Raising Wisconsin’s minimum wage to $15 an hour would bring raises to one in seven workers and reduce racial and gender pay gaps, according to a new report from COWS, a University of Wisconsin-Madison think tank.
Wisconsin is one of 20 states that use the federal minimum of $7.25, which hasn’t increased since 2009. According to the Bureau of Labor Statistics’ Consumer Price Index Inflation Calculator, a worker today would need to make $10.57 per hour to have the same buying power that $7.25 bought 14 years ago. Nineteen states have indexed their minimum wage to inflation to ensure that it rises as prices rise, but Wisconsin isn’t one of them.
In the report, researchers examined what would happen if Wisconsin raised its minimum wage to $15 or $20 over a five-year period. Rising consumer prices, labor standards and cost of living make such “dramatically higher” minimums necessary, the authors write, calling $7.25 a “paltry standard” that “has no credibility as a living wage.”
According to Massachusetts Institute of Technology’s Living Wage Calculator, a single adult without children would need to earn $17.49 per hour to support herself in Madison.
“Wisconsin is part of a shrinking number of states using the federal standard to establish the wage floor,” COWS associate director and report co-author Laura Dresser said in a press release. “And while many workers have seen raises in recent years, we show that a stronger wage floor would reach hundreds of thousands of workers in the state.”
While many employers already pay more than minimum wage, the authors argue that upping the minimum wage will discourage employers from committing other violations, like cheating workers of hours they work or misclassifying employees as independent contractors to reduce their own tax burden.
“Raising and enforcing the wage floor signals to all – employers and workers alike – that work is valued and that standards for employment will be upheld by the state,” they write.
Wisconsin pays less than neighbors
Just one of Wisconsin’s neighbors, Iowa, also uses the federal minimum. Michigan pays $10.10, Minnesota $10.59 and Illinois $13.
“Even in conservative states, higher minimum wages win on the ballot. This was evident in 2020, when both Donald Trump and a $15 minimum wage won a majority of votes in Florida,” the authors write.
In many states, including Wisconsin, workers who earn tips are subject to a lower minimum wage than their untipped counterparts, with the promise that their tips will bring them to at least the untipped wage.
Wisconsin’s tipped minimum of $2.33 per hour, 20 cents above the federal floor, is lower than all its neighbors. Michigan offers $3.84, Iowa $4.35 and Illinois $7.80, while Minnesota offers the same $10.59 minimum to tipped and untipped workers.
The authors call on Wisconsin to follow Minnesota’s lead, eliminating the “tip credit” to bring “more predictable income” to the state’s 50,800 tipped workers.
Raise would reduce racial, gender gaps
The report uses a model created by researchers at the pro-labor Economic Policy Institute to estimate how many workers would benefit from raising the minimum to either of the hypothetical new rates, $15 or $20. They counted both workers who currently make less than that rate, and workers who currently make just over that mark and who they anticipate would get raises “as pay scales adjust upward.”
Raising the minimum wage to $15 would directly or indirectly raise wages for more than 375,000 workers, they found, while raising it to $20 would reach nearly 900,000, or about one-third of the state’s workforce.
More than half of those who stand to benefit work in restaurants and retail, though significant numbers of health care and manufacturing workers would get a boost too.
The increase would help close racial and gender pay gaps, researchers find, as low-wage workers are disproportionately people of color and women. If the minimum rose to $15, one in four Black or Hispanic workers would get a raise, as would one in five women.
The move would boost incomes for nearly 60% of Wisconsin families living in poverty, and for 30% of those living near poverty, those that make less than 200% of the federal poverty line.
And it would raise wages for four out of five teenage workers, the authors write, pointing to a 2022 California study that showed that when wages rise for teens, they tend to work less and have more time available for school. Still, almost 75% of those who would benefit are 20 or older.
National legislation proposed
The authors note that their recommendations are controversial. “Some may find the suggestion and analysis of a $20 minimum wage for Wisconsin – a level nearly three times our current minimum – absurd or even offensive. Respectfully, we disagree,” they write, noting that a group of fast food workers began popularizing the “Fight for $15” mantra in 2012, when prices were far lower.
“The movement of low-wage workers put $15 as the goal long before the pandemic shut-downs, before the increasing understanding of the ‘essential’ nature of these jobs, and before the dramatic inflation of 2022,” they write. “All of this means we should continue to challenge the notion of what the minimum can and should be.”
Though critics worry that raising wages will stifle job growth or spike inflation, the 2022 study found that those concerns were largely unwarranted, with no effect on job numbers and little effect on prices.
Still, pointing to recent proposals to restrict access to unemployment insurance or let 14-year-olds serve alcohol, the authors say Wisconsin’s Republican-led Legislature is “more interested in eliminating labor standards” than in raising the minimum wage.
Nationally, legislation is currently on the table. In July, Democrats introduced the Raise the Wage Act, which would raise the federal minimum wage to $17 by 2028. The bill has been introduced unsuccessfully in each Congress since 2017.