Washington, D.C. — A new analysis from the Center for American Progress shows that states that guarantee better pay for their workers have added more jobs in 2021 than states with lower minimum and subminimum wages.
The issue brief analyzed state-level employment data from the hard-hit leisure and hospitality sector, from January 2021 through September 2021, and found that states with a minimum wage of more than $12 an hour saw industrywide employment growth of 25 percent, compared with only 7 percent growth in states still using the federal minimum of $7.25. It also found that states that have eliminated subminimum wages for tipped workers have grown employment in their leisure and hospitality sectors much more quickly than states that allow subminimum wages.
Similarly, the analysis finds that states that guarantee better pay for leisure and hospitality workers are on track to recover their prepandemic employment levels in the sector much sooner than lower-wage states. States with a minimum wage greater than $12 an hour are expected to surpass their pre-COVID-19 employment levels in the industry by July 2022, while states with a minimum wage between $10.01 and $12 an hour are projected to reach pre-COVID-19 levels in August 2022. Meanwhile, states using the federal minimum of $7.25 will not get to prepandemic employment levels in leisure and hospitality until November 2022, and states with a minimum wage between $7.26 and $10 would not get there until December of next year.
“States that guarantee higher pay for workers are adding jobs and recovering from the pandemic more quickly,” said Justin Schweitzer, policy analyst for the Poverty to Prosperity Program at the Center for American Progress and co-author of the analysis. “We’ve heard a lot of talk this year about a labor shortage, but this analysis indicates that there is not so much a labor shortage as a good jobs shortage.”
“The narrative that a higher minimum wage significantly hurts employment, especially during an economic recovery, has once again been shown to be false, as it has in countless studies before,” added Kyle Ross, special assistant for Poverty to Prosperity at the Center and co-author of the analysis. “Local, state, and federal lawmakers across the country should look at studies like this and see that raising the minimum wage and eliminating subminimum wages are both a moral imperative and an important way to encourage people to reenter the labor market.”
Read the issue brief: “Higher Minimum Wages Support Job Growth as the Economy Recovers From COVID-19” by Justin Schweitzer and Kyle Ross
For more information on this topic or to speak with an expert, please contact Julia Cusick at [email protected].