November 17, 2014

Where near-minimum-wage workers work, and how much they make

As Fact Tank noted earlier this month, about 20.6 million people — 30% of all hourly, non-self-employed workers 18 and older — are what we call “near-minimum-wage workers,” meaning they earn more than the current minimum wage (either the federal $7.25-an-hour minimum or a higher state minimum) but less than the $10.10 hourly rate that emerged over the past year as a consensus goal of many Democrats and labor groups.

We first explored the demographics of this group by workers’ age, sex and race. But we also wondered what jobs they held and how much they earned, so we took another run through the public-use microdata from the 2013 Current Population Survey.

restaurant workers most near minimum wageAs you might have guessed, the restaurant and food service industry is the single biggest employer of near-minimum workers. Last year, according to our analysis, that industry employed 3.75 million near-minimum workers, about 18% of the total. Many of those workers, presumably, are tipped, so their actual gross pay may be above $10.10 an hour. (Federal law, as well as wage laws in many states, allow tipped employees to be paid less as long as “tip credits” bring their pay up to at least the applicable minimum.)

Restaurant/food service is by far the leading employer of near-minimum workers aged 30 and younger: about 2.5 million, or nearly a quarter of all near-minimum workers in that age bracket. The industry, in fact, is the single biggest employer of every other age bracket as well, though not quite to such a preponderant extent.

how much near minimum wage workers makeHowever, other industries are even more reliant on near-minimum-wage workers. Based on our estimates, industries where more than three-quarters of the hourly workers make more than minimum but less than $10.10 an hour include scrapyards, video-rental stores (the few remaining), mail-order houses, makers of mobile homes and other prefabricated buildings, and car washes.

The picture looks slightly different when viewed by job rather than employer. We have occupational data for 19.5 million of the estimated 20.6 near-minimum workers, and according to our analysis the most common occupations for those workers are cashiers (1.4 million workers), retail salespeople (1.1 million) and cooks (1.05 million). (We do wonder a bit about the 11,000 or so near-minimum workers who gave their occupation as “chief executive.”)

We also looked at the wage distribution of the near-minimum workforce. Interestingly, nearly a quarter of them (about 5.1 million workers) are already close to $10.10 an hour, meaning an increase in the federal minimum to that level wouldn’t benefit them very much. More than a third, though — or roughly 7.4 million workers — make between $7.25 and $8.50 an hour.

Topics: National Economy

  1. Photo of Drew DeSilver

    is a senior writer at Pew Research Center.

20 Comments

  1. GREG2 years ago

    So the best guess is the right to work for nothing states are the lowest wage payers and drag the economy down.

  2. whiteyward2 years ago

    The CEO gets an attorney to bargain wages, the laborer should use the Union. Capitalism without the Union is slavery. If you need an example of a good Union just look to the Police. Use wallmart as an example of no Union.

    1. Jaswalt1 year ago

      Sorry, but being reimbursed for your work, even if you don’t like the wages, is far from slavery. You need to look up that word before you go throwing it around so effortlessly. Unions destroy a huge percentage of the companies they touch. Sure they will fight for the little guy for higher wages, more benefits, and stuff like that. But as often is the case, unions don’t take into consideration the profit of the company and has often”benefited”a lot of people right out of a job due to the company going under because it has to pay all of its pro profits back to the worker and the company goes bankrupt. It has happened scores of times and will continue to happen add long as unions get greedy. Don’t get me wrong, there are a lot of unions out there that do really good things and both worker and company flourish. But more often than not, they damage and destroy businesses with out so much as a fare thee well to people who built the businesses and have a right to set any legal wage they want and moreso have a right to profit as much as their hearts desire. But in no way is a non unionized job slavery. You do work, you get paid. You go to the home of your choice at the end of the day, and when you wake up the next morning you decide if you want to go back, nobody else forces you. You are not a slave. To the unions on the other hand, you do take on a more slave like stance. Union forces you to pay dues, even if you want nothing to do with the union, then they tell when you can our can’t work lest you become a scab. Who are you more a slave to? The guy who pays you for your work, or the guy that demands membership dues even if you disagree with the union itself who then can come along and tell union members that they can’t work for money right now cuz you have to carry a pocket sign for the next 2 weeks carrying a sign you don’t necessarily believe in. And oh yeah, not only will you not get paid for those weeks, the union still expects their dues to be paid on time. I think we found the true definition of slavery. But wait, there is a little bit more–in the 2 weeks when nobody worked, the sore closed due to bankruptcy. Now the union killed every unionized worker’s job. I’ve seen it happen…a couple of times. I understand what you were going for, but slavery is a strong word and shouldn’t be thrown around in such a way.

