Bernie Sanders’ “Raise the Wage Act” Would Make Life Better for 40 Million Americans: Analysis

By Jessica Corbett, a staff writer for Common Dreams. Follow her on Twitter: @corbett_jessica. Originally published at Common Dreams

By increasing the federal minimum wage over the next five years, the Raise the Wage Act of 2019 would boost the incomes and improve the lives of an estimated 40 million Americans, according to an analysis out Tuesday from the Economic Policy Institute (EPI).

Introduced last month by Sen. Bernie Sanders (I-Vt.) and Rep. Bobby Scott (D-Va.), the bill would raise the federal hourly minimum wage from $7.25—which Sanders calls “a starvation wage”—to a living wage of $15 by 2024. It would also require employees to pay the new minimum to tipped workers, who currently can make as little as $2.31 an hour.

EPI senior economic analyst David Cooper used EPI’s minimum wage simulation model—which pulls data from the American Communities Survey, the Current Population Survey, and the Congressional Budget Office—to predict the likely impacts of the proposal on American workers’ paychecks.

Cooper found that the bill would directly lift the wages of 28.1 million workers—leading to a $4,000 increase in annual wage income, or a raise of about 21 percent, for a full-time worker—and “another 11.6 million workers would benefit from a spillover effect as employers raise wages of workers making more than $15 in order to attract and retain employees.”

The report also debunks myths touted by Republican lawmakers and other critics of the grassroots Fight for $15 movement, explaining that “the vast majority of workers who typically benefit from minimum wage increases do not fit the common portrayal of low-wage workers primarily as teenagers from middle-class families, who are working part time after school, or as ‘stay-at-home’ parents…who are picking up some work on the side and whose ‘secondary earnings’ are inconsequential to their family’s financial health.”

Overall, according to EPI, a total of 39.7 million workers would benefit from the legislation, including:

  • 38.6 million adults ages 18 and older
  • 23.8 million full-time workers
  • 23.0 million women
  • 11.2 million parents
  • 5.4 million single parents
  • The parents of 14.4 million children

Cooper’s analysis also shows that the bill would disproportionately help workers—and their families—living at or below the poverty line, with more than two-thirds of the working poor positioned to see wage increases if the legislation were implemented as it was introduced.

In addition to helping millions of Americans escape poverty, the bill would also benefit the economy more broadly. “Because lower-paid workers spend much of their extra earnings,” the report outlines, “this injection of wages would help stimulate the economy and spur greater business activity and job growth.”

Advocates of the proposal are quick to point out that federal lawmakers haven’t updated the national rules since 2009—and, as Cooper noted in a statement, “in that time, the minimum wage has lost almost 15 percent of its value to inflation.”

“In fact, America’s workers are more productive and better educated than ever, and yet many are paid less today than their counterparts 50 years ago,” Cooper added. “It is long past time that we raise the federal minimum wage to a level that affords a decent life.”

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  1. jsn

    Pair this with improved antitrust/competition policy or the oligopolies will just raise their administered prices to absorb the wage Delta.

    1. Rajesh K

      Exactly, otherwise this will be offset by making the life of x million other Americans “worse”. Also food prices are already super expensive in a city like San Francisco. Heck a Subway salad can be as expensive as 9 bucks. That’s garbage food at stratospheric prices. Why should I support that?

      1. Ignacio

        This is pretty much onesided race to the bottom state of mind “I don’t want other guys’ pay rise cos I will have inflation”

        1. JTMcPhee

          Amazing, isn’t it, how the “Puritan Hangover” still sickens us to the point that half of os ordinary working mopes really will take Jay Gould’s pittance wage to kill the other half of of the class we are forced into by the actions of the Owners deploying all their wealth. And the skills of so many 10 percenters to bamboozle the rest of us into adopting that divide-and-conquer mind set.

          Easy to identify and describe the problem, of course, but how to counter the power that makes it so? Who owns the legitimizing machinery? Though a few insurgents are breaching the walls at a couple of spots, maybe, via their inclinations and courage, making way for a bunch more to actually turn the political economy in a much healthier direction? Was it Mother Jones who said “It ain’t easy”?

          1. jsn

            Yes indeed, “it ain’t easy!” I’m kind of surprised by the tone this thread took.

            Having read up on Speenhamland, subsequent to comments by Yves, I was just trying to point out that economic power, so long as it is allowed in its current concentrated forms, will simply milk any new surpluses from the system.

            Political economy is integrated and changes at any point ripple through the system. Understanding and managing those chains of causality is what makes successful polticial and economic policy.

