September 8, 2014

Who makes minimum wage?

federal minimum wage over timeGiven the continuing campaigns by unions, workers, politicians and others to raise the federal minimum wage, it bears asking: Just who are minimum-wage workers, anyway?

Perhaps surprisingly, not very many people earn minimum wage, and they make up a smaller share of the workforce than they used to. According to the Bureau of Labor Statistics, last year 1.532 million hourly workers earned the federal minimum of $7.25 an hour; nearly 1.8 million more earned less than that because they fell under one of several exemptions (tipped employees, full-time students, certain disabled workers and others), for a total of 3.3 million hourly workers at or below the federal minimum.

That group represents 4.3% of the nation’s 75.9 million hourly-paid workers and 2.6% of all wage and salary workers. In 1979, when the BLS began regularly studying minimum-wage workers, they represented 13.4% of hourly workers and 7.9% of all wage and salary workers. (Bear in mind that the 3.3 million figure doesn’t include salaried workers, although BLS says relatively few salaried workers are paid at what would translate into below-minimum hourly rates. Also, 23 states, as well as the District of Columbia, have higher minimum wages than the federal standard; people who earned the state minimum wage in those jurisdictions aren’t included in the 3.3 million total.)

People at or below the federal minimum are:

  • Disproportionately young: 50.4% are ages 16 to 24; 24% are teenagers (ages 16 to 19).
  • Mostly (77%) white; nearly half are white women.
  • Largely part-time workers (64% of the total).

minimum wage workers by occupational groupThey’re employed in the industries and occupations you might expect: More than half (55%) work in the leisure and hospitality industry, about 14% in retail, 8% in education and health services, and the rest scattered among other industries. Broken down occupationally, the picture is similar: Nearly 47% are in food-preparation and serving-related occupations; 14.5% are in sales and related occupations, 7% in personal care and service occupations, and the rest are scattered.

They’re also more likely to live in the South than anywhere else – in part because only one southern state (Florida) has its own higher state minimum wage. In both the West South Central (Texas, Oklahoma, Arkansas and Louisiana) and East South Central (Alabama, Kentucky, Mississippi and Tennessee) regions, 6.3% of hourly workers make the federal minimum or less — the highest rates among the nine Census Bureau-defined regions. They were followed by the eight-state (plus D.C.) South Atlantic region, where 5.1% of hourly workers made the federal minimum or less. The lowest rate, 1.5%, was in the Pacific region – not surprising, given that four of the five states in that region (California, Oregon, Washington and Alaska) have their own, higher state minimums.

Economists continue to debate the extent to which minimum-wage laws reduce poverty, income inequality and/or overall employment. What’s clear, though, is that after a three-step increase in 2007-09, today’s minimum wage buys more than it did recently, but its real purchasing power is about where it was in the early 1980s — and below its late-1960s peak.

Note: This post has been updated with 2013 data.

Topics: Economics and Personal Finances, National Economy

  1. Photo of Drew DeSilver

    is a Senior Writer at the Pew Research Center.

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46 Comments

  1. Mike3 days ago

    I think 1.5 million food prep and service workers making $7.25/hr is a shame on our country and the ubber rich.

    Reply
  2. Befuddled3 days ago

    If one is trying to support a family on minimum wage you can’t do it but my guess is if that is the case they are already on welfare of some sort. If not they must be very slow mentally. It’s not rocket science to figure out one must do something to make themselves more valuable so as to improve their financial well being. As this report states buying power is going down. It’s called inflation. The ones I tend to feel for are those who worked their life and tried to save for retirement only to see their savings earn nothing to help keep up with inflation. We tend to want to do away with those people as they are considered non productive now and they want their money that was earned so they can do with it as they want. Be it the government or the me me generations. Pathetic

    Reply
  3. hs4 days ago

    What is the % just slightly above the legal minimum?

    Reply
  4. John B5 days ago

    Sorry your inflation adjustment is way off. According to the US Dept of Labor inflation adjustment tool, the minimum wage in 1968 would be $10.95 todays dollars.

    data.bls.gov/cgi-bin/cpicalc.pl?…

    dol.gov/whd/minwage/chart.htm

    Reply
    1. Ryan F3 days ago

      It’s not inaccurate, it’s just using the PCE deflator instead of the CPI to calculate inflation.

