5 facts about the minimum wage
The Los Angeles City Council this week moved to raise the city’s local minimum wage to $15 an hour by 2020, joining a growing list of states, cities and other localities in moving beyond the federal minimum of $7.25. While the idea of raising the minimum wage is broadly popular, efforts to do so at the national level have stalled repeatedly in Congress, leading advocates to focus more of their efforts on cities and states.
A Pew Research Center survey from January 2014 found clear partisan differences in support for raising the minimum wage: Overall, 73% of people favored an increase in the federal minimum to $10.10 an hour, mirroring a Democratic-backed proposal that failed to move ahead in Congress last year. But while large majorities of Democrats (90%) and independents (71%) said they favored such an increase, Republicans were more evenly split (53% in favor and 43% opposed).
Here are five facts about the minimum wage and the people who earn it:
1Adjusted for inflation, the federal minimum wage peaked in 1968 at $8.54 (in 2014 dollars). Since it was last raised in 2009, to the current $7.25 per hour, the federal minimum has lost about 8.1% of its purchasing power to inflation. The Economist recently estimated that, given how rich the U.S. is and the pattern among other advanced economies in the Organization for Economic Cooperation and Development, “one would expect America…to pay a minimum wage around $12 an hour.”
2Nearly half (48.2%) of the 3 million hourly workers who were at or below the federal minimum in 2014 were ages 16 to 24. An additional 22.4% are ages 25 to 34, according to the Bureau of Labor Statistics; both shares have stayed more or less constant over the past decade. That 3 million represents about 2.3% of all wage and salary workers. (See more about the demographics of minimum-wage workers.)
3Twenty-nine states, plus the District of Columbia and nearly two dozen cities and counties, have set their own, higher minimums. State hourly minimums range from $7.50 in Arkansas, Maine and New Mexico to $9.47 in Washington state, according to the National Conference of State Legislatures. Together, these states include 61% of the nation’s working-age (16 and over) population, according to our analysis of U.S. Census Bureau data. Among the cities that have enacted even higher local minimums are San Francisco ($15 by 2018), Seattle ($15 by 2021), Chicago ($13 by 2019) and Washington, D.C. ($11.50 by 2016), according to the National Employment Law Project.
4About 20.6 million people (or 30% of all hourly, non-self-employed workers 18 and older) are “near-minimum-wage” workers. We analyzed public-use microdata from the Current Population Survey (the same monthly survey that underpins the BLS’s wage and employment reports), and came up with that estimate of the total number of “near-minimum” U.S. workers – those who make more than the minimum wage in their state but less than $10.10 an hour, and therefore also would benefit if the federal minimum is raised to that amount. The near-minimum-wage workers are young (just under half are 30 or younger), mostly white (76%), and more likely to be female (54%) than male (46%). A majority (56%) have no more than a high-school education.
5The restaurant/food service industry is the single biggest employer of near-minimum-wage workers. Our analysis also found that 3.75 million people making near-minimum wages (about 18% of the total) worked in that industry. Among near-minimum workers aged 30 and younger, about 2.5 million (or nearly a quarter of all near-minimum workers in that age bracket) work in restaurants or other food-service industries. But because many of those workers presumably are tipped, 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.)
Note: This is an update of a post originally published in December 2013.
Category: 5 Facts
Drew DeSilver is a senior writer at Pew Research Center.