A YEAR OF ACTION: 

PROGRESS REPORT ON RAISING 

THE MINIUMUM WAGE

 

Executive Office of the President

August 2014
This Report Was Prepared by the National Economic Council, 

the Domestic Policy Council, the Office of Public Engagement 

and Intergovernmental Affairs, the Council of Economic 

Advisers, and the Department of Labor 
A YEAR OF ACTION:

Progress Report on Raising the Minimum Wage

In his State of the Union address on January 28, 2014, President Obama called on Congress to raise 

the minimum wage to $10.10 an hour. But as part of what he termed a “year of action,” the 

President also made clear that even as he pressed Congress to act, it was possible to make progress 

in the meantime – through steps that states, cities, counties and businesses could take to raise 

wages, as well as through executive action.

Despite efforts by leaders like Senator Tom Harkin and Representative George Miller to pass a 

$10.10 minimum wage, Congressional Republicans have thus far blocked proposals to raise the 

national minimum wage. But state legislatures and governors; mayors, county executives and city 

councils; and business leaders have answered the call, and the President has taken action on his 

own to raise the minimum wage for workers on new Federal contracts. Together, their efforts will 

result in higher wages for millions of Americans across the country. They also illustrate how the 

broad-based support for a higher minimum wage – bolstered by economic evidence on the benefits 

of higher wages to workers, businesses and the economy – has helped build momentum for wage 

increases across the country.

This report provides an update on the progress that has been made as a result of a nationwide 

push for a higher minimum wage, including:

 About 7 million workers will benefit from state minimum wage increases passed since the 

President’s initial call in 2013: Since the President called for a minimum wage increase in early 

2013, 13 states and the District of Columbia have passed increases to their minimum wage. 

According to new estimates from the Council of Economic Advisers (CEA), about 7 million 

workers will benefit from these increases as of 2017. 

 The Administration is implementing the President’s Executive Order to raise the minimum 

wage for workers on new Federal contracts – which will benefit nearly 200,000 workers: The 

Administration is on track to implement by the end of the year a new Executive Order raising 

the minimum wage for workers on new Federal contracts to $10.10 an hour, which is estimated 

to benefit nearly 200,000 workers by 2019.

 Cities and counties have also taken steps to raise their wages: Cities like Philadelphia, 

Louisville, and St. Louis have raised the minimum wage for their employees and contractors, 

joining other cities and counties that have raised wages for all local workers.

 Businesses – both large and small – are taking action: Since the beginning of the year, large 

companies like Gap Inc., Disney, and IKEA as well as small businesses across the country have 

announced increases to their starting wages. For example, Gap Inc.’s increase in its starting wage 

to $10 an hour by next year will benefit 65,000 workers – and has already helped increase 

applicants for new positions by 10 percent.
3

States, Cities and Businesses Taking Action to Raise Their Workers’ Wages

Even in the absence of Congressional action, states are taking steps to raise wages. During his State 

of the Union address this January, as the President called on Congress to raise the federal minimum 

wage to $10.10, he also urged state and local officials to pass minimum wage: “To every mayor, 

governor, and state legislator in America, I say, you don’t have to wait for Congress to act.” State 

legislatures and governors; mayors, county executives and city councils; and business leaders have 

all identified the benefits that come with raising the minimum wage – from increased spending in 

the local economy to higher productivity on the job – and responded.

THE CASE FOR RAISING THE MINIMUM WAGE 

 Adjusted for inflation, the value of the minimum wage has fallen by a third from its peak: In real terms, 

the minimum wage is now less than it was in 1981, at the beginning of the Reagan Administration. The 

Federal minimum wage is now only about 36 percent of the average wage, down from its peak of over 50 

percent.

 Raising the minimum wage would benefit about 28 million workers: According to CEA estimates, about 

28 million workers would benefit from an increase of the minimum wage – with more than 19 million 

earning less than $10.10 and benefiting directly, and an additional 9 million low-wage workers benefitting 

from the “ripple effect” of an increase. 

 A minimum wage increase would disproportionately benefit working women: Women account for more 

than half (55 percent) of all workers who would benefit from increasing the minimum wage to $10.10, and 

account for 72 percent of workers in predominantly tipped occupations (like restaurant servers, bartenders, 

and hairstylists) who would benefit from the first increase in the tipped minimum wage in over 20 years. 

