Who benefits from a minimum wage hike?
By Davis Burroughs
May 29, 2019

Who comes to mind when you think of a minimum wage worker?

Opponents of increasing the minimum wage like to depict teenagers flipping burgers or waiters pocketing cash tips. Put another way, people who don’t depend on wages because they get tips or kids working part-time who don’t need a raise.

According to an analysis from the Economic Policy Institute, that is a very incomplete portrait of the low-wage workforce.

Among those who’d benefit from increasing the minimum wage to $15 per hour in Virginia, 60 percent work close to full time — at least 35 hours per week — while just 17 percent work in the restaurant and food service industry, according to the EPI study.

The 2019 data, scrubbed from EPI’s Minimum Wage Simulation Model, suggests there’s no such thing as a stereotypical low-wage worker in Virginia. The report shows wide diversity in the demographics of the workforce that would see an uptick in income if, as Virginia’s Democratic lawmakers have advocated, the minimum wage were increased from $7.50 an hour to $15 per hour.

“What’s really interesting about this analysis is that most workers who would see an increase are working full-time and most of the rest working at least half time,” said Laura Goren, a research director at The Commonwealth Policy Institute, a Virginia fiscal policy research group.

Among those who stand to gain, 21 percent work in retail; 13 percent in health care; 7 percent in education; and 7 percent in administrative, support and waste management roles.

Thirty-seven percent of would-be-beneficiaries graduated from high school, 31 percent have at least some college experience, and 15 percent have associates, bachelors or higher degrees.

Nine percent are 19-years-old or younger and 15 percent are age 55 or older — the rest are in between. “Ninety-one percent are age 20 or older,” Goren said, “so these are not teenagers by and large.”

A plurality, 48 percent, of those who would benefit are white; 27 percent are black, 16 percent are hispanic and 9 percent are of another ethnic background.

Ironically, among the few commonalities between beneficiaries is that they work at for-profit businesses. Eighty-three percent work in the private sector compared to 10 percent who work in the public sector and 6 percent at nonprofits.

The report considers two-types of beneficiaries, those who would benefit directly (workers that currently earn less than $15 per hour) and indirectly from a minimum wage hike to $15 per hour. Indirect beneficiaries are people estimated to benefit from employers seeking to continue rewarding seniority.

Bar chart showing percent of Virginia workforce that would be directly and indirectly affected if the minimum wage was increased to $15/hour

Twenty-two percent of Virginia’s workforce would directly benefit from bumping the minimum wage $15 per hour while 7 percent would benefit indirectly. All together, almost 30 percent of workers in Virginia would make more money under a $15 per hour minimum.

The average affected workers’ income would rise by 17 percent or about $4,060.00 per year, according to the EPI report.

In an interview, Del. Ken Plum, who in 2019 sponsored a bill to increase the minimum wage, said that extra income could act as a local stimulus. “One thing we know about what happens to the money that comes available to people with limited income is they spend it,” Plum said, “ … they’re not going to bury it in a Mason jar in the backyard.”

Low-wage workers “are not as active of consumers as they could be,” Plum continued, and plugging them with a little bit more money through policies like a higher minimum wage, “enhances the whole of the economy.”

Chart showing Virginia Democrats' 2019 proposed increases to the minimum wage over time compared to Republican's plan to hold the min. wage at $7.25 an hour.

General Assembly lawmakers haven’t touched the minimum wage since 2009, when it matched the federal government’s minimum of $7.25 an hour.

Republicans and some economists say that raising the minimum wage would have a negative effect on employment, particularly in lower-income areas where the cost of living is lower.

Del. Hala Ayala, who formerly earned minimum wage while working as a gas station attendant, rejected that argument and said Republicans are just “standing in the way of helping.” Democrats put forward four different minimum wage hike proposals in 2019, including two that called for a raise below $15 an hour. Republicans opposed and defeated all four bills.

“It’s unbelievable that you know, even at $15 an hour, it’s just helping you meet the basic essentials, it’s not really this glamorous lump sum of money.” She said that $15 an hour should be the bare minimum “no matter where you work or where you live.”

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