It has been 13 years since the federal minimum wage was increased: Since July 2009, the federal minimum wage has remained at $7.25 per hour. In fact, in inflation-adjusted terms, it has declined by 26 percent over this time. A failure at the federal level to raise the minimum wage has resulted in a majority of states stepping in to fill the vacuum. Now, 20 states—disproportionately in the South—that have not raised their wage floors above the federal minimum to take action.
Using new data from the U.S. Bureau of Labor Statistics, this piece highlights the characteristics of those who earned at or below the federal minimum wage in 2021. Women are the majority of federal minimum wage earners, with Black and Latina women also overrepresented. Tipped and disabled workers also earn subminimum wages, which remains federally legal. Failure to increase the federally mandated minimum wage consistent with productivity or cost of living has caused these workers to earn poverty-level wages and struggle to meet their basic needs, particularly at a time with high cost of living pressures and food insecurity. Women and workers of color often also have limited access to worker protections and basic benefits—such as paid sick days or healthcare—and disproportionately experience poverty through higher rates of food and housing insecurity; lack of access to quality healthcare; and lower economic opportunities.
Raising the federal minimum wage benefits not just those that earn the minimum wage directly and their families but also employers and the overall economy. Furthermore, by eliminating the subminimum wage for tipped and disabled workers, the federal government could uplift paychecks of millions of workers who are often trapped in poverty. Higher wages are linked to less worker turnover and higher productivity, thus benefiting employers. When low-wage workers and households have higher pay, they tend to spend more, which helps stimulate the economy. It’s imperative that Congress and state legislatures, particularly those in the South, raise the minimum wage to foster an economy that works for all.
Significant disparities exist across states
Currently, there are 20 states that don’t have a minimum wage higher than the federally mandated minimum wage. (see Figure 1) States that have raised their minimum wages beyond the federal level have helped millions of low wage workers receive larger paychecks to better provide for themselves and their families. However, these increases have not occurred widely, with most states in the South having not raised their wages above the federally mandated $7.25 minimum. In 2021, more than half (53 percent) of all workers who earned at or below the federal minimum wage lived in the South, a region that is disproportionately African American, resulting in wide racial inequities. Furthermore, eight states—which include California, Nevada, Oregon, Washington, Minnesota, Montana, Alaska, and Hawaii—have abolished subminimum wages. Meanwhile 16 states, disproportionately in the South, use the federal tipped minimum wage of $2.13 per hour, adding to unequal wages across states.
The failure of states in the South to increase their minimum wages has contributed to racial inequity—that is, part of the reason for large racial income gaps is because many Black workers live in the places where the minimum wage is lower than the rest of the country. These states, by policy design, also have weak economic safety nets, which mean that low-incomes earners have less support to meet their basic needs or weather emergencies, should one arise.
These disparities are no coincidence: They are deeply rooted in the United States’ history of slavery, sexism, and racism. In 1938, the Fair Labor Standards Act was passed by the New Deal Congress, which required minimum wage and overtime compensation. With these federal labor laws, Southern congressmen were concerned that a minimum wage would not serve to be economically viable to the white supremacist plantation system they overwhelmingly relied on. Eventually, what led to the passage of a federal minimum wage law was a racist “compromise” with Southern Democrats, which excluded minimum wage requirements in the agriculture and service-sector industries that had painfully high concentrations of Black workers, particularly in the South. As a result, today, people of color are still overrepresented in minimum wage jobs.
Similarly, subminimum wages and the culture of tipping emerged from racist and exclusionary policies that prevented African Americans from receiving adequate pay against the backdrop of limited job opportunities. After emancipation, though tipping was socially unfavorable, it was widely practiced in order to underpay and degrade Black workers, especially in the service sector. The $2.13 tipped minimum wage is the byproduct of policy choices that continue to perpetuate racial inequities.
Women dominate jobs that pay minimum wage
Women make up the majority—63.5 percent—of those that earn at or below the federal minimum wage. (see Figure 2) They are also substantially more likely to be tipped workers who often earn even below the minimum wage.
Occupational segregation—as well as gender and racial discrimination—have shaped many features of the low-wage labor market today. Women and people of color, including Hispanic workers, are often likely to be employed in the service industry—as restaurant hosts, dishwashers, fast food cooks, child care providers, home health care aides, and cashiers—which represent nearly 74 percent of jobs that pay at or below the federal minimum wage. The historical division of the labor force—with some occupations seen as “women’s work”—has undervalued the work of women, especially women of color. The overrepresentation of women, and particularly women of color, among those earning at or below the federal minimum wage have contributed to persistent gender, ethnic, and racial pay gaps. In 2021, across all workers, women were paid just 73 cents for every dollar a man earns, while women of color experienced even larger pay gaps. The enduring concentration of women in minimum wage jobs illustrates persistent barriers in accessing good, quality jobs across the labor market.
The popular belief that minimum wage workers are teenagers who work after school or on summer vacation is not accurate: Most minimum wage workers are adults in their prime working years between the ages 25 and 54, many of whom are supporting families and children. This has important gender implications, as women are the majority of federal minimum wage earners and also hold dual responsibilities in their households. White women are the majority of breadwinning mothers, and women of color are disproportionately more likely to be the breadwinners of their households. This means that, often, their families depend on these low earnings to make ends meet. Minimum wage earners are not typically early career individuals, but are most often women that also shoulder multiple responsibilities in their households.
Policy solutions to support women and people of color in the workplace
To build an equitable economy, intentional policy changes are needed at state and federal level, including raising minimum wages and eliminating subminimum wages.
At a federal level, Congress must increase the federal minimum wage by passing the Raise the Wage Act of 2021 and work to end the subminimum wage for tipped and disabled workers. In addition, the federal government must establish guardrails that reflect the competing responsibilities individuals face at work and home by ensuring workers have access to paid medical and family leave; strong workplace protections; and increased access to affordable childcare, which helps parents, often mothers, to find and retain jobs.
At the state level, policymakers need to raise their respective minimum wages. Due to federal inaction in increasing the federal minimum wage, some states have taken it upon themselves to raise their minimum wages to more livable standards. As of January 1, 2022, eleven states—which include California, Connecticut, Delaware, Florida, Illinois, Maryland, Massachusetts, New Jersey, New York, Rhode Island, and Virginia—have increased their state minimum wages higher than the federal level. States in the South, in particular, need to work to increase their minimum wages—after failing to do so for years—and reverse state-by-state disparities.
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Conclusion
A declining real minimum wage has rendered many workers without enough income to make ends meet: Living on the current federal minimum wage is simply untenable. It is critical that federal and state policymakers work to increase the minimum wage to reduce poverty, help build economic security, and benefit workers. This would disproportionately assist women and workers of color who are often the workers earning at or below the federal minimum wage. Focusing on strengthening labor market conditions for those who are most vulnerable helps create an equitable economy that works for all.