More broadly, only 12 percent of workers benefiting from a minimum wage increase are teenagers and the 

remainder of the beneficiaries include a wide cross section of families with children, couples, and others.

 Raising the minimum wage would help the economy today: Because low-wage workers are most likely to 

spend the additional money they earn, increasing their wages would help to increase aggregate demand 

and strengthen the economy today. For example, a study released by economists at the Federal Reserve 

Bank of Chicago found that raising the minimum wage would raise growth by 0.3 percentage point in the 

short run. 

 A $10.10 minimum wage would lift 2 million out of poverty: Currently, a family of four with one full-time 

worker earning the $7.25 minimum wage is 17 percent below the poverty line, including tax credits. A 

$10.10 minimum wage would raise that family of four to above the poverty line – and in total, would lift an 

estimated 2 million families out of poverty. 
4

State Activity

Since the President first proposed raising the federal minimum wage in his 2013 State of the Union 

Address, 13 states and the District of Columbia have passed laws to increase the minimum wage. 

Jeanne Mejeur, a senior researcher at the National Conference of State Legislatures, noted in the 

New York Times of the nationwide effort to raise wages: “This is the first time where there have 

been quite a few states that have gone over the threshold of $10 per hour ... This is the first time 

that I’ve seen the states proposing these kinds of numbers.”

As one example of the momentum to raise wages in states across the country, on March 5, four 

governors – Dannel Malloy of Connecticut, Deval Patrick of Massachusetts, Lincoln Chafee of Rhode 

Island, and Peter Shumlin of Vermont – appeared with the President in Connecticut to support 

raising the minimum wage to $10.10. Three weeks later, the Connecticut legislature passed and 

Governor Malloy signed an increase in the state’s minimum wage to $10.10 by 2017, legislation 

closely aligned with the Harkin-Miller bill in Congress. Governor Malloy signed the bill at Café 

Beauregard, a small business in New Britain that pays its employees above the minimum wage – a 

location where President Obama and the four Governors dined at during the President’s visit to 

Connecticut. As Governor Malloy explained, “Connecticut was the first state that answered the 

President's call to increase our state's minimum wage to $10.10 because it's the right thing to do for 

PRESIDENT BARACK OBAMA DELIVERS REMARKS ON THE MINIMUM WAGE AT CENTRAL CONNECTICUT STATE UNIVERSITY IN NEW BRITAIN,

CONNECTICUT, MARCH 5, 2014. THE PRESIDENT IS JOINED BY GOV. DANNEL MALLOY OF CONNECTICUT; LABOR SECRETARY THOMAS PEREZ, GOV.

PETER SHUMLIN OF VERMONT, GOV. LINCOLN CHAFEE OF RHODE ISLAND, AND GOV. DEVAL PATRICK OF MASSACHUSETTS. (OFFICIAL WHITE HOUSE 

PHOTO BY PETE SOUZA)
5

our workers, for our businesses, and our communities. Full time workers shouldn't live in poverty 

and we know higher wages boost economic activity.”

The three additional governors who stood with the President in March – Patrick, Chafee, and 

Shumlin – have all signed minimum wage increases in their states. Massachusetts raised its 

minimum wage to $11 by 2017, Rhode Island raised it to $9 by 2015, and Vermont raised it to $10.50 

by 2018. Additional states including Maryland, Hawaii and Minnesota have used the President’s call 

to action to help catalyze efforts to pass minimum wage increases to or near $10.10 an hour. As 

Maryland Del. Tom Hucker said: “President Obama’s call to action was a powerful shot in the arm 

for efforts to raise the minimum wage in Maryland to $10.10 an hour. Before the President issued 

his challenge to states, previous efforts to raise Maryland's minimum wage had failed. His challenge 

was the catalyst that helped spur successful legislative action in Maryland and other states and 

cities.”

