KY Policy Blog

Increase in Federal Minimum Wage Would Provide Much-Needed Boost to Kentucky Families

By Jason Bailey
August 14, 2012

An increase in the federal minimum wage to $9.80 an hour would raise wages in Kentucky by $606 million over the next three years and benefit one out of every four of the state’s workers, according to a new report by the Economic Policy Institute (EPI). Contrary to stereotypes, increasing the minimum wage would primarily benefit adults whose families depend on these jobs to make ends meet.

The report examines the impact of legislation introduced in both houses of Congress to incrementally raise the federal minimum wage from its current $7.25 an hour to $9.80 an hour over three years. The proposal would also raise the minimum wage of tipped workers to 70 percent of the regular minimum wage.

EPI estimates that in Kentucky the increase would directly affect the wages of 296,250 workers and indirectly affect the wages of another 135,101 workers whose wages are just above the new minimum wage, for a total of 431,350 workers impacted (25 percent of the Kentucky workforce). Those workers would receive an average annual wage increase of $607 upon full implementation of the legislation.

EPI’s report debunks the stereotype that minimum wage increases primarily help teenage part-time workers from middle and upper-class families. As the report outlines, in Kentucky:

  • 89.7 percent of workers who would benefit are at least 20 years old.
  • 56.1 percent of the family income of affected workers comes from the affected worker.
  • 39.5 percent of affected workers are married and 29.7 percent are parents.
  • 79.4 percent of affected workers are in families with incomes of less than $60,000.
  • 40.3 percent of affected workers have at least some college education.
  • 55.9 percent of workers who would benefit work full-time, while only 12.9 percent work less than 20 hours a week.

A minimum wage increase is an especially important policy right now because continued high unemployment is putting downward pressure on wages, making it particularly difficult for workers to meet their families’ needs. As the report outlines, increasing the minimum wage would also provide much-needed stimulus to the U. S. economy, increasing gross domestic product nationally by $25 million and resulting in the creation of approximately 100,000 net new jobs.

For the report’s state level data, including the impact of a minimum wage increase in Kentucky, click here.

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