      The note under the graph mentions that they are using the implicit price deflator for Personal Consumption Expenditure, which is not the same as the Consumer Price Index. Indexed to 100 in 2009, the CPE had a value of 20.5 in 1968 and 108.8 in 2014 Q2, an increase of about 431%. Multiplying the 1968 minimum wage of $1.60 an hour by 5.31 gives us values corresponding to the chart included in the article.

      research.stlouisfed.org/fred2/gr…

      Reply
  5. Jon the pizza guy5 days ago

    I have a 17 year old kid who washes dishes at my pizzeria, he works about 25 hrs a week. He lives at home with his parents and he is a full time high school student…he has no bills but his car insurance. At $7.25 he makes about $180 a week. If I paid him $15 that goes to $375…almost $200 a week more…and that comes right out of my pocket…my kids college fund, my retirement…*my car insurance*….who out there can explain to me why he deserves that money more than me?

    Reply
    1. Chuck3 days ago

      The term “deserves” means nothing in the discussion about minimum wage. The workforce in the US is larger than you are, and you are the measuring stick for nothing. How about the teenage mother shlepping boxes at a Walmart who lives at home with her disabled mother and a little brother, taking care of them? Does she deserve part of your surplus earnings? I don’t know; what do you think?

      Reply
  6. Dennis6 days ago

    I support raising the minimum wage for 18 and older workers to $10.10 per hour and leaving it the same for workers under 18. This would provide more income to the adults currently earning minimum wage without decreasing employment for after school workers.
    The real question the economists should be answer before commenting on minimum wage is how much economic impact do yearly cost of living raises have on the economy? when all cost living wages are added up do they eliminate jobs? are we seeing fewer jobs every year because employers are providing cost of living increases? and if so how many jobs are lost every year? How would raising the minimum wage decrease jobs and not cost of living raises for non minimum wage jobs?

    Reply
    1. Pam4 days ago

      Why should there be different wages for the same work? That does not seem fair to the individuals under 18. For those over 18, the wages are, and have always been in direct proportion to skill level. It should remain that way. The more skills acquired, the more the wage increases.

      Reply
  7. Sandy – Julesburg, CO2 months ago

    I, personally, know a great many single mothers who work for minimum wage. They attempt to feed their children, pay for daycare, and live in half-way decent housing on $7.35 per hour. Yes, they could make better choices — but they didn’t. The only way these women survive is with the help of Social Services-basically, tax dollars. As states attempt to cut Social Services budgets, everyone suffers.

    Think of small children coming into a daycare and depending only upon breakfast, lunch, and snacks without having been able to eat anything at home.

    Reply
    1. Reymark6 days ago

      5.35 is good enough. All the people here support their kids on that. And this is America too– Well, Saipan. The commonwealth of the United States.

      Reply
    2. Pam4 days ago

      Yes, well it is unfortunate for single mothers. However, we need to find a way to encourage people to make better choices, not just supplement their income, which does nothing to discourage irresponsible behavior. Many of these women go on to have 2, 3 4 etc children with deadbeat dads. Where is the accountability??? I know some of these women. Some of them are completely unemployed and pride themselves on being stay at home moms. I didn’t have that option because I was actually working to help support my family, not asking for handouts.

      Reply
      1. Befuddled3 days ago

        Bless you

        Reply
  8. Denny Rivera2 months ago

    Can we really count tipped workers as making at or below minimum wage? If anything, they make WAY more, and it’s undocumented, untaxed!

    Reply
    1. Chuck3 days ago

      And your source documentation for this is……?

      Reply
      1. Ryan F3 days ago

        The BLS confirms this.

        The 10th percentile of waiters and waitresses made $7.84 in 2013. Median hourly pay was $8.94. The 90th percentile made $14.33 per hour. Mean hourly wage was over $10 per hour.

        Counting all of these workers among minimum wage earners is careless and misleading at best. Even the 10th percentile is beating minimum wage by a considerable margin, and the BLS doesn’t look at such extreme ends of the earnings curve to tell us exactly how many of them only make minimum wage. It’s definitely less than ten percent, and just by eyeballing it I’d say it’s probably less than five percent.

        bls.gov/oes/current/oes353031.htm

        Reply
  9. Mark Curran3 months ago

    How many people make within 20% of minimum wage.

    This article above, like many “statistic” based articles, is apparently meant to mislead. It does not say one word about those making very close to minimum wage, and they could tell you. Why don’t they?

    They don’t want to.

    It’s highly unusual, for example, for McDonalds to keep someone at minimum wage –perhaps five people at a given store make only that. But 40 of them might make within 10% of minimum wage, and very likely, only 4 people make over 150% of minimum wage

    The wat the article above is written, you would have no clue about that. If McD’s pays two cents above minimum wage — or one cent –this article would not tell you about them.