New estimates by the Council of Economic Advisers illustrate how these statewide increases are 

poised to raise wages for millions of workers across the country. According to these estimates, more 

than 7 million workers will experience an increase in their wages as of 2017 as a result of statewide 

actions, compared to current law.1

States That Have Passed Increases to the Minimum Wage in 2013 and 2014

State New Minimum Wage2

# of Workers 

Benefitting as of 

2017

States That Passed Increases in 2014

Connecticut $10.10 by 2017 138,000

Delaware $8.25 by 2015 30,000

Hawaii $10.10 by 2018 71,000

Massachusetts $11 by 2017 540,000

Maryland $10.10 by 2018 286,000

Minnesota $9.50 by 2016, indexed for inflation 347,000

Michigan $9.25 by 2018, indexed for inflation 482,000

Rhode Island $9 by 2015 51,000

Vermont $10.50 by 2018, indexed for inflation 20,000

West Virginia $8.75 by 2016 95,000

 

1 This estimate includes people who will benefit from the executive order raising the minimum wage for federal 

contractors to $10.10, those who live in cities who plan to raise their minimum wage above that of the state's current 

level and those who work for companies who have announced plans to raise their minimum wage above that of the 

state's current level.

2

For states that passed increases in both 2013 and 2014, only the 2014 increase is listed. 
6

States That Passed Increases in 2013

California $10 by 2016 3,323,000

D.C. $11.50 by 2016, indexed for inflation 43,000

New Jersey $8.25 by 2014, indexed for inflation 510,000

New York $9 by 2016 994,000

TOTAL 7,038,000

Local Activity

Just as states have taken action, cities and counties have also pursued steps to raise minimum wages 

on their own – whether for their own workers, for their contractors, or for all workers.

Cities like Louisville, Philadelphia, St. Louis, Santa Monica, Calif., and Ypsilanti, Mich. have raised 

wages to $10.10 or higher for their city workers or contractors. In January, St. Louis Mayor Francis 

Slay described his action to raise wages for city workers and contractors as responding to the 

President’s call: “Tonight during the State of the Union speech, President Obama announced his 

intention to re-set the minimum hourly wage for employees on new federal contracts to $10.10, a 

step toward a larger goal of setting all workers' wages at levels high enough to support families. This 

is a useful step and an important goal. I hope other employers will follow the President's example. 

The City of St. Louis will.” In May, Philadelphia Mayor Michael Nutter similarly cited the President’s 

efforts as helping to drive his action to raise wages for contract workers: “Today, I will in fact answer 

the president's call,” Nutter said. “I will sign an executive order that gives Philadelphians a raise right 

now.” 

Other cities like Seattle, Richmond, Calif., Berkeley, Calif., and Las Cruces, N.M. have raised wages 

citywide, as have counties like Montgomery and Prince George’s in Maryland, which raised them in 

tandem with Washington, D.C.

Mayors across the country have also called for additional steps to raise wages. In addition to 

endorsing a national increase of the minimum wage to $10.10 per hour, the United States 

Conference of Mayors passed a resolution earlier this year supporting “state and local government 

efforts to set their own minimum wages above the federal minimum wage to help [the] lowest paid 

workers keep pace with the rising cost of living.” 

Business Activity 

The President also called on business leaders to “do what you can to raise your employees’ 

wages.” As the Council of Economic Advisers explained in a February presentation, “The Economic 

Case for Raising the Minimum Wage,” decades of research on the minimum wage illustrates how 

raising the minimum wage could help businesses in several key ways. As the CEA summarized its 

findings (citations available in the original document): 
7

 Raising wages can increase productivity: First of all, raising the minimum wage can increase 

motivation. Workers are motivated directly by feeling they are receiving a fair wage. Higher 

wages can increase employee morale, which raises productivity. In addition, higher wages 

help workers maintain better physical and mental health, allowing them to be more 

productive at work.

 Raising wages can reduce turnover and save on recruiting/training costs: Higher wages lead 

to lower turnover, reducing the amount employers must spend recruiting and training new 

employees.

 Raising wages can reduce absenteeism: When workers are paid higher wages, they are 

absent from work less often, increasing both their own productivity and that of their 

coworkers.

