Raising Wages and Protections for Workers Lifts All Texans
How Higher Wages Drive Our Economic Progress
Unless otherwise noted, this report relies on data from the Economic Policy Institute.
Working families from Amarillo to Corpus Christi are worth dignified wages that can put nutritious food on the table and strengthen Texans’ ability to prosper. When Texas workers are not paid for the value of our work, we all pay the price. As inflation rose during the pandemic, most necessities – housing, food, energy – became much less affordable. Recently inflation has slowed and reached the smallest increase since February 2021, but without sustained, robust wage growth for low- and middle-income Texans, we will continue to struggle against the ever-increasing cost of living.
There is some good news. Between 2019 and 2023, Texas’ lowest-paid workers saw a significant 5.3% increase in real wages. Federal investments during the pandemic, like stimulus checks and enhanced unemployment benefits, helped boost wages for low-paid workers and revitalize the economy. Most Texans of color saw wage growth as well, but wage gaps persist for women, the less educated, and non-unionized workers. This is due to anti-worker policies, especially pervasive in the South, that exploit racial and class divisions to maintain cheap labor at the expense of workers.
Despite strong wage growth for the lowest-paid Texans, wages are still insufficient to afford an adequate standard of living. The 5.3% wage growth Texas workers have seen is still less than half of the 13.2% wage increase seen across the nation. Due to a depreciating minimum wage that undervalues care, service, and safety occupations, working Texans at the bottom of the pay scale often cannot afford a livable family budget.
State leaders must raise worker wages and protections in the 89th Legislative Session.
- Policymakers must raise the minimum wage from the outdated $7.25 and fully staff the Texas Workforce Commission to prevent wage theft.
- State leaders must also address worker misclassification to prevent employers from wrongly classifying an employee as an independent contractor.
- Workers’ unions are a powerful vehicle for higher wages; the state should lift all laws that deter workers from participating in unions.
Lowest-Paid Texans Experienced Strongest Wage Growth Post-Pandemic
In this analysis, the wage distribution is divided into five groups: the 10th percentile (“low”), average of the 20th to 40th percentiles (“lower-middle”), the 50th percentile (“middle”), average of the 60th to 80th percentiles (“upper-middle”), and the 90th percentile (“high”).
Texans’ wages have increased across the board in the last 40 years, but the gaps between wage groups have widened considerably. The disparity gap is stark – wages for the 90th percentile have increased by 46% since 1979, compared to just 4% for the lowest-paid workers. Despite wage growth across all earning levels, many Texans still find their pay insufficient, as 2-in-5 Texans e to meet their basic needs.
The highest-paid Texans have experienced the fastest wage growth since 1979, while the lowest wage workers’ purchasing power has remained low since it dropped sharply in the 1980s. In 2023, the highest paid Texans in the 90th percentile had a wage of $57.35, far above those in the middle with an average wage of $22.05. The lowest earners in the 10th percentile earned just $11.96, and they didn’t see an increase in wages until a sharp rise in 2020.
Focusing on the wage change between 2019 and 2023 provides a clearer understanding of trends without the distortions caused by the sudden swing in employment and wages during the COVID-19 pandemic. From 2019 to 2023, hourly wage growth was strongest for lowest-wage Texans (the 10th percentile.) Their hourly wage increased by 5.3% (30 cents in 2023 dollars), largely a result of historic federal investment for workers.
Despite a rapid overall inflation rate of nearly 20% (about 4.5% annually), low-end wages grew slightly faster than prices. Nominal wages – the wage paid without accounting for inflation – for the lowest-paid Texans rose by 25.9%, from $9.50 in 2019 to $11.96 in 2023. Despite that wage growth, it is still not enough to make ends meet. No person or family of four can achieve an adequate standard of living with this wage in any county in Texas.
Wage growth was slower across higher wage groups. Texans earning the median wage saw the slowest growth at just 0.6% – a negligible figure suggesting wage stagnation. The 2023 median wage in Texas was $22.05, up from $18.32 in 2019. However, when adjusting for inflation, the real increase was only $0.14. Since 1979, real median wages showed no growth until 2000. The highest growth occurred in 2020 at 22% over the 1979 level but was followed by a decline.
When corporations fail to fairly compensate workers based on productivity or adjust pay for inflation, they keep workers from sharing in the prosperity their labor creates. As a result, executive salaries and shareholder margins have widened since the 1970s, while wages for everyone else have stagnated. Between 1979 and 2023, the hourly wages of middle-wage workers — those earning more than half the workforce but less than the other half — grew just 14.1% (about 0.3% per year.)