            1. GF

              Also, if it isn’t paired with single payer, all or most of the wage increase will be taken by insurance costs as Kurtismayfield states below. Most companies paying minimum wage don’t offer health insurance. In addition, the poverty level will need to be adjusted as many will no longer qualify for Medicaid.

            2. Anarcissie

              Agreed. In liberalism, the social product is divided up according to power. Since the rich have more power than the poor, if the wages of the poor are raised, the rich will simply increase their take, to the detriment of those with savings and those on fixed incomes, such as pensioners and Welfare recipients — in other words, poor people with other incomes than crap wages. To make any real difference, we have to change the power relationships. The capitalist welfare-warfare state is a shell game.

            3. jrs

              yes increased minimum wages could all go to rents of various forms including rent as much as a guaranteed income could. But that’s happening even without either.

  2. taunger

    Can we use the inevitable reaction of, “But small businesses will down in flames!” to raise class consciousness.

    1. cocomaan

      I mean, that’s what is happening in NYC.

      The fact of the matter is that giant conglomerates benefiting from lobbying efforts, favorable regulations, international trade, etc, will barely see this increase in cost while small businesses are going to get shredded.

      There’s a whole hell of a lot of ways the government can actually help workers without tinkering with minimum wage. Like making collective bargaining easier.

      1. Pat

        Let’s really break this down. Eighty dollars a week per worker plus another nine dollars for payroll taxes equals 89 dollars per employee that gets the raise, remember in restaurants tipped workers have a different minimum wage. Of course the other question is how many of those employees are part time before the “I can’t pay workers that!” To really work out the increased costs.
        Look I would bet the woman from the Harlem diner really is facing increased cost issues forcing her to look to cuts to survive. It is likely a small neighborhood place where the clientele are facing the same pressures of inflation. Heartland Brewery not so much, as largely a tourist area restaurant all he needs to do is raise the cost of his already over priced burger between a quarter and fifty cents

      2. Yves Smith Post author

        This is such neoliberal bullshit. Living in NYC, the outrageous rent increases are a much bigger deal for retail businesses. About two years ago. the landlords DOUBLED the rents on 3rd Ave. near me. Several restaurants and other long-established businesses died. Most of those spaces have been less than half filled since then, so the greedy landlords didn’t come out ahead but killed enterprises and jobs.

        There was even an NYTimes articles 18 or so months ago listing 20 very famous NYC businesses that were killed by rent increases.

        1. Carey

          There was a, by all accounts, well run deli in my town of San Luis Obispo CA.
          Was. They had to move, I think, because of earthquake refitting; then in their
          new, equally well-run and fancier location, the landlord utterly arbitrarily
          raised the rent to an by a huge amount (anybody in this region would know
          who I’m talking about). The result: a well-run and well-loved local business
          sent down the tubes, “local color™” lost, but most of all, the proprietor, who
          made it all work, cut adrift.

          Yes, this is the “magic of capitalism”. Tell me again.

          Direct Action for the Common Good

    2. mraymondtorres

      We need to scrub the national consciousness (& conscience!) of the idea that a business built on paying less than a living wage (& I agree w Carla below that $20 by 2024 & indexed is more like it) to its workers is a defensible or even a viable business.

      If your business can’t survive without impoverishing workers, good riddance!

      1. Medbh

        Yes, the response should be the same as using slave or child labor. If you can’t do it without exploiting someone, then it shouldn’t be done.

        If it truly needs to be done (like maybe harvesting crops or care giving), then the business should reflect the real costs. No one has to eat out, get their house cleaned, or have lawn work done cheaply. If the work is necessary, then it’s necessary to pay livable wages.

  3. Carla

    $15 by 2024 is just small thinking. We have to do better than barely lifting workers above the poverty line. $20 by 2024 and of course index it to inflation.

    1. lordkoos

      Yes, and why do we have to wait until 2024 to make these changes? I can’t predict what a dollar would buy in 2024, but I’m pretty sure it will be less than it buys now.

    2. Big River Bandido

      Thank you. How much will your $15 be worth in FIVE YEARS?

      In the time since “Fight for 15” started, that $15 has already diminished its buying power.

      1. jrs

        I would struggle mightly to live on $20 in SoCal now but it’s probably the minimum that might be doable, but at least the minimum wage here is going up to $14 something THIS YEAR, not in some distant future. But yea it’s still not doable unless it’s at least $20 *NOW*, and that might be getting by. And a family living on that? Oh hahaha, oh no.

