Federal data affirm Minnesota’s choice to raise the minimum wage

Ben Horowitz
Mar 06, 2015

American workers earning the least saw wage gains from 2013 to 2014. Those gains were largely in states where the minimum wage increased last year. The boost for low-wage workers was the silver lining in Elise Gould’s 2014 Continues a 35-Year Trend of Broad-Based Wage Stagnation. This report for the Economic Policy Institute found that most workers’ earnings remained flat or decreased in 2014, despite the economic recovery.

Gould takes a deep dive into federal wage data and discovered that wages moved in very different ways for different people. She compares 2014 wages to wages in 2007, the most recent year before the Great Recession. When wages are adjusted for inflation, only the highest earners are doing better compared to 2007. And only the lowest earners saw a decent-sized bump in wages from 2013 to 2014: the 10 percent of workers with the lowest wages saw a 1.3 percent increase.

Gould finds that low-wage earners’ gains are largely attributable to the 17 states (plus Washington, DC) that saw a minimum wage increase in 2014. Low-wage workers’ wages in these states increased by an average of 1.6 percent, compared to just 0.3 percent elsewhere.

Chart Hourly wages of all workers, by wage percentile, 2007-2014 (2014 dollars)

Like the evidence of greater unemployment and underemployment for Minnesotans of color in our recent State of Working Minnesota report, Gould finds that Americans of color continue to earn much less than their peers, even as the economy recovers. Women also continue to earn less than men. This gender-based wage gap shrank a little at every wage level from 2007 to 2014, but increased slightly from 2013 to 2014 for the bottom 60 percent of workers.

As many Minnesota families still struggle to recover from the Great Recession, this study offers further proof that we cannot assume that economic growth will raise all boats. Gould’s work suggests that Minnesota’s recent legislation raising our minimum wage led to higher wages for low-income workers, just as decades of research on the minimum wage predicted.

-Ben Horowitz