    When these guys distort, they know they distort, and they do it for a reason. They don’t want you to know whats going on

    Reply
    1. Jed2 months ago

      It also ignores the fact that many of the most populated states have minimum wages higher than the Federal minimum.

      Reply
      1. Justin2 months ago

        No it doesn’t, it specifically states, “Also, 19 states besides the District have minimum wages higher than the federal standard; people who’d be minimum-wage workers in those states aren’t included in the 3.55 million total.).” Did you even read the article?

        Reply
        1. Morgan1 month ago

          No, Jed’s right. If it doesn’t include them, it ignores them. By definition.

          Reply
    2. Leroy3 days ago

      Right on!
      Exactly my observation.

      Reply
  10. Jc Jones5 months ago

    I honestly hate to post a stupid question. When we talk about people earning the minimum wage, are we talking about people earning $7.25 an hour as a threshold? Are those earning say, $7.26 an hour not included in the numbers? What about those earning $7.75 an hour? Lets just be honest. The difference between $7.25/hr and $7.26/hr a year is $20.80 a year. The $.50 difference: $1,040. Then lets talk take home pay. $.50 cents an hour equals $86 a month. I’m just curious if the research includes any data for those slightly above minimum wage or not.

    Reply
    1. Doug Eckelbecker4 months ago

      I’ll take an extra $86 per month

      Reply
  11. Mike6 months ago

    dol.gov/whd/state/tipped.htm – Implying tipped employees aren’t paid minimum wage isn’t entirely accurate.

    Reply
    1. Ryan F3 days ago

      In practice, they aren’t. Even the 10th percentile of waiters and waitresses beats minimum wage by more than fifty cents an hour.

      bls.gov/oes/current/oes353031.htm

      While there are almost certainly tipped employees making minimum wage, I would be willing to wager that such workers represent less than five percent of the total.

      Reply
  12. Howard6 months ago

    I would be interested in seeing the graph adjusted to show how much federal aid a person making minimum wage might receive, and how much it has changed since 1960.
    Since we are talking about a ‘living wage’ it implies its purpose is to help those who have to attempt to support a family on the wage. In that vein federal and state aid would add to the income.

    Reply
    1. Uyen5 months ago

      Bureau of Labor Statistics and dig deeper. I’m doing research on this issue. There are many sources.

      Reply
  13. Mike7 months ago

    I’d be more interested in statistics that show the financial situation of those working minimum wage jobs. The protests are about a “living wage”. What percentage of minimum wage earners actually have to “live” off their wages? I suspect the vast majority of minimum wage earners are supplementing household income, as I did as a teenager working for gas/party money.

    Reply
    1. Titanium Dragon5 months ago

      About a third of people who earn minimum wage, and a bit over 40% of those who make below living wage, are the sole breadwinners for their household.

      Reply
      1. Doug Eckelbecker4 months ago

        WHERE DID YOU GET THAT STAT?

        Reply
      2. Kathy1 week ago

        I suspect that stat is exaggerated but I also suspect many sole bread winners will take a part time just to supplement their main income, often just temporary jobs, like those one might take at Walmart on weekends and evenings during holidays to get the extra money needed to buy Christmas gifts.
        I worked at Walmart for years and saw a lot of people doing just that.

        Reply
  14. Steve C1 year ago

    The reference to the percentage of workers at or below the minimum wage relative to the total number of workers is meaningless due to exclusion of states with minimum wages above the federal level. Just five of those states – California, Florida, Ohio, Michigan and Massachusetts – represent over 25% of the nation’s employees, but no minimum wage workers in those states are acknowledged relative to the total labor market.

    Comparing the total number of workers in all states to the number of minimum wage workers in only some of them is making a comparison of dissimilar data; i.e., comparing apples to oranges.

    Reply
    1. Drew DeSilver1 year ago

      The post was careful to state that it was talking specifically about the percentage of workers at or below the *federal minimum wage*. We kept the focus there for a couple of reasons. First, as one of our other commenters noted, the federal minimum acts as a uniform floor — it applies even in states that have no set minimum wage in their own laws, or one set below the federal minimum. A minimum-wage worker in Ontario, Oregon makes considerably more than a minimum-wage worker just across the border in Payette, Idaho; combining both sets of workers in the same analysis didn’t seem to make much sense.

      And as a practical matter, since we wanted demographic and occupational breakdowns of minimum-wage workers and those data come from BLS, we would had to adopt their definitions anyway.

