The Low-Wage Labor Market: Challenges and Opportunities for Economic Self-Sufficiency. Does the Minimum Wage Help or Hurt Low-Wage Workers? . Who Are Minimum Wage Workers?

01/14/2000

Table 1 presents the demographic and job characteristics of workers who would be affected by an increase in the federal minimum wage from $5.15 to $6.15 per hour. The minimum wage increase would directly affect 16 percent of all earners, or 11.2 million workers. President Clinton's proposal would particularly affect adult working women and teenagers. Teenagers represent 27.3 percent of affected workers, but comprise only 7.5 percent of all workers. Most of the direct beneficiaries of a new minimum wage would be women (62.3 percent). Only 17.4 percent of those benefiting from the proposed minimum wage are full-time workers while an additional 7.5 percent work 20 to 35 hours weekly. Most beneficiaries (75.1 percent) work less than 20 hours a week. The average minimum wage worker worked 9.2 hours per week in 1998.

Table 1. Characteristics of Minimum Wage and Other Wage Earners, 1998
Characteristics Workers directly affected by proposed minimum wage
($5.15-$6.14)
Other low-wage workers
($6.15-$6.64)
Workers above minimum wage
($6.65+)
All workers
Average hourly wage $5.64 $6.41 $12.49 $11.04
Employment (in millions) 11,166 3,344 52,447 66,958
Share of total 17% 5% 78% 100%
Demographics
       Men 37.7% 40.2% 53.5% 50.2%
  Women 62.3% 59.8% 46.5% 49.8%
White 80.8% 82.2% 82.3% 82.0%
  Men 30.9% 32.6% 45.0% 42.0%
  Women 50.0% 49.6% 37.3% 40.0%
Black 13.8% 14.2% 13.2% 13.4%
  Men 4.7% 5.2% 6.3% 6.0%
  Women 9.1% 9.1% 6.9% 7.4%
Teenagers (16-19) 27.3% 20.6% 2.5% 7.5%
Young adults (20-24) 19.5% 21.6% 11.5% 13.3%
Adults (25+) 53.2% 57.9% 86.0% 79.1%
  Parents 19.4% 24.6% 38.0% 34.3%
Work hours
  Full-time (35+) 17.3% 22.2% 44.8% 39.1%
  Part-time        
  20-34 hours 7.5% 7.6% 3.5% 4.4%
  1-19 hours 75.1% 70.2% 51.7% 56.5%
Average weekly hours 9.2 11.2 19.6 17.5
Poverty status
  Below poverty 16.4% 11.4% 4.8% 7.1%
  100-124% poverty 7.2% 4.8% 2.8% 3.6%
  125-149% poverty 5.1% 4.8% 3.0% 3.5%
  150% or more of poverty 71.3% 79.0% 89.4% 85.9%
Industry
  Manufacturing 9.3% 13.6% 22.8% 20.1%
  Retail trade 46.8% 35.3% 13.3% 20.0%
  Service 34.2% 37.8% 37.3% 36.8%
Occupation
  Managerial & professional 5.5% 6.9% 16.8% 14.4%
  Technical, sales 35.3% 33.9% 32.2% 32.8%
  Service 39.2% 33.0% 29.0% 30.9%
  Operators & laborers 20.0% 26.2% 22.0% 21.8%

Minimum wage workers are heavily concentrated in the retail trade sector. Although the retail trade workforce comprised only 20 percent of all earners in 1998, this group accounted for 47 percent of all minimum wage workers.

These same data suggest that most workers likely to be affected by the proposed minimum wage increase are not poor. Table 1 shows that only 16 percent of minimum wage workers live in families with incomes below the poverty level, and 12 percent are near-poverty (100 percent to 149 percent of poverty). The remaining 71 percent of minimum wage workers have family incomes of at least 150 percent of poverty. Bluestone and Ghilarducci (1996), for example, noted that only a small proportion of the poor would directly benefit from increasing the minimum wage, despite the fact that nearly 75 percent of poor households include someone who works.

Only a small proportion of the poor would directly benefit from increasing the wage floor, despite the fact that nearly 75 percent of poor households have someone who works. According to estimates by Richard Burkhauser and Kenneth Couch of Syracuse University and their colleague, Andrew Glenn of Vanderbilt University