Businesses have taken their own steps to raise wages above the level required by law, following 

the lead of businesses like Costco that had already set an example by paying its workers well 

above the minimum. Gap Inc. will establish a minimum of $10 next year, benefiting 65,000 of its 

90,000 American employees. The company has reported that job applications at Gap and Old Navy 

have since increased at least 10 percent. IKEA took a similar step raising hourly wages at its 38 

stores across the United States, and Disney recently announced starting wages at Walt Disney 

World would increase to $10 an hour in 2016. 
8

Small businesses have also acted – consistent with multiple surveys of small businesses conducted 

by the American Sustainable Business Council, Business for a Fair Minimum Wage, and the Small 

Business Majority that show a majority of small businesses supporting an increase in the minimum 

wage. For example: 

o Chuck and Don’s – a 25-store chain of pet food stores based in Minnesota – raised its 

minimum wage to $10.10 in March, retroactive to the 2014 State of the Union. “We want 

everyone who contributes to the company to share in its successes,” said CEO Bob Hartzell.

o Euclid Hospitality Group, owners of the Pi Pizzeria and Gringo restaurants in St. Louis, 

implemented a $10.10 per hour minimum wage in restaurants in March 2014, with co-owner 

Chris Sommers noting, “We began researching it in the fall and concluded that we can pay 

for this through (savings) associated with turnover and improved morale.

o Pizza King Indianapolis franchise owner Aaron Schaler pledged to pay all of his workers more 

than $10 per hour in April, noting that “happy employees are productive employees.” 

WHAT RESEARCH SAYS ABOUT THE IMPACT OF THE MINIMUM WAGE ON EMPLOYMENT

A wide range of economic research has found no significant impact on employment from raising the minimum 

wage. As summarized by CEA earlier this year: 

 Seven Nobel Prize Winners, eight former Presidents of the American Economic Association and over 600 

other economists recently summarized the literature on the employment effects of the minimum wage 

in this way: “In recent years there have been important developments in the academic literature on the 

effect of increases in the minimum wage on employment, with the weight of evidence now showing that 

increases in the minimum wage have had little or no negative effect on the employment of minimumwage workers, even during times of weakness in the labor market.”

 Pioneering research conducted by David Card and Alan Krueger in a 1994 study published in the American 

Economic Review in 1994 found that fast food restaurants in New Jersey did not cut back employment 

relative to Pennsylvania after the former State raised its minimum wage. They concluded, “We find no 

indication that the rise in the minimum wage reduced employment.” The Card-Krueger research was 

generalized by Arindrajit Dube, T. William Lester, and Michael Reich who compared 288 pairs of 

contiguous U.S. counties with minimum wage differentials from 1990 to 2006. Based on this, 

researchers found “no adverse employment effects” from a minimum wage increase.

 A recent literature review of the extensive published work on the minimum wage concluded: “[W]ith 64 

studies containing approximately 1,500 estimates, we have reason to believe that if there is some adverse 

employment effect from minimum-wage raises, it must be of a small and policy-irrelevant magnitude.”

 John Schmitt at the Center for Economic Policy Research concluded that “The employment effects of the 

minimum wage are one of the most studied topics in all of economics. This report examines the most 

recent wave of this research – roughly since 2000 – to determine the best estimates of the impact of 

increases in the minimum wage on the employment prospects of low-wage workers. The weight of that 

evidence points to little or no employment response to modest increases in the minimum wage.”
9

o RecycleForce, a social enterprise that provides recycling services and workforce training, 

announced in February that it was raising its minimum wage to $10.10 per hour for its hourly 

staff, explaining that raising wages is smart for helping families. RecycleForce President 

Gregg Keesling explained: “After the President’s speech, two of our employees asked, ‘Are 

you one of those federal contractors the President’s order impacts?’ While the executive 

order does not apply to us at this time, their attention to the President’s speech impressed 

me and prompted me to consider voluntarily raising our minimum wage to $10.10 per hour.”

Similarly, colleges and universities have raised wages for their workers. Earlier this year, Centenary 

College in Louisiana announced it would raise wages for its staff to at least $10.10 an hour. Hampton 

University President William Harvey took a similar step, donating $108,000 to raise that university’s 

minimum wage for permanent full-time staff to $9 an hour—benefiting 121 housekeepers, cafeteria 

workers, and maintenance staff. Recently, Kentucky State University interim president Raymond 

Burse decided to return $90,000 of his salary in order to raise the university’s minimum wage to 

$10.25. 

WHY BUSINESSES INCREASE THEIR WAGES

 Glenn K. Murphy, Chairman and CEO, Gap Inc.

To us, this is not a political issue. Our decision to invest in front-line employees will directly support our 

business, and is one that we expect to deliver a return many times over.

