Why the optimal minimum wage in the US is at least $12 an hour
This story was supported by the journalism nonprofit the Economic Hardship Reporting Project.
When TaShira Smith of Durham, North Carolina, makes breakfast for her mother, three-year-old son, and five-year-old daughter, the typical menu is bacon and eggs. Around lunchtime, she might serve tuna sandwiches and chips—perhaps a banana. Dinner for the family might be meatloaf and mashed potatoes or spaghetti.
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Smith makes $7.25 an hour, the federal minimum wage, preparing fast food at a Checker’s drive-in restaurant. On those earnings, feeding her family, on top of their other expenses, proves a challenge.
“Once I get a check, it’s basically gone the same day,” says Smith, who receives the maximum monthly amount of SNAP benefits but has been denied affordable housing assistance twice.
Smith, 31, has long grappled with poverty-level wages and inconsistent work scheduling that’s largely out of her control. At the time of our interview, she says she was scheduled to work about 10 hours per week, despite hoping to work full-time. She deploys strategies to stretch her food budget, like using coupons. Name brand groceries are out, and milk is increasingly a splurge. It’s heartbreaking, she says, to go to the store with her kids and say no when they ask for something special.
“But sometimes I have to because I just really can’t afford it.”
Checkers, which reports average sales of about $1.1 million annually per restaurant, “could definitely afford to pay us more,” Smith argues. Same with other workplaces where she’s previously worked, like Burger King and Walmart, she says. But in North Carolina, one of 20 states without a minimum wage above the federal rate of $7.25 an hour (or $2.13 an hour for tipped workers), companies don’t have to.
The federal minimum wage hasn’t budged since 2009
Campaigns for a $15 hourly minimum wage have cropped up around the US over the past decade. But only California has set a statewide wage floor at that amount, at companies with 26 or more employees. Elsewhere, about a dozen US metro areas offer minimum wages of $15 or higher, including Denver, New York City, Seattle, and Washington DC.
Even a $15 wage, in an era of rising inflation and housing costs, is arguably too modest for American households. Drexel University’s Center for Hunger-Free Communities suggests that “[a] true living wage that supports a basic standard of living without food and housing insecurity would be between $20.00 and $26.00 or more per hour depending on the state.”
But other research suggests a leap to just $12 an hour would be enough to make noticeable progress on a perennial and critical problem for low-earning households: battling hunger.
A magic number?
During the covid-19 pandemic, data from the Household Pulse Survey enabled researchers to look at food insufficiency for low-wage earners on a biweekly basis, instead of annually. A 2021 research paper analyzing this data, co-authored by Boston University’s Julia Raifman, found state minimum wages of at least $12 an hour were associated with a 13% decrease in household food insufficiency compared to minimum wages below $8 hour, such as the one Smith earns.
“I would say that it is a significant reduction,” says Raifman, an assistant professor of health law, policy, and management at BU. She notes that this benchmark could be applied outside the pandemic—though inflation and cost of living increases may push it upward over time.
The research from Raifman and her colleagues also suggests that when compared to wages below $8 an hour, minimum wages between $8 and $11.99 an hour don’t decrease food insufficiency or alleviate very low levels of food sufficiency in households with children, meaning small, gradual increases to the current federal minimum won’t leave families any less hungry than they are now.
State and federal minimum wage increases might have to be big to fight hunger
In the past, any minimum wage increase, no matter how tiny, might have been hailed by pro-worker politicians as progress. (Minimum wage increases over the past two years commonly ranged from $0.50 to $0.75, leaving most states short of the $12 mark, and about half of all states experienced no increase.)
The research by Raifman and her colleagues suggests these tiny increments likely fail to tackle one of the most profound challenges for low-earning households: filling the fridge with more, and higher quality, food.
State minimum wages of at least $12 an hour were associated with a 13% decrease in household food insufficiency compared to minimum wages below $8 hour.
While $12 an hour still isn’t enough for US families to survive on, using it as a first milestone in raising wages could help with two critical issues concurrently: boosting incomes and decreasing household food insufficiency.
By this measure, 2022’s minimum wage increases stack up poorly. Of the 21 statewide increases that went into effect on Jan. 1, nearly half failed to boost the minimum above $12 an hour. (Presently, only 14 states and DC have minimum wages greater than or equal to $12.) Even the left-leaning Economic Policy Institute’s proposal for a phased-in $15 federal minimum wage doesn’t bypass the $12 mark until year three.
If the basic economic argument can’t rally enough support for more ambitious minimum wage increases, the lens of food insecurity (Is it available and acquirable?) or insufficiency (Is there enough in the house to eat?) perhaps offers another way to spur action.
