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Minimum wage

What is it?

Local minimum-wage policies are an important policy lever for city leaders to use to lift families out of poverty and promote economic security for workers. Over the past few decades, the purchasing power of low-wage workers has continued to decline. In 2014, the inflation-adjusted minimum wage was 24 percent less than it was in 1968. To address this pressing challenge, many cities and states have established minimum hourly wages higher than the federally mandated minimum wage of $7.25 an hour ($2.13 for tipped workers). 

Building on the momentum of  fast-food workers’ campaign to raise their wages to $15 an hour, advocates and working people have advanced local efforts to increase the minimum wage for all, and they have won several high-profile victories from Seattle to Los Angeles to New York. Higher wages improve living standards for workers and their families, provide greater workforce stability, reduce reliance on social safety-net services, and increase the municipal tax base. Research has shown that mandatory minimum-wage increases have been manageable for businesses and beneficial for workers and the economy, as low-wage earners tend to spend their extra income in the local economy, creating a multiplier effect.

Some critics worry that raising the minimum wage will eliminate jobs, raise consumer prices, and drive employers out of business — or simply to outlying suburbs with lower wage requirements — but researchers have shown that minimum-wage increases have relatively minor effects on employment and large positive effects on living standards and economic inclusion for low-wage workers. 

For more resources on the minimum wage, see National Employment Law ProjectEconomic Policy InstituteFight for 15, and Alliance for a Just Society.

Who implements it?

  • Elected and appointed city officials can increase the minimum wage through executive orders, ordinances, and resolutions, unless state law prohibits local minimum-wage policies.
     
  • Unions, working people, advocates, and community organizations can organize campaigns to promote higher minimum wages and build critical support among residents and voters.
     
  • Business leaders can play important roles in minimum-wage campaigns. One of the key challenges advocates face is demonstrating that wage increases will not cause businesses to close or workers to lose their jobs.

Key considerations

Strong, well-organized coalitions that can effectively make the case for wage increases should specify the target wage level and which workers will be included. The most robust policiesinclude automatic increases linked to the cost of living and include strong enforcement provisions.

  • State preemption: Several states now preempt their cities’ ability to establish local minimum-wage standards.
     
  • Identifying the target population: Campaigns may focus initially on fast food workers, home health-care workers, state university workers, workers in the hospitality industry, or workers in city or state government, while others have focused on all minimum-wage workers.
     
  • Setting the minimum wage: Many current local and city fights are focused on an increase to $15 per hour, either for all workers or for all non-tipped workers. Cost-of-living analyses have found that low-wage workers need $15 an hour to be able to afford basic costs of living in many places in the United States, but local minimum wages might also be pegged to the federal minimum wage or calculated as a certain percentage of the local median wage.
     
  • Phase-in provisions: Most cities and states have found it helpful to phase in minimum-wage increases over several years, giving businesses time to adjust.
     
  • Include tipped workers: Strong minimum-wage provisions should eliminate the sub-minimum wage for tipped workers such as restaurant, car wash, and nail salon workers — increasing their wages to the same level guaranteed to non-tipped workers.
     
  • Automatic adjustments over time: Most minimum-wage policies build in predictable raises, often linked to the Consumer Price Index, so that minimum-wage workers do not fall behind as the cost of living increases over time.
     
  • Making the business case: Some business owners push back against minimum-wage campaigns, so advocates and policymakers need to make a compelling case that raising the minimum wage will help the local economy and will not harm businesses.
     
  • Legislation or ballot measure: State and local minimum-wage policies have been passed primarily through legislation, although ballot initiatives have also been effectively used.
     
  • Enforcement provisions: Most policies require employers to post the minimum wage prominently at work sites, post it in languages spoken by the company’s workers so everyone can read it, and document hours worked and payments. Policies should also provide for education and protection of workers and provide adequate resources for enforcement.

Where is it working?

Workers, organizers, and advocates across the nation are making rapid progress in securing minimum-wage increases.

  • Seattle was the first major city to adopt a $15 per hour minimum wage. The advocacy effort started in neighboring SeaTac, home to Seattle’s airport. Airline companies were shifting to pay workers as contractors, and wages declined dramatically as a result. A local Service Employees International Union (SEIU) chapter led a successful ballot initiative campaign, and voters approved a $15 per hour minimum wage for airport-related jobs. They then asked mayoral candidates to take a position on expanding the increase to the whole city. After the election, the new mayor set up a task force to develop a proposal for a citywide $15 per hour minimum wage, and the proposal was ultimately passed by the city council. In the years since Seattle began gradually raising its minimum wage to the $15 floor, the local job market has grown far faster than the national rate, and researchers have found minimal effect on prices at restaurants, grocery stores, and other merchants.
     
  • In New York City, fast-food workers took part in a strike to protest their low wages. Several years later, the Governor of New York State responded to ongoing advocacy by directing the state labor commissioner to study worker conditions and wages. After holding hearings and gathering testimony across the state, the wage board recommended raising the minimum wage for fast-food workers in New York City to $15 per hour, and raising minimum wages for fast-food workers statewide by 2021. With leadership from Governor Cuomo, New York State has now increased wages to $15 per hour statewideand tipped workers received wage increases to $8.45 per hour. Coalition partners are fighting to eliminate the separate sub-minimum wage for tipped workers.