Understanding the Landscape of Low-Wage Workers in America

Today, 30.6 million Americans, representing 21% of the workforce, earn under $17 an hour.

For the past 15 years, the federal minimum wage has remained unchanged, with its real value now at its lowest point in 67 years. While the pandemic fueled wage gains for low-paid workers due to tight labor markets and state-level minimum wage increases, this comes after decades of stagnant wage growth.

The above graphic, sourced from the Economic Policy Institute, illustrates the share of low-wage workers by state, highlighting significant disparities across the country.

Which States Have the Most Low-Wage Workers?

Below is a ranking of states by the share of workers earning under $17 an hour:

State	Share of Workers Earning <$17/hr	Number of Workers
Mississippi	41%	443,000
Louisiana	37%	647,000
Oklahoma	36%	608,000
West Virginia	35%	238,000
Arkansas	34%	412,000
Alabama	31%	641,000
North Carolina	31%	1,428,000
New Mexico	31%	251,000
Florida	30%	2,850,000
Kentucky	30%	518,000
South Carolina	29%	612,000
Tennessee	29%	853,000
Texas	29%	3,824,000
Georgia	28%	1,302,000
Idaho	27%	219,000
Missouri	27%	729,000
Wyoming	27%	70,000
Iowa	26%	383,000
Kansas	26%	354,000
Nevada	26%	361,000
Hawaii	24%	140,000
Indiana	24%	735,000
Michigan	24%	1,057,000
Montana	24%	111,000
Ohio	24%	1,241,000
Arizona	23%	729,000
Delaware	23%	101,000
Utah	23%	366,000
Illinois	22%	1,197,000
Nebraska	22%	204,000
Pennsylvania	22%	1,285,000
South Dakota	21%	89,000
Virginia	21%	843,000
Wisconsin	21%	584,000
Maine	19%	107,000
New Jersey	19%	801,000
New Hampshire	18%	117,000
New York	18%	1,478,000
Rhode Island	18%	92,000
North Dakota	17%	62,000
Maryland	16%	445,000
California	15%	2,467,000
Connecticut	15%	240,000
Oregon	15%	277,000
Vermont	15%	45,000
Colorado	14%	388,000
Minnesota	14%	381,000
Alaska	13%	41,000
Massachusetts	13%	414,000
Washington	12%	411,000
U.S. Total	21%	30.6M

Insights and Implications

The southern state of Mississippi has the highest share of workers earning under $17 an hour, making up 41% of its workforce. Despite having the lowest cost of living in the country, Mississippi has struggled to attract workers, even amid a period of sustained inflation. With no state minimum wage, it defaults to the federal minimum of $7.25 per hour. Additionally, its workforce is the least productive in the country, measured by economic output per job.

Following Mississippi are Louisiana and Oklahoma, with 37% and 36% of the labor pool being low-wage workers, respectively. Since the start of the pandemic, Louisiana has seen some of the slowest average wage growth across America. In real terms, between mid-2019 to mid-2023, it rose just 1.7% in total.

By contrast, Washington has the lowest share, at 12% of the workforce earning under $17 an hour. This is due in part to its high minimum wage, which increased from $15.74 in 2023 to $16.28 this year.

Historic Wage Gains

Notably, between 2019 and 2023, real wages increased by a total of 12.1% across low-wage workers. These gains marked a historic rise in real wage increases, even as inflation increased by almost 20% during this period. As part of this shift, 29 states raised their minimum wage through indexing, referendum, or legislation. While these wage gains have been markedly slow for decades, the share of low-wage workers has substantially declined from over 30% of the workforce in 2013, adjusted for inflation.

The Raise the Wage Act of 2023, a proposed bill to increase the federal hourly minimum wage to $17 by 2028, could potentially reshape the landscape of low-wage work in America, continuing the trend of state-level initiatives to boost minimum wages.

Conclusion

The disparities in low-wage worker shares across states highlight the complexities of wage policies and economic conditions in the U.S. These variations are influenced by multiple factors, including cost of living, state-level minimum wage laws, and local economic conditions. For instance, states with higher living costs and robust minimum wage laws, such as Washington and California, have lower percentages of low-wage workers. Conversely, states with lower living costs and no state minimum wage laws, such as Mississippi and Louisiana, show higher percentages of workers earning less than $17 an hour.

While significant progress has been made in recent years—particularly with state-level initiatives to raise minimum wages—there remains a considerable journey toward ensuring fair wages for all workers. The pandemic highlighted the essential nature of low-wage workers, leading to wage gains driven by tight labor markets and increased public awareness of wage disparities. However, these gains followed decades of stagnant wage growth, and the share of low-wage workers, though reduced, is still substantial.

The proposed Raise the Wage Act of 2023 aims to address these issues on a national level by gradually increasing the federal minimum wage to $17 by 2028. This policy could potentially lift millions of Americans out of low-wage jobs, offering a pathway to improved living standards and financial stability. By setting a higher wage floor, the Act would reduce income inequality and provide a stronger foundation for economic growth.

Moreover, raising the federal minimum wage can have broader economic benefits. Higher wages increase consumer spending, which drives demand for goods and services, stimulating economic activity. Businesses may experience higher labor costs, but these can be offset by increased productivity, lower employee turnover, and a more motivated workforce. Additionally, a higher minimum wage can reduce reliance on social safety net programs, alleviating pressure on government resources.

However, the implementation of a higher federal minimum wage must be carefully managed to balance the needs of workers and businesses. Policymakers must consider the diverse economic landscapes across states, ensuring that the transition to higher wages is smooth and supportive of both workers’ welfare and business viability.

In conclusion, the Raise the Wage Act of 2023 represents a crucial step towards achieving fair wages for all American workers. It acknowledges the importance of equitable pay and aims to create a more inclusive and resilient economy. As the nation progresses towards this goal, ongoing dialogue and collaboration among stakeholders will be essential to address challenges and harness the full benefits of a higher minimum wage.