A Depreciating Minimum Wage Hurts Working Families
Inflation deeply affects working families. When prices rise faster than wages, purchasing power declines. A decline in purchasing power prices out families, particularly those on a tight budget or a fixed income, from having budgets that build a prosperous future for themselves and their children. In 2021, nearly 43% of Texan households — around 4.6 million of 10.7 million — struggled to afford necessities, including families technically above the federal poverty level.
The cost of household basics is rising faster than general inflation. Since 2007, the ALICE Essentials Index (AEI) has grown faster than the broader Consumer Price Index (CPI), with the gap widening after the COVID-19 pandemic. From 2021 to 2023, the AEI’s annual inflation rate for household basics was 7.3% nationally and 7.8% in Texas, compared to a 6.1% increase in general inflation. Unlike the CPI, the AEI tracks only essential expenses like housing, child care, food, transportation, health care, and a basic smartphone plan.
Stagnant wages are by design. Anti-worker policies have allowed business interests and the wealthy to exploit racial and class divisions, securing cheap labor and maintaining their power at the expense of all working people in the South. This is not surprising, as the gap between worker productivity and wages has increased dramatically in the last 40 years.
Too many Texans are held back from adequately supporting themselves and their families because of low hourly wages. Nearly 30% of workers in Texas (4.5 million) make less than $17 per hour, according to Oxfam. Compared to other demographic groups, people of color (36.7%), women (36.1%), and single parents (52.0%) represent a higher share of Texans with wages below $17 per hour.
Low pay is a perennial problem, stemming from outdated minimum wages that federal and state leaders have failed to adjust for inflation or the true cost of living. This outdated minimum wage creates a job market that deeply undervalues the labor of care, service, and safety occupations. Raising the minimum wage prioritizes the well-being of families, particularly for households where women are the primary income earners.
The purchasing power of minimum wage has declined close to 30% in the last 15 years. In Texas, the minimum wage stands at $7.25 per hour ($15,080 a year.) Because Texas adopts the federal minimum wage, its purchasing power was at its highest in 2009 when the federal government last raised the minimum wage. Comparing the purchasing power in recent terms, the minimum wage in 2010 was $10.19 compared to $7.25 today, a drop of $6,115 in a year’s worth of wages.
Raising the minimum wage in Texas would fairly distribute the wealth that workers provide to their families. Without strong wage growth for low- and middle-income Texans, their purchasing power will continue to erode. With better wages, thousands of Texans would be closer to maintaining a stable family budget that fosters prosperity.
Wage Growth for Most Texans of Color in the Last Four Years
Most Texans of Color have seen median wage growth in the last four years, but wage gaps persist for women, the less educated, and non-unionized workers.
- Race and Gender: The gender pay gap remains stark, with women earning 84 cents for every dollar earned by men in 2023. Notably, women of all races and ethnicities have received median pay increases since 2019, while white and Hispanic men saw drops in their wages. Despite starting their careers with equal pay, women fall behind as they age – even with higher college graduation rates.
- Educational Attainment: Education significantly impacts median wages. In 2023, college-educated Texans were paid $34.21 per hour, 2.3 times more than those without a high school education ($15.05 per hour). While wages for the least educated have risen, those with higher education – especially bachelor’s degrees – had median wages lower than in 2019. Despite this, a four-year degree offers benefits such as higher wealth and better lifestyle prospects.
- Union Membership: Unionized workers were paid $6 more per hour in median wages than non-union workers, though union wages did fall $1.23 between 2019 and 2023. Not only are unions popular among Texans, but collective bargaining also helps to raise wages for all workers and bolster democratic engagement.
Mapping Livable Wages Across Texas Counties
The wage a family needs to have an adequate standard of living varies greatly by family size, number of earners, and the area they call home. An adequate standard of living for a two-parent, two-child family requires a household income ranging from $75,612 in Maverick County to $110,052 in Rockwall County.
Using the EPI Family Budget Calculator, the following map provides a comprehensive measure of income requirements for a family of four and a single individual to live a modest life in Texas.
Raising Worker Wages and Enhancing Protections Strengthen Texas Families
A livable household budget is essential to afford nutritious food, quality health care, and resources to care for our children and loved ones. When leaders fail to align wage growth with worker productivity and inflation, all Texans bear the cost. Since the pandemic, inflation has made necessities increasingly unaffordable. Federal recovery policies showed that higher wages are possible, proving that corporations can afford to pay livable wages.