      I do agree that If individual states with higher-than-federal minimums did the same kind of analysis, with the same definitions, in such a way that they could be readily combined with the BLS numbers, we’d have a fuller and more nuanced picture of the minimum-wage workforce in different parts of the country (I’d be interested, for example, to know how the demographic/occupational profile of minimum-wage workers in Washington State, for example, is similar to or or different from an otherwise-comparable state that has only the federal minimum.) But absent such data, it seemed to us that sticking with the uniform federal-level data made the most sense.

      Reply
      1. Steve C1 year ago

        A statement such as: “In the Pacific region (California, Oregon, Washington, Alaska and Hawaii), by contrast, only 1.5% of hourly workers earned the federal minimum or less” is of little value if you fail to note that the only state in that region in which it’s not illegal to pay employees at or below the federal minimum wage is Hawaii, which represents less than 3% of the jobs in the region.

        Similarly, the comparison between now and 1979 is pretty much meaningless because of the increased number of state laws mandating pay above the federal minimum wage, even if only by a few cents per hour. The fact that the percentage of workers earning federal minimum or below in the South Central region (which has no states with floors above the federal minimum) is virtually the same as the 1979 average suggests that in fact no demographic/job change has actually taken place over that time period in terms of the percentage of the workforce working for minimum wage. The statement “they make up a smaller share of the workforce than they used to” is probably due solely to state laws mandating higher pay. The data actually suggests that in fact the percentage of workers earning the legal minimum in the location they work in (whatever it might be) is probably unchanged.

        In fact, the majority of the apparently meaningful facts suggested by the article – regional and temporal differences in the percentage of minimum wage workers, etc. – appear to be primarily due to the impact of those laws rather than any demographic or economic factors. Ignoring that factor results in a study which is pure but of little value. (The demographics of the minimum wage workers and the industries they work in are probably valid observations, but that’s not particularly new or informative.)

        Reply
      2. AC1 year ago

        You’re giving the impression here that you don’t understand the criticism of your statistical analysis. The original poster is right and these analytic errors in your article are not matters of opinion.

        Reply
        1. Drew DeSilver1 year ago

          I totally agree that looking just at who makes the federal minimum by definition undercounts the total number of minimum-wage workers in states with higher-than-federal minimums. And in hindsight I should have noted that that would affect the regional percentages (although I did note at the end of the third paragraph that the BLS analysis I relied on excludes minimum-wage workers in states with higher-than-federal standards).

          I can’t say whether or not the fact that a smaller share of hourly workers earn at or below the federal minimum than 30+ years ago “is probably due solely to state laws mandating higher pay,” though I’m sure such laws are a factor. One would have to do a state-by-state analysis of job growth in states with and without higher-than-federal minimum wage laws to answer that question; while that would be an interesting and worthwhile piece of analysis, that’s not what I was trying to do here. The main intent of the post was to look at the demographic and occupational characteristics of minimum-wage workers, and those data come from BLS, which means they’re keyed to the federal minimum.

          Reply
          1. Ron8 months ago

            To find out how many and which types of employment might be affected by the proposed change in the MW, can you look at who makes the proposed minimum wage or less?

            Might also be interesting see how much folks like these contribute to the tax rolls. But not just Federal Income Tax, as they probably pay none. They all will, however, pay state and local sales taxes, possibly state income taxes, vehicle registration taxes, federal and state gasoline taxes, … . Their monthly rent will allow their landlords to pay state real estate taxes, local home owner insurance, … .

            Thanks.

        2. Dan7 months ago

          Steve’s analysis is also flawed. He took a number of statistical correlations and suggested a causual relationship with no data to back it up.

          He may well have valid points, but words like “probably” and “appear to be” with no roots in data don’t make the argument correct. He is just as guilty of the errors of interpretation as he suggests the author of this article is.

          Reply
      3. DJ Crane7 months ago

        It would also help to see comparison of minimum wage with cost of living differences by states. Just as some international comparisons use the “Big Mac” as a comparative tool, it seems US minimum wage in some lower cost states could contribute to a higher standard of living than state minimums in higher cost states.

        More importantly, we should pay attention to “liveable wage” where a person who works 50 hours a week (at one or more jobs) or a couple who works a combination of 60 hours per week should earn enough support themselves and family – rent, food, clothing, transportation, and perhaps something toward retirement and college education. Spending too much time and attention on minimum wage at the very bottom of the compensation spectrum will keep the society from addressing a much broader and more fundamental disparity in pursuing “greatest good for greatest number” and aspirations that helped create and sustain our country.

