Raising the minimum wage will improve the economic well-being of Rhode Islanders and strengthen the state’s economy. Giving the lowest paid workers a raise will improve their economic security and help curb the growth in income inequality, which has been significant in the Ocean State over the past three decades. Putting more money in the pockets of workers will also put more money in the cash registers of locals businesses and create jobs in Rhode Island.
Minimum wage workers are not able to meet their basic needs. The Rhode Island Standard of Need, a study that documents the cost of living in the Ocean State, shows that a worker earning the state’s current minimum wage of $7.75/hour falls short of meeting his or her basic expenses by $474 each month.[i] Furthermore, while Rhode Island’s minimum wage is slightly higher than the federal minimum wage, it still leaves a family of three well below the federal poverty line ($16,120 versus $18,480).
The Economic Policy Institute in Washington, D.C. has studied the Fair Minimum Wage Act of 2013 which would raise the federal minimum wage to $10.10 by 2015[ii]. Key findings from their analysis include :
- Nationally, 30 million workers would receive over $51 billion in additional wages once phased in, increasing GDP by roughly $32.6 billion and creating 140,000 net new jobs by 2015
- 72,000 Rhode Island workers would directly benefit when it is fully phased in, while another 31,000 would experience a boost in their earnings. Wages would be increased by more than $154 million by 2015.[iii]
- Rhode Island workers who would benefit from an increase in the minimum wage defy the stereotypes
– Women would benefit more than men
– More than four out of five beneficiaries are at least 20 years old
– More than 40 percent of beneficiaries have some college education
– Close to half of impacted workers are employed full-time
– 41,000 children in RI live with a parent who would directly or indirectly benefit
EPI’s findings that Rhode Island’s economy would benefit from increasing the minimum wage are consistent with recent research that de-bunks claims of employment loss[iv]. Additional costs can be absorbed by a variety of alternative means, including modest price increases, increased productivity, lower turn-over rates, or smaller profit margins.
Raising the minimum wage is an important step that lawmakers can take to help ensure that the American dream becomes a reality for more Rhode Islanders.