The Texas Legislature should enact policies that guarantee workers get to share in the prosperity that they create and are able to properly care for their families.
- Raise Texas’ Minimum Wage: Despite Texas’ GDP growth of 115%, median wage growth was only 22%, highlighting the need for higher wages. With the federal minimum wage stagnant at $7.25 since 2009, and with 30 other states having already raised their minimum wages, Texas must follow suit. Research indicates that modest minimum wage increases do not contribute to job loss, but rather benefit all low-wage workers and spur societal improvements such as better infant health and educational outcomes. Adjusting Texas’ minimum wage for inflation is equally important for working families.
- Stop Wage Theft by Fully Staffing the Texas Workforce Commission: Wage theft is prevalent in Texas, costing over 3 million low-wage workers more than $12 billion from 2009 to 2022. The Texas Workforce Commission (TWC) – responsible for enforcing the state’s Pay Day Law – is understaffed, which leads to insufficient enforcement. From 2010 to 2020, 80% of the $99 million in stolen wages ordered to be paid back to victimized workers remain unpaid. The Texas Legislature must fully staff and resource TWC to effectively enforce wage laws.
- Address Worker Misclassification: Misclassification happens when an employer wrongly classifies an employee as an independent contractor to avoid payroll taxes and other legally mandated protections to the worker. The Workers Defense Project found that 41% of Texas construction workers are misclassified – a potential $1 billion. Platform-based transportation network and delivery companies misclassify drivers as independent contractors to avoid paying a minimum hourly wage, overtime, and state/federal payroll contributions. Texas should pass legislation to protect workers from misclassification and protect taxpayers from employers who commit this form of tax fraud. Platform-based transportation network and delivery companies misclassify drivers as independent contractors to avoid paying a minimum hourly wage, overtime, and state/federal payroll contributions. Texas should pass legislation to protect workers from misclassification and protect taxpayers from employers who commit this form of tax fraud.
- Increase the Coverage Level and Share of Union Workers: Workers with union coverage are paid higher wages. The Economic Policy Institute found that in 17 states with the highest share of union workers, minimum wages are 40% higher than in the states with the lowest share of union workers. For more information on how to increase union worker coverage and density, see State of Working Texas: Texas Workers Want Unions.
A Prosperous Future Starts with Livable Budgets for Working Families
Texans from Amarillo to Harlingen work hard to provide for our families. When corporations fail to raise wages in pace with workers’ productivity, the gap continues to widen between the wealthiest few and a strong, multiracial middle class. Despite Texas’ economic growth, purchasing power is unevenly distributed; this leaves many working families struggling financially, particularly those facing systemic biases from marginalized communities.
This report is the fourth part of Every Texan’s series, The State of Working Texans. Part 1: Texas Is the Tale of Two Economies explores the ways in which our state’s abundance is not distributed equitably by design. Part 2: Texas Workers Want Unions examines Texas’ rich labor history and how the rise in union organizing benefits us all. Part 3: Texas Workforce Is Resilient and Undervalued underscores the need for greater protections and investments in our state workforce — especially for women, low-wage workers, and marginalized communities.
As we conclude the 2024 State of Working Texans series, our goal has been to highlight the resilience and contributions of our workers and demand better policies ahead of the 89th Legislative Session. To achieve shared prosperity and foster a robust multiracial middle class, we need a state budget that prioritizes inclusive policies and investments for all Texans. Investing in our working families is essential for a prosperous future, since a strong state budget will strengthen working Texans’ budgets as well.
Federal investment and recovery policies shortened the pandemic, prevented a recession, and laid a strong foundation for economic recovery with historic job and wage growth. It is now time for state leaders to step up. Gov. Abbott and the Legislature must make long-overdue public investments in Texas’ workforce to close persistent participation gaps and improve pay and conditions for care and domestic workers.
Furthermore, the Texas Legislature should enact policies that promote dignified jobs and a robust child care system rather than placing the burden on individuals. In doing so, the state will enable workers to adequately care for our families while contributing to our economy and communities.
This year, Every Texan rolled out the People’s Budget, a proactive, long-term community engagement initiative to hold conversations with Texans across the state about their values and priorities for the state budget. The data and analysis presented in the State of Working Texans series complements and provides context for what we have learned in those conversations, which will inform Every Texan’s policy advocacy in the next legislative session and beyond.
Note: Every Texan is a proud partner of the Economic Analysis and Research Network (EARN) of the Economic Policy Institute. Every Texan used EPI data to complete this State of Working Texans edition.