Research suggests additional food security can spin off other benefits for low-earning households
Economist Tiffany Green, an assistant professor at the University of Wisconsin, Madison, says children with low birth weights or who were born prematurely may benefit from improvements in diet and nutrition attained through higher household earnings. “There’s some work that suggests minimum wage increases have modest but still significant effects on birth outcomes,” she notes.
Green acknowledges substantive income jumps would likely have a greater effect on population health and well-being. But “small increases help,” Green argues, because they can make a more convincing case for even larger climbs, “particularly when those programs are implemented and it can be shown that they don’t have the adverse effects on employment that a lot of people think.”
Since women and people of color are most often impacted by food insufficiency and insecurity, getting hourly wages to, or beyond, the $12 threshold can also help alleviate some underlying equity issues, along with providing better health and academic outcomes. Failure, meanwhile, will have an equally lasting impact.
“[The] food insecurity patterns we observe today will not only affect well-being and economic security in the short term,” Brookings Institution fellow Lauren Bauer testified (pdf) in 2021 before a US Congressional subcommittee, “but will reverberate for decades to come.”
The compromises of low-wage living
The US Bureau of Labor Statistics reports that about 1.1 million Americans earn the federal minimum wage or below.
Evan Holt is one of them. When we spoke in April of this year, he was a steakhouse server making $2.13 an hour in Covington, Kentucky, across the river from Cincinnati, Ohio, where he grew up. (Ohio’s base wages are slightly higher—$4.65 per hour for tipped employees and $9.30 an hour for non-tipped employees; Kentucky doesn’t have a minimum above the federal floor.)
Holt, 34, who has spent his career in customer and food service, calls his food budget “sustainable,” though he feels the sticker shock of ingredient costs when cooking from scratch.
But there’s a big catch to his “sustainable” budget. To stretch his living expenses, Holt has made some choices that many would refuse. He doesn’t rent his own place, staying between his partner’s and his mother’s, and he and his partner decided not to have children.
“I struggle to support even myself,” he says.
Taking action on minimum wage
In Birmingham, Alabama, Scott Douglas of Greater Birmingham Ministries successfully advocated for increasing the city’s minimum wage to $10.10 in 2016. But the measure was overturned by the state government. Though a lawsuit fought back against the state, progress in the case has stalled and minimum wage remains $7.25. Meanwhile, the MIT Living Wage Calculator calculates Birmingham’s living wage at $17.09 an hour for a single adult, and higher for those with families to support.
The US Bureau of Labor Statistics reports that about 1.1 million Americans earn the federal minimum wage or below.
Douglas says many low-wage working families he works with live in food deserts, finding locally available food to be more expensive and less nutritious than what’s available in wealthier areas.
“A woman told me that she preferred to shop in the suburbs because ‘I like to go to a supermarket where the meat is not green and vegetables are not brown,’” Douglas says.
I ask Douglas what would happen if Birmingham’s minimum wage increased even to $12 an hour to combat food insecurity. That alone, Douglas says, would prevent many workers from having to work multiple jobs and being reliant on rapacious payday loans.
Activism like Douglas’s, along with the unionization trend taking root among low-wage workers at companies like Starbucks and Trader Joe’s, puts the onus for change on workers instead of corporations or governments. But it might be the trick to hasten wage raises in states which have adopted the federal minimum and where employers don’t offer a higher wage floor.
Holt, the server in Kentucky, resolved to advocate for higher minimum wages in his hometown by running for office. His candidacy drew on his working roots claiming he would be “the first service industry professional ever elected to Cincinnati City Council.” He came in 23rd out of a crowded field of 35, in which only the top nine win a seat.
Meanwhile, Smith, the single mother in North Carolina, started organizing for a $15 federal minimum wage and union rights last year with the nonprofit Raise Up.
“When I first heard about it felt like it was like a song to my soul. It was a no brainer,” she says. Recently she traveled to Washington with other Raise Up and Fight for $15 campaigners for a Congressional Progressive Caucus briefing about fast-food industry working conditions and wages.
Smith says the main challenge in relaying how necessary wage increases are is that most politicians, and executives in charge of multibillion-dollar companies, have never had to experience the life she has.
“They try to say that it’s a livable wage, but I don’t honestly think that they could make it on that wage,” she says. I think if given the opportunity, they will probably fold under pressure.”
For Smith, a $15 minimum wage could mean getting off of social services and no longer having to be “the bad guy” when out shopping, denying her kids items they’d like to eat.
“It would do a lot for our family, our community and the world as a whole,” she says.
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