        1. Brooklin Bridge

          Your point that a “liveable” amount is different depending on location is spot on and frequently involves a heavy unreported tax of time and money in transportation.

  4. Skip Intro

    I’m glad you included the graph with a line representing the hypothetical minimum wage (currently $20.94) if wages increased with worker productivity. That line depicts a wage that is profit-neutral for employers. The difference between this level and the actual wage is the increased profit that employers are able to extract at no cost, the surplus surplus-value, as it were, that capital extracts from labor as a result of productivity increases. If anyone is still wondering about the increase in income inequality, and the exploding gap between the persons of obscene unearned wealth and the rest of us subhuman rabble, this chart might provide a serious clue. All that surplus profit is not unearned wealth, it is wealth earned by someone other that the person who took it.

  5. John Beech

    What is the effect on jobs? I wonder because we compete directly with vendors in the Orient. Consumers go online, make a purchase, and delivery is effected from Hong Kong via the USPS. And very competitively. Sometimes, the cost is below the amount for which we can sell our products often made in America.

    Since consumers talk a good game about buy American, but in the privacy of their internet connection do otherwise, forcing a wage increase leaves me wondering, what happens to the jobs? The point being, our position in the business world is already precarious, or put another way, when does the calculus shift to closing the business, selling the assets, and finding something else to do?

    Or is no job preferable to a low wage job? I remember my Dad working two jobs for a few years stretch. And I have done it myself once (but for months instead of years) until I obtained better employment.

    1. TroyMcClure

      At the risk of feeding a troll…

      “What is the effect on jobs?” Ask the wrong questions and the answers don’t matter.

      What is the effect of working full time plus and not being able to afford your own life?

      “when does the calculus shift to closing the business, selling the assets, and finding something else to do?”

      Sure glad this sort of thing hasn’t been happening for some 40 years.

    2. jsn

      “Or is no job preferable to a low wage job?”
      After a while, when your body begins to ache, no job is better: hence the opioid epidemic and the growth in disability payments.

      A system that relies on this level of exploitation is a system that needs to be discarded in favor of one that offers people a healthy future. A society that cannot produce that is a society that cannot be sustainable, ever.

    3. diptherio

      If the only way you (as the assumed business owner) can continue running your business is by paying your employees less than it takes them to live on, you don’t actually have a viable business — what you have is a way to pay your bills by denying your employees the ability to pay theirs. You are Walmart on a smaller basis — dependent on paying poverty wages to maintain your profit margin. If that’s the only way your business can “work,” then yes, you should close up shop and find something to do that doesn’t require you to pay the people who work for you below subsistence wages.

      1. JBird4049

        what you have is a way to pay your bills by denying your employees the ability to pay theirs.

        It seems a lot of the small businesses that are still surviving are doing this. Perhaps the economy is even worse than we believe?

    4. jrs

      I suppose there is an alternative philosophy whereby instead of raising wages etc. we control costs of living and keep them low (this doesn’t get much traction because it really would change everything, empower the masses, and also being so revolutionary it’s not so easily accomplished – a wage increase is a more immediately winnable battle).

      Of course this includes medical costs, it probably means housing is not ruled by the market the way it is now, maybe it’s all subsidized and state run. It’s a world in which the cost of everything needed to survive is super low (and some of it is free). Stuff that people merely want that can cost more. But not housing and medical care and job training and transportation if it’s necessary to daily living etc.

    5. Carey

      I received a product just today that was advertised as “Made in USA”- a Battenfeld Goldenrod, which is not a high-tech thing; just a low-wattage heating element in
      a hollow aluminum tube. For many years it was made locally, then the rights to it were bought by this Battenfeld outfit.

      What I received, of course, is a ‘Made in China’ piece of junk, even though this thing has
      been profitably made in the States for the last forty years.
      Words cannot…

  6. Kurtismayfield

    Until Health insurance costs are addressed, all of this is meaningless.. this will all be absorbed by either A. Employers pushing a higher percentage of your insurance costs on to you or B. The continued 8%/year increase that we all get on average.

    In 2000 I payed $30 a month for myself. Today I pay $211 a month/person in my household. That percentage increase is unsustainable, and if medical costs indexed to inflation (3%} during that same period we would have over $600 more salary per month in my household. That’s a $3.75 increase per hour in my salary.

    1. Ignacio

      That is exaggerated. I’d never consider meaningless the Raise Wage Act just because health care, climate change or whatever have not been solved. This is downplaying for nothing. If you want to address Health Care (yes, important) don’t do it by denying a deserved and needed rise (also important) just because it is not your case.