 Craig Jelinek, CEO and President, Costco

At Costco, we know that paying employees good wages makes good sense for business. We pay a starting 

hourly wage of $11.50 in all states where we do business, and we are still able to keep our overhead costs 

low. An important reason for the success of Costco’s business model is the attraction and retention of 

great employees. Instead of minimizing wages, we know it's a lot more profitable in the long term to 

minimize employee turnover and maximize employee productivity, commitment and loyalty. We support 

efforts to increase the federal minimum wage.

 Rob Olson, U.S. Acting President and Chief Financial Officer, IKEA

At IKEA, we are guided by our mission ‘to create a better everyday life for the many people,’ a vision that 

includes our co-workers, customers and the communities impacted by our business. The transition to the 

new minimum hourly wage structure is not only the right thing to do, it makes good business sense. We 

are basing our wages on our co-workers and their needs, rather than what the local employment market 

dictates. Our focus is to ensure that IKEA is a great place to work by providing an environment that 

develops our co-workers and also meets our customers’ expectations. All of this contributes to our 

business success.

 Randy Garutti, CEO, Shake Shack

Our turnover is lower, we can hire the best, they stay longer, and we can grow them into management. If 

the team feels taken care of, then they’ll go out and take care of the guests. 

 Gina Schaefer, Owner, A Few Cool Hardware Stores, a group of nine Ace Hardware stores in 

Washington, D.C., and Maryland.

As a small business owner, I am a firm believer that raising the minimum wage is the right thing to do. It 

will mean more money in the hands of those who need it, allowing them to pay for daily necessities 

without sacrificing their other basic needs. And increased wages means more money in peoples’ pockets 

that they then put back into the economy, which is good for businesses.
10

Taking Action to Support Federal Contract Workers

In January, the President made clear that while he was calling on state, local and business leaders 

to take action, he would also take the available actions within his power to raise wages. On February 

12, 2014, he issued Executive Order 13658, which increased the minimum wage to $10.10 for 

workers on Federal contracts and indexed the applicable minimum wage to inflation starting in 

2016. The Executive Order will also increase the tipped minimum wage for federal contractors to 

$4.90, with additional increases of $0.95 annually until it reaches 70 percent of the full minimum 

wage.

As noted elsewhere in this report, existing evidence suggests that raising the wages of contracted 

workers will boost their morale, productivity, and quality of work. It will also lower turnover and 

the costs of hiring new workers and supervisory costs. Together, these effects will increase 

efficiency and cost savings in government contracting.

To implement the Executive Order, the Department of Labor published a Notice of Proposed 

Rulemaking on June 17. A final rule is to be issued by October 1, 2014, with the $10.10 minimum 

wage required for new contracts when the solicitation is issued on or after January 1, 2015. 

Additionally, the Office of Management and Budget and the Department of Labor issued a 

memorandum to Federal agencies strongly encouraging them to begin implementing a $10.10 

minimum wage as soon as possible.

The proposed rule covers contracts for construction covered by the Davis-Bacon Act; contracts for 

services under the Service Contract Act; concessions contracts, such as contracts to provide food, 

lodging, fuel, souvenirs, newspaper stands, and recreational equipment on federal property; and 

contracts entered into by the federal government in connection with federal property or lands and 

related to offering services for federal employees, their dependents, or the general public, such as 

child care or dry cleaning in Federal buildings.

The proposed rule would cover workers doing work under these contracts who are otherwise 

entitled to the Fair Labor Standards Act minimum wage or prevailing wages under the Davis-Bacon 

Act or the Service Contract Act. The Executive Order also specifically noted that the minimum wage 

requirement would apply to workers with disabilities whose wages are calculated pursuant to 29 

U.S.C. 214(c). 

The rule’s economic analysis estimates that the Executive Order will directly benefit nearly 200,000 

Federal contract workers by 2019.

Next Steps

As this report shows, efforts by states, cities and businesses – as well as executive action taken by 

the President – is set to raise wages for millions of Americans across the country. Over the coming 
11

months, the Administration will continue to implement the President’s Executive Order raising 

wages for new workers on Federal contractors. At the same time, he will continue to make the 

case for a minimum wage increase – both for Congressional action to raise it nationally, and for 

additional progress among states, cities and businesses raising wages themselves.