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Equal Pay Day: Raising minimum wage will help women – and the economy

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Raising the minimum wage wouldn’t just help these women make ends meet; it would also help close the gender wage gap. In 2011, women working full time, year round were paid only 77 cents for every dollar paid to men. The wage gap was even larger for women of color: Black women working full time, year round made only 64 cents, and Hispanic women only 55 cents, for every dollar paid to white, non-Hispanic men. 

Of course, multiple factors contribute to the wage gap, including pay discrimination, family caregiving obligations that constrain women’s employment opportunities, and the undervaluing of work traditionally performed by women. But the bottom line is that women – and their families – are disproportionately affected by the low minimum wage.

New legislation introduced last month in Congress – the Fair Minimum Wage Act of 2013 – would over the course of three years, gradually increase the minimum wage to $10.10 and increase the minimum cash wage for tipped workers to 70 percent of the regular minimum wage, indexing both to inflation. The bill would increase the gross earnings of a full-time minimum wage employee by $5,700 a year, lifting a family of three above the poverty line.

Critics argue that a wage increase would hurt employment and increase poverty. And a few studies have shown small negative effects on employment. But the bulk of the evidence suggests otherwise. In a study published in November 2010, for example, three economists studied 16 years of data, and compared counties where the minimum wage increased to neighboring counties where it didn’t. They found no detrimental impact on employment.

Other economists have gone further, concluding that a wage increase would stimulate the economy. The thinking is that low-income employees tend to immediately spend the additional money they earn on groceries, housing, transportation, and other expenses. Corporate profits would increase, and businesses would expand.

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