      1. jrs

        Yes people earning minimum wage are not people paying $211 a month for healthcare . People earning minimum wage can’t afford $211 a month for healthcare PERIOD. The extra $211 is simply NOT THERE, the concerns are much more immediate, maybe they can get medicaid if they qualify (and live in a state with expanded medicaid of course). So saying a minimum wage increase wouldn’t address their concerns, uh their concerns are probably not the $211 healthcare bill.

        (and even $211, unaffordable as it may be on minimum wage, is only possible if you are getting an employer subsidy, try getting that on the exchange market, even the bronze plans are likely to be more unless one is 20 something). Many of us work, yes work, without employer subsidized insurance.

      2. kurtismayfield

        No it is not downplaying .. the problem is that real wages are stagnant and necessary spending has inflated.. If there is a wage increase you bet your bottom dollar that it will be sucked up by housing, healthcare, and all of the the other costs that a rise in the minimum wage will not address.

  7. anon y'mouse

    by 2024, the “wage” will need to be closer to $25-30 to be a true livable minimum. and of course, this does not apply to the coasts or big cities. so why “phase in” what is already behind schedule? more bullshit, doled out with a “please sir, may i have some more…” expected in return.

  8. Disturbed Voter

    Sorry, but wage/benefit caging can only work in a protected market. You can achieve an equilibrium of higher wages & benefits, only if you keep foreign products, services and labor out of your market. Otherwise those other pressures will erode anything achieve by government mandate. US wages and benefits, were higher in the past, precisely because there were anti-competitive barriers in place, though some of those were circumstantial, not legislated. As the world markets matured post-Nixon, first the blue-collar workers were marginalized and now the white-collar workers.

      1. JBird4049

        It is greatly overstated, but he does have a point. It is why the post war economic setup created by the Bretton Woods System has been destroyed.

        The system of moderate international interconnection with fully independent states able to run their internal economies as they want is not what the international elites want. The neoliberal system of almost absolute free trade with no capital controls and a race to the bottom works for them.

        Think of what happened when Glass-Steagall was repealed. That combined with all the other undermining was part of the Neoliberal Washington Consensus. In order to regain prosperity and power for the whole nation and for others, we have to recreate the Bretton Woods system, the Glass-Steagall Act, and all the other parts of pre 1970. It will not be a duplicate because there have been great changes, and the goals are more important than any forms, but the system’s essence will be.

        If we don’t soon, I do not see how our current civilization will be around much longer. Certainly not as a functioning one.

        1. Disturbed Voter

          Unfortunately true, if all people, all nations were equal, and stayed equal, since 1900, all resources were equally distributed, and all costs of transportation/communication were “flat” … then every person, every region would have an equal chance … the variance in space and time would be purely statistical (chance) with some mean, and standard deviation at any given time. But that isn’t the world we live in.

          How much does particular barrier to entry twist the market? How much does government intervention twist the market? I leave that to real economists. Is is a 1% variance, 10% variance etc.

          I am in no way opposed to government intervention, or the aspiration of opportunity deprived peoples. Even egalitarianism seems impossible, let alone equalitarianism. But I think we should strive for some kind of egalitarianism. Unfortunately, whatever we do, we must be both smart and systematic about it, otherwise moving just one end of the Gordian knot won’t get us anywhere.

          Yes, no reason, except racism, that Mogadishu isn’t just like Stockholm? But it isn’t about the skin color either.

  9. todde

    you could lower the payroll tax.

    Everybody gets a raise AND the people who hire them get a break too.

    1. MyLessThanPrimeBeef

      That particular tax reduction also increases the money supply, in the sense that it lessens money destruction done via taxation.

      Like deficit spending, tax reduction can be good or it can be bad. This one sounds like a good idea.

  10. JIm A.

    I think that part of the reason for people’s misconception is that MANY people born into middle class families spent SOME time working for minimum wage in High School or College. But many of them only did it for a few years, so even if they are a large percentage of the people who have worked for minimum wage, they are a small percentage of the people working for minimum wage at any particular time.

    1. JBird4049

      It is a class issue as if you are poor or working class you have plenty of experience of both you and many others living on the minimum wage. I would also guess even the lower middle class, but yes the apparatchiks not so much. Since most of them come from the top 10% and do most of approved or acceptable punditry, new reporting, and think tank analysis, it’s a problem.

      Too many people don’t have enough exposure to most of the country to even realize that they might be wrong about it.

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