        Reply
    2. BpF7 months ago

      This complaint is like buying an apple and later complaining it is round and doesn’t taste at all like banana.

      Reply
  15. Bill Bateman1 year ago

    I like your informational post.

    I find it interesting that many in the food business have a couple benefits that don’t “show”. #1 – they often have tips and those amounts are usually in excess of what’s reported #2 – most that I know eat food from the restaurant they work at a large discount that is not reported as an economic benefit.

    In the 2nd category I would suggest that a lot of commissions are paid in addition to the minimum wage base.

    I think the Government needs to stay out of this issue

    Reply
    1. FDR9 months ago

      Your naivete about tips and the food industry is astounding. You don’t know that their part of their tips are withheld in the form of taxes thanks to St. Reagan’s policy of robbing from the working poor and middle classes to ingratiate the rich.

      You also don’t know that most sit down restaurants have a policy of pooling their tips so that 10 – 20 percent tip on the bill is actually split amongst the cooks, bus boys, hostesses, etc.

      Third, there is a percentage (approximately 20%) that don’t tip at all.

      Reply
      1. Matt9 months ago

        While some of Steve’s comments are valid some are just picking the data apart to prove his view without much in the way of facts. The article is for the most part on point to the premise it s trying to illustrate. Not a lot of people make the federal minimum wage. Approximately $1.5 million. And you certainly should not include tipped employees as their average minimum is above the federal minimum. I have not talked to any tipped employees that average out to $7.25. If they do they move to a higher volume restaurant. I am not why withholding in tips is pointed out as bad by FDR. Certainly he should expect workers to pay taxes on their earnings. Which by the way many of them don’t as they get it back in refunds.
        So the article is correct – all this hub bub about the importance of raising the minimum wage is a waste of time as it impacts so few and is appropriate for entry level jobs. Minimum wage jobs are not meant to be the primary source of income to raise a family and in fact rarely is as you can see because most of the minimum wage earners are students or first year employees. One last point, wages are suppose to be set to be the fair price to pay for services rendered, not how much one needs to pay their bills. How much should you pay a high school student to ask you if you want cheese on your burger? It is not hard. I know, I did it for years while pursuing what would be my more permanent job to support my family.

        Reply
    2. Joe W.7 months ago

      One thing people seem to forget is that this data is talking about people who currently earn the minimum wage. If it is raised, it will affect more people. So the real need is now to compare the above data with the additional number of people that will be earning more.

      Secondly to address another point that was mentioned, it is extremely important to address the difference in service industry jobs that have tips and those that don’t. There is a growing trend in food service to have, “fast casual” restaurants, which are more like fast food, and workers tend not to be tipped, or if they are the tips are very low.

      Reply
  16. Chris Peterson1 year ago

    I believe this article does a disservice to the discussion of the minimum wage in our society, given that it only focuses on those who earn at or below the FEDERAL minimum wage, but excludes those who are paid at or below their given STATE minimum wage. Thus, you are comparing two dissimilar data points (minimum wage workers in 1979 vs. today). I would’ve expected a more rigorous analysis from the Pew Research Center… if Mr. DeSilver could please post updated figures documenting those who earn at or below their state’s minimum wage, or at least note in his analysis that the drop between 1979 and today could be attributed to increases in state-specific minimum wages compared to the federal standard during that time, that would be greatly appreciated.

    Reply
    1. Jess1 year ago

      “…it only focuses on those who earn at or below the FEDERAL minimum wage, but excludes those who are paid at or below their given STATE minimum wage. Thus, you are comparing two dissimilar data points (minimum wage workers in 1979 vs. today)…”

      State minimum wage laws vary. Five states have no minimum wage laws, and four states have a minimum wage below the federal rate. Employers in those nine states must pay the FEDERAL minimum wage. Another 22 states set their minimum wage right at the FEDERAL rate.

      19 states (and DC) have a STATE minimum wage that is HIGHER than the FEDERAL minimum. It is only those workers earning MORE than the FEDERAL minimum wage that are not counted here – and they shouldn’t be, because this is an examination of the purchasing power, by national average, of the FEDERAL minimum wage over time. It is NOT a comparison of the federal minimum wage to the wages paid in those states with a higher rate.

      The FEDERAL minimum wage and those STATE minimums are DISSIMILAR data points to compare for this purpose.

      Now, if you’d like to compare the minimum wage rate paid in Alabama (a state with no minimum wage) to that of California (a state with a rate higher than the federal minimum wage), then you also need to adjust for the relative local purchasing power of that wage – or you’ll once again be trying to compare apples to oranges.

      Reply