Increasing the federal minimum wage to $15 an hour by 2025 will boost wages for 32 million workers in America, a new report says.
The report, published by the left-leaning Economic Policy Institute (EPI), found that an increase in the minimum wage would affect 22.1 million workers directly, and 10.1 million workers indirectly, by the year 2025 – and together would constitute 21% of the projected U.S. workforce in that year.
According to EPI's estimates, 22.1 million workers would directly see a benefit from the hike since they would otherwise be earning less than $15 an hour in 2025, and 10.1 million would benefit indirectly as they'd be earning just above $15 an hour by 2025.
Previous research from the UC Berkeley Labor Center reached roughly the same estimates, expecting 23 million workers to see a "direct boost" in pay.
On average, an affected low-wage worker would see an annual pay increase of more than $3,300, EPI estimated.
'It makes great business sense'
Part of the 32 million who would see an increase in pay includes those in "critical infrastructure" jobs, such as in healthcare, energy, and transportation.
And the hike would disproportionately benefit Black and Hispanic workers — and women — the authors said. Earnings would rise for nearly one in three Black workers, and one in four Hispanic workers. Only one in five white workers will see a boost in wages, in comparison.
Additionally, a wage increase would lift 3.7 million people out of poverty, EPI stated.
That estimate is higher than a separate report by the Congressional Budget Office. The CBO said that while the wage hike would cost 1.4 million jobs by 2025, 900,000 people will be lifted out of poverty with a $15-an-our federal wage. (It's also worth noting that the CBO is more conservative in its estimates of how many workers would benefit directly and indirectly from a wage increase, placing that number at 27 million.)
For many workers, an increase to $15 would have a significant impact on their day-to-day finances. "I work 20 hours a week, my take-home pay is about $200, after paying rent, electric, phone bill and transportation and ... food and medication ... it's really a struggle and I'm working from paycheck to paycheck," Tracey Thuo, a 59-year-old worker Wilmington, Del., said at a press conference earlier this week, organized by Business for a Fair Minimum Wage, a coalition of groups that support of a $15 minimum wage.
Thuo is a member of the 32BJ Service Employees International Union, and cleans a building on Market Street. A "$15 minimum wage means a lot for all of us... [and] will make a big difference in my life," she added.
A handful of big retailers have already moved to raise their employees wages to $15 an hour and above, namely Target, Costco and Best Buy. Some smaller businesses support a hike as well. "It makes great business sense," Delaware-based Courtney Sunborn, who owns Ecolistic Cleaning, said during the press conference. "I want all of the employees to feel valued for their hard work."
She explained that by paying her workers a minimum of $14.50 an hour — and soon $15 an hour this year — "we've seen that it increases both employee commitment and reliability, but also decreases turnover. And turnover has proven for me to be so expensive," Sunborn said.
The current federal minimum wage has been at $7.25 an hour since 2009. Many parts of the country have already raised the minimum wage, reflecting local market pressures and workers' needs.
This includes Republican-leaning states like Florida. By 2022, three more states will have hourly wages beyond $10.
While President Joe Biden and some progressive lawmakers tried to include a $15 federal minimum wage hike in the $1.9 trillion stimulus package expected to pass this week, congressional rules prevented the wage hike from being included in the budget reconciliation bill.
EPI noted that 24 million of the workers who would see an increase in wages from a hike live in states represented by the 58 senators who voted against the minimum wage increase.
For instance, in Arizona — Sen. Krysten Sinema's state — around a quarter of the state's workers would be affected by the hike. Sinema, a Democrat, had voted against the amendment last week.
Some Democratic lawmakers have since then urged Biden to overrule the parliamentarian's decision.
"Without a higher minimum wage, a lot of workers... they're working two or three jobs... just to literally put food on their tables, so it's just a shame," Sen. Kirsten Gillibrand (D., N.Y.) told Yahoo Finance Live. But the fight isn't over, she added.
Most Americans favor raising the federal minimum wage, which was last increased in 2009.
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Aarthi is a reporter for Yahoo Finance. She can be reached at aarthi@yahoofinance.com. Follow her on Twitter @aarthiswami.
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