Of the 20 states that failed to raise the minimum wage above the federal standard of $7.25 an hour, 17 have more than 12% of their children living in poverty, according to a States Newsroom analysis of wage and poverty data. Anti-poverty advocates say it’s a sign that lawmakers urgently need to raise the federal minimum wage and do more to help families in need.
Congress had an opportunity to do the latter by expanding the child tax credit before the end of the year, but lawmakers failed to reach an agreement with Republicans to include it in the omnibus spending package. The expansion, which was part of America’s bailout plan, provided eligible families with monthly payments of up to $3,600 and is said to have lifted 3.7 million children out of poverty, at least temporarily.
Raising the minimum wage wouldn’t result in such a rapid or drastic improvement, but a 2019 analysis by the Congressional Budget Office found that raising the amount to $15 an hour would lift more than 500,000 children out of poverty. And the Economic Policy Institute estimated in 2021 that if Congress passed a $15 minimum wage increase through 2025, up to 3.7 million people would be out of poverty — 1.3 million of them children.
Ben Zipperer, an economist at the Economic Policy Institute, said there is a strong link between the minimum wage and poverty.
“It’s not a one-to-one connection, but there’s a pretty strong connection,” said Zipperer, whose expertise lies in minimum wage, inequality and low-wage labor markets. “The most important determinants of poverty in this country are whether you work and how much you work, that is, whether you have a job during the year and how many hours per week or weeks per year you work for that job. … And then the third [determinant] is how much you were paid for an hour of work at your job. If you get relatively low wages, the minimum wage affects that.”
Congress last raised the minimum wage in 2009, but 30 states now require employers to pay more than the federal standard, according to the National Conference of State Legislatures. Numerous municipalities have also enacted living wage laws for city or county workers.
Twenty-seven states, including New Jersey, Florida, California and Missouri, will raise their state minimum wage in 2023 after passing legislation or voter-approved ballot measures that gradually increase the state minimum wage over several years or tie it to inflation. Washington ($15.74), California ($15.50), and Massachusetts ($15) will have some of the highest state minimum wages in 2023, although the high cost of living in these states mitigates the impact on poverty rates.
In Missouri, where the minimum wage will be $12 next year, a 2018 analysis by the Economic Policy Institute found that Proposition B, the ballot measure responsible for raising wages, will raise wages for 677,000 people in Missouri would.
States where lawmakers have not raised the minimum above the state $7.25 an hour include Mississippi, Louisiana, Georgia, Oklahoma, Tennessee, Kentucky, Arkansas, North Carolina, and South Carolina. All have child poverty rates of 20% or more, according to US Census data analyzed by 24/7 Wall Street, a financial news site. Mississippi has the highest child poverty rate in the United States at 27.6%, followed by Louisiana at 26.3%.
Zipperer said many of these low-minimum-wage states are concentrated in the southern United States for a reason. He pointed to the political arrangements that legislatures had made to exclude black workers from the labor rights gains of the 1930s, which were made in favor of Southern Democrats.
“This legacy of racism plagued the early years of the national minimum wage and labor laws in general in the United States, and while it has been somewhat ameliorated and overcome by the civil rights movement, you see the parallel to it now that you have a lot of places in the South, who have no minimum wages and/or very low minimum wages, and so they follow the federal standard that Congress has rejected for the past 13 years,” he said.
He added, “This type of decline in the cost-of-living adjusted value of the minimum wage disproportionately hurts the people who are paid the lowest wages in the US economy and because of our sexist and racist labor market, that is, women and people of color.”
In Louisiana, for example, 64% of black women make less than $15 an hour, while 58% of black workers and 50% of Hispanic workers also make less than $15 an hour, according to Oxfam America’s analysis of the US Census data.
The results of this discrepancy can be seen in an analysis of data on Lousian living standards conducted by Talk Poverty, a project of the Center for American Progress. It found:
19% of people in Louisiana had an income below the poverty line in 2019. 20% of working-age women and 29% of Black Lousianans lived below the poverty line in 2019. Louisiana ranked 42nd nationally for high school graduation rates and 45th for college degrees for the 2017-2018 school year. In 2018, 20% of young people ages 18-24 without a high school diploma were out of school or working. From 2017 to 2019, 15.3% of Louisiana households were food insecure.
Peter Robins-Brown, executive director of Louisiana Progress, said several factors contribute to the number of Louisians living in poverty. Louisiana has not prioritized funding for economic relief programs, has focused its tax reform on benefits for the rich and businesses, and has a particularly unfair criminal justice system that punishes the poor, he said.
“Louisiana’s social services are largely underfunded, which facilitates the persistence of generational poverty,” Robins-Brown said.
The state also favors landlords’ rights over renters’ rights, and people living in the southern parts of the state, which experience the worst weather disasters, have to live with high homeowners’ insurance premiums, further contributing to economic inequality, Robins- Brown.
Although Louisiana Governor John Bel Edwards is a Democrat and has expressed support for raising the minimum wage, Republicans control both houses of the Louisiana legislature. Louisiana is one of 24 states without a process for citizens to offer ballot initiatives and voter referenda.
“Both the House and Senate committees that deal with labor issues are low priorities for Republicans and Democrats because industry interests typically dictate outcomes in those committees,” Robins-Brown said.
For these reasons, Robins-Brown says, Louisians are counting on the federal government to take action to raise the minimum wage. He said his organization supports expanding the child tax credit because it is a powerful tool to reduce child poverty.
Congress last failed to raise the minimum wage in 2021 when it was proposed as part of a larger pandemic relief package. Fifty Senate Republicans and seven Senate Democrats voted against raising the minimum wage to $15 by 2025. The exclusion of expanding the child tax credit in Congress’ omnibus bill is another missed opportunity to reduce child poverty.
“The child tax credit has greatly reduced poverty during the recent expansion of this program, and unfortunately that was only temporary,” Zipperer said. “But I think it’s very clear evidence that we are indeed capable, to some extent, of eradicating a lot of poverty in this country. All you have to do is overcome the political opposition.”
Georgia Recorder is part of States Newsroom, a network of news outlets supported by grants and a coalition of donors as a 501c(3) public charity.
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