RELEASE: New CAP Analysis Shows That Ending the Subminimum Wage Will Benefit Workers

Washington, D.C. — A new issue brief from the Center for American Progress finds that states with “one fair wage”—in which tipped, disabled, and temporary teenage workers earn the same minimum wage as other workers—have lower poverty rates and stronger businesses in affected industries compared with other states.

Key findings from the analysis include:

  • One fair wage states have lower poverty rates for both tipped and nontipped workers in key tipped industries.
  • Overall, businesses in tipped industries had higher employment growth in one fair wage states.
  • Notably, small businesses in key tipped industries also saw faster employment growth in states with one fair wage.
  • Women and people of color are overrepresented in tipped industries, meaning they benefit most when the subminimum wage is eliminated.
  • One fair wage states had less poverty for all tipped industry workers, with women and parents seeing the biggest reductions in poverty rates.

“People and businesses in states with one fair wage, clearly fare better than in states where some workers are paid as little as $2.13 an hour,” said Justin Schweitzer, policy analyst with the Poverty to Prosperity Program at CAP and author of the analysis. “This analysis and other studies from recent years show that raising the minimum wage and eliminating subminimum wages are effective ways to both reduce poverty and inequality and stimulate the economy. Congress has a chance to do right by workers, businesses, and the larger economy by passing the Raise the Wage Act in its entirety this year.”

Read the issue brief: “Ending the Tipped Minimum Wage Will Reduce Poverty and Inequality” by Justin Schweitzer

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