A $15 Minimum Wage Would Give One-Third of WI Workers a Raise

The average affected full-time worker would make $3,500 more annually, with 60% of those affected 25 or older and 61% women, according to Wisconsin Budget Project.  

The fight for a $15-per-hour minimum wage is back in mainstream political discussion after President Joe Biden included the increase in his $1.9 trillion COVID-19 relief proposal. 

Biden’s plan to raise the minimum wage to $15 per hour by 2025 would more than double the income of Wisconsin’s minimum wage workers and benefit the thousands more who are above minimum wage but are paid less than a living wage. Wisconsin’s last minimum wage increase was 2009, when the federal rate rose to $7.25 per hour. It is one of just 21 states stuck at $7.25, according to the National Conference of State Legislatures.

About a third of Wisconsin workers—more than 840,000 people—would see a raise with a $15 per hour minimum wage, according to estimates released Monday by the progressive Wisconsin Budget Project. The 25th percentile of workers in the state make $13.11 per hour or less, while the state’s median hourly wage is $18.79, according to the federal Bureau of Labor Statistics’ May 2019 state occupational and wage estimates, the most recently available data. 

“It would impact a broad range of workers [in Wisconsin],” said Tamarine Cornelius, an analyst with the Wisconsin Budget Project.

The average affected full-time worker would make $3,500 more annually, Cornelius said. Six in 10 of affected workers are 25 or older, and 61% are women, according to the Budget Project.  

Even a smaller minimum wage increase would have a large impact on Wisconsin workers, according to a 2020 report from the Budget Project, which estimated more than 460,000 Wisconsinites would see a pay raise under a 2019 proposal from Gov. Tony Evers to increase the state’s minimum wage to $10.50 per hour by 2023.

While a minimum wage hike would affect thousands throughout Wisconsin, its overall effects on the statewide economy are unclear, two economics professors told UpNorthNews.

“We’re talking about a pretty substantial increase in the minimum wage compared to, I would say, what we’ve seen historically,” said Tessa Conroy, an economic development specialist and assistant professor at UW-Madison. “And so it’s a little bit hard to know exactly what the impacts are going to be.”

Making $15 per hour in Madison or the Milwaukee suburbs is a lot different than making that amount of money in the Northwoods, said Steven Deller, a professor and community development specialist at UW-Madison. Further, an employer’s ability to pay that rate also varies wildly between urban, suburban, and rural areas, leading to the possibility of job losses in small business settings.

The nonpartisan Congressional Budget Office on Monday released a report in which it found Biden’s proposal would help 900,000 people out of poverty, but also cost as many as 1.4 million jobs and add $54 billion to the federal deficit from 2021-31.

Deller said it is likely many of those lost jobs would be caused not by unemployment, but by people who no longer need to be overemployed just to get by. He also said governments should consider how much taxpayer money might be saved by no longer having to fund food stamps for as many people.

“I think you’ll find that a lot of people—rather than having to piecemeal together two, three, four part-time jobs to make ends meet—at $15 an hour they’ll be able to work one job and survive,” Deller said.

Past minimum wage impact studies have found little to no negative economic impact when the minimum wage has increased, Deller and Conroy said. However, they cautioned that past minimum wage studies may not be relevant because the federal minimum wage has never doubled in such a short span of time.

Deller said any negative effects from a steep minimum wage hike would most likely affect rural Wisconsin employers disproportionately, because many—such as agriculture or tourism businesses—can’t afford to pay $15 per hour.

“As a community, you’ve got a choice to make,” Deller said. “Do you want to have more businesses and more jobs … or do you want to have fewer businesses that can pay better wages? What’s your choice? There is no clean answer.”

Conroy and Cornelius said negative business impacts would probably be at least somewhat mitigated by the fact that Biden’s plan is phased-in. 

Under Biden’s proposal, the minimum wage would move to $9.50 on June 1 and increase by $1.50 per year through 2024, reaching $14 per hour; it would then jump to $15 in 2025. From 2026 and onward, minimum wage would climb each year by an amount equal to the annual nationwide percentage increase of the median hourly wage. So, if the median annual wage grew by 10% in 2026, the federal minimum wage would increase by 10%, and so on.

“In general, local governments that have implemented $15 minimum wage have found that businesses can still thrive in that environment,” Cornelius said.

A Wisconsin law passed in 2005 prohibits counties and municipalities from independently raising the minimum wage, leaving the function up to the state and federal government. Republicans, who controlled the Assembly and Senate at the time, passed the law after Madison raised its minimum wage; Democratic Gov. Jim Doyle signed it.

Biden admitted in a weekend interview with CBS Evening News that he does not think his minimum wage plan will survive negotiations in his COVID relief proposal, in part because it is unclear whether Senate rules allow such a provision to be included via budget reconciliation. (The bill will be passed through budget reconciliation to allow for a simple majority vote, enabling Democrats to bypass the 60 votes required to break a Republican filibuster.)

Additionally, Sen. Joe Manchin, a moderate West Virginia Democrat, is against a $15 per hour federal minimum wage. He told The Hill he would support “something that’s responsible and reasonable,” such as $11 per hour. Democrats need Manchin’s support to pass the COVID relief bill because they only hold 50 seats in the Senate and will rely upon Vice President Kamala Harris to cast a tiebreaker.