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Essential workers in Texas looking for a raise? Maybe Washington will step up

President Biden wants to raise the federal minimum wage to $15 an hour, which would boost prospects for over 3.5 million Texans.

Many low-paid essential workers, from those in grocery stores to nursing homes, have been lauded for stepping up during the pandemic. But that hasn’t spared them some bad economic hits, including difficulty paying for food and rent.

At least some are getting a raise, thanks to increases in the minimum wage. This month, the pay floor is rising in 20 states and 32 cities and counties, according to a report by the National Employment Law Project in New York.

NELP, which advocates for policies to create good jobs and protect low-wage workers, said 23 more locales are scheduled for increases later this year, from cost-of-living adjustments to pay hikes from voter-approved ballot initiatives.

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Alas, Texas is not on the list.

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The Lone Star State, which has more minimum-wage workers than anywhere in the U.S., remains among the 21 states using the federal minimum of $7.25 an hour. The federal rate hasn’t moved since 2009, the longest period without an increase since the U.S. adopted a minimum hourly wage over 80 years ago.

Yet the movement for a $15 minimum, launched in 2012, has been gaining momentum in local jurisdictions. This month, over two dozen U.S. cities and counties reached or surpassed the $15 threshold with more to come, the NELP report said.

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Perhaps most important for low-paid Texans, President Joe Biden has proposed a $15 federal minimum wage as part of a $1.9 trillion pandemic relief plan. Eventually, that could benefit over 3.5 million workers in Texas, including many in essential businesses.

“Everybody’s all about [protecting] front-line essential workers now, but they need more than just applause,” said Tsedeye Gebreselassie, director of work quality at NELP. “Two weeks into a pandemic, we had literal breadlines and people getting kicked out of their homes. That’s not a strong middle class.”

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Historically, businesses have opposed raising the minimum wage, arguing it drives up labor costs and leads to fewer jobs — harming the people a higher minimum is supposed to help. The National Restaurant Association, which said over 110,000 restaurants have closed permanently or for the long term, warned of the impact.

“A nationwide increase in the minimum wage will create insurmountable costs for many operators in states where restaurant jobs are most needed for recovery,” a spokesman said in a recent statement.

But recent research, especially comparing job growth in neighboring communities with different minimums, has largely rejected the notion that a higher minimum wage reduces employment, Gebreselassie said.

“In fact, it’s incredibly helpful,” she said. “Both to the low-wage workers earning more income and to the families and local businesses that rely on that money.”

Expert views have shifted significantly as more research and real-world examples have emerged. In 1978, 90% of economists agreed that higher minimum wages reduced jobs for low-income workers. By 2015, only 26% of economists agreed as more evidence mounted, reported economic blogger Noah Smith.

Dozens of economists signed a petition calling for gradually increasing the minimum wage to $15. They said the past decade has produced a wealth of rigorous academic research showing that “modest increases in the minimum wage had little or no negative effects on the employment of low-wage workers.”

The benefits of a $15 wage to workers, families and communities far outweigh the costs, the petition said.

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More workers in Texas stand to benefit than anywhere else because the state is so large and has not adopted a higher pay floor. Over 3.5 million Texans would directly benefit from a $15 minimum wage by 2025, according to a 2019 study by the Economic Policy Institute, a nonprofit think tank in Washington.

The change in average earnings for affected year-round workers would be $4,300 a year, the study estimated. Only low-wage workers in Mississippi and Louisiana would see higher average annual increases.

The usual criticism that a higher minimum wage would hurt business is overblown, especially in business-friendly Texas, said one observer.

“It really leads to a race to the bottom in terms of protecting Texans,” said Jonathan Lewis, senior policy analyst at Every Texan, an Austin advocacy group formerly known as the Center for Public Policy Priorities. “This mentality that what’s good for businesses is good for Texans is not actually playing out.”

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Public support for a higher minimum wage is strong and growing. In an Ipsos poll in late August for Public Agenda and USA Today, 72% of Americans supported raising the minimum, including a majority of Republicans. In November, over 60% of Florida voters approved an amendment to raise the state minimum to $15.

Texas lawmakers have consistently rejected proposals to raise the minimum wage or let large cities set a higher floor. But Lewis is cautiously optimistic about a federal change, and another expert said the Texas economy won’t be damaged by it.

“We have an optimistic outlook for Texas,” said Karl Kuykendall, associate director of the U.S. regional economic service at IHS Markit, an economic forecasting firm. “Post-pandemic, we expect Texas to continue to rank among the fastest-growing states in the nation. And a $15 minimum wage would not fundamentally change that growth story.”

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The fastest-growing sectors in Texas, including technology and financial services, pay much more than the minimum wage. A long line of high-profile relocations, from Toyota to Tesla, also pay well — as does the oil and gas business.

A higher minimum wage could shock some low-paying service industries, depending on how fast the rate rises, he said. Construction costs could go up, too.

While Texas’ cost of living remains a competitive advantage, those costs have increased a lot in the past decade. But it’s not because of higher wages.

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“That’s just the natural economic cycle when you’re growing so quickly and attracting high-wage jobs,” Kuykendall said. “If you’re worrying about the cost of living, the rapid growth in Texas is more of a threat than a higher minimum wage.”

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