      People in some place around Washington DC were outraged that they could no longer sit on thee a$$ and collect their government checks. We’re talking about able bodied people collecting checks from the star for doing nothing. Along came a brilliant idea: If you’re going to collect welfare while you’re able bodied, then you going to do county work at the rate of 20 hr per week. The remaining 10 hrs will be training on how to get a job. You don’t get your 20 hrs of taking leaves and picking up trash on the highway. We give you 10 hrs instruction time at no cost, and then we will give you your check. Holy cow if you missed the uproar that caused? People holding signs crying about how the new program is self centered and is impact slavery. Bull$h1t. You doing a little work and are getting a free education and money on top of that!?! They don’t have a freaking clue what that word means. It is proof that they don’t have any idea what the true meaning of slavery.

  3. Patbilla2 years ago

    The CEOs of Chevron, GM, Citi & JPMorgan made more money in personal salary than their corporations paid in US taxes. It’s tough for a high school dropout to bargain for higher wages as an individual but not so hard for a CEO.

  4. Wes Goodvin2 years ago

    Keep in mind that labor is a commodity. Just as you pay more for gold than you do for zink so you pay more for rare labor. That you pay less for zink does not mean that zink is less necessary, it just means that zink is more plentiful. That you pay more for a programmer who can write fast, elegant code than the person who mops the floors does not mean the programmer is more necessary, it means he is rarer and therefore, is more valuable as a labor commodity. Unfortunately no one or no company can pay a person what they are worth as a human being.

  5. Minor SInclair2 years ago

    I don’t see any mention here of farm workers. Studies I’ve seen show between 1.4m and 1.8m workers. And though many are paid piece rates, it generally doesn’t get them over $10.10/ hr. Can you explain?

  6. Jack2 years ago

    People will not pay more for a good or service than they feel it will benefit them.

    When production quality and the cost of American cars were more than they were worth to consumers, Americans went to import cars for a better value. When hamburgers sales drop off in a strong market, quick service restaurants will make less labor intensive burgers. Maybe burger flipping robots will be flipping your burger soon?

  7. Gus2 years ago

    Funny that the article does not account for how long the Minimum Wage earners have been making Minimum Wage. If people are stuck in minimum wage, why have they not done something to move forward? Every single legal citizen in America has had the opportunity for a FREE primary education and/or technical training (18 y/o and younger). If you throw away that opportunity you are dooming yourself to life at minimum wage and no matter how high you raise MW, the low skilled worker will always be in the same boat. Many of us started at minimum wage, but through time, sweat, sacrifice, and education, we moved on to better careers. Careers not jobs.

  8. Don Endresen2 years ago

    Unskilled employees in the hands of a motivated employer become skilled and valuable in a very short period of time. And that value should, at least afford them the ability to feed, house, clothe and educate themselves at somewhat greater that a pure subsistence level.

  9. George B. Feist2 years ago

    Cashiers, retail sales people and waiters then are paid what they are worth. Jobs are not that hard and waiters get TIPS way over the minimum wage…..I know a place in Fresno where the waiters in an 8 hour shift AVERAGE $150 for 8 hours….plus their $9 hr x 8 or $72 a day…not bad huh.?

