings

• The annual family earnings of the nearly 56 million affected workers nationwide would rise by an average of $5,600 as a result of the minimum wage increase.
• Assuming no job loss would occur as a result of raising the minimum wage, nearly one-third of U.S. workers would be affected by an increase in the federal minimum wage to $15.
• Hispanic workers would see the largest increases in earnings and reductions in poverty. Earnings of affected Hispanic workers could rise by $5,900 and net family resources would increase by almost $4,500.  °   2.5 million Hispanic people in the United States would be lifted out of poverty.
• Even assuming some job loss, 6.9 million people would be lifted out of poverty, including 1.2 million Black people. °    States that would see the largest reductions in poverty are Louisiana (3.2 percentage point reduction), Texas (3.0 percentage point reduction), and Florida and Mississippi (2.8 percentage point reduction).

Conclusion

Researchers determine that regardless of the scenarios, a federal minimum wage increase would reduce poverty among all race and ethnic groups. Considering this wage increase would likely impact 56 million workers, it has the potential to bring great financial relief to families who need it most.

About the Urban Institute

The nonprofit Urban Institute is dedicated to elevating the debate on social and economic policy. For nearly five decades, Urban scholars have conducted research and offered evidence-based solutions that improve lives and strengthen communities across a rapidly urbanizing world. Their objective research helps expand opportunities for all, reduce hardship among the most vulnerable, and strengthen the effectiveness of the public sector. Visit the Urban Institute’s Health Policy Center for more information specific to its staff and its recent research.