  10. Andrew Terhune2 years ago

    “Interestingly, nearly a quarter of them (about 5.1 million workers) are already close to $10.10 an hour, meaning an increase in the federal minimum to that level wouldn’t benefit them very much. More than a third, though — or roughly 7.4 million workers — make between $7.25 and $8.50 an hour.”

    Although the last sentence doesn’t expressly state it, its implication is that those making between $7.25 and $8.50 would benefit from an increase in the minimum wage. That’s true to the extent that they still have employment at all. More and more places are dispensing with cashiers, a trend which will accelerate if the cost of those cashiers is raised by fiat instead of by productivity.

  11. Tommie Wells2 years ago

    None of these jobs require particular skills or education level. Why should they be paid much for doing them?

    1. Kochevnik2 years ago

      You could say the same for CEOs.

      1. Phranque2 years ago

        I agree that CEO’s should not get more and more $$ especially if their organizations do not perform from a profit standpoint. Income inequality is or should be a major concern for this country and the Global economy. It’s the middle and lower income worker who spend the most in the economy whereas the 1%ers just stash their cash. How many meals can they eat, houses can they live in, or clothes can they wear?

      2. Phil Hudson2 years ago

        +1 to you, sir. The perfect retort. 😛

    2. Chris2 years ago

      Neither do factory jobs, but for most of the last century they made several times minimum wage. Why should we place arbitrary weight on some unskilled labor but not others?

    3. wj2 years ago

      Good question Tommie. I think you’re implying that if these folks got better skills they could move into other jobs, which is true. But then who would provide these services that you and I expect? Until robots take over these low skill service jobs, someone has to do it. I doubt you, nor I, want to give up eating out on clean washed plates. The skill required is minimal but the work has to be done.

      If “pay” is based on skills alone, I see your point, but if pay is exchanged for “work” then full time employed people are contributing their part to society and the economy and should be able to raise their families as well as you and I do.

      1. rn2 years ago

        Customers will demand clean plates. Restaurants will provide them and pass additional costs to patrons. Some marginal restaurants might close. In any case, the low skilled jobs will still exist but there may be fewer of them.
        Regarding “…should be able to raise their families as well as you and I do”. Money is only one factor in raising families, but that factor must vary depending on the market value of the work done by family breadwinners. It’s really not about “contributing their part to society” but more about how that contribution is valued. I’ll always value the labor of someone who fixes my car more than that of someone who mows my lawn. Inequality is both fair and necessary.

        1. Phil Hudson2 years ago

          Well, you might value the lawnmower less…until he withholds his labor for a few months and you can no longer see the street over the tops of the tall, jungle-like fronds adorning your front yard! I suspect you will then suddenly be a bit more motivated to see the value in the service that he provides to you.

          This is why going on strike is so important for workers. It’s their only means of leverage, and it isn’t used nearly enough in America compared to any other advanced country.

          The strongest correlation involving a country’s relative rate of inequality that can be made is actually the inverse relationship between the incidence of major strikes in that country and overall inequality. Part of the logic of both capitalism and society is that the squeaky wheel gets the grease, and the naked exercise of power always speaks louder than words; if workers never attempt to defend themselves, then they’re doomed to get walked all over, REGARDLESS of educational attainment.

          Witness the recently media-spotlighted example of adjunct professors at universities, who make minimum wage with no benefits, and many have doctoral degrees. Despite the fact that, academically, many of them have gone as far in their respective fields as one can go, they have no power, so they get no pay.

          Remember, kiddies: education does NOT equal money. Power equals money (q.v. the matter of CEO compensation, lobbyists and industry insiders who make absurd pay just for the “work” of undermining our democracy, etc.). The more leverage you have, the more you will make. Education matters only to the extent that it is — sometimes — a means of obtaining leverage…though not always.

          Write it on the chalkboard 50 times so you don’t forget your lesson, now!

    4. rosebuddear2 years ago

      well, because slaving away for substandard pay at superhard work is the American dream, isn’t it?

      Why should they be paid much for doing them? Because it’s damn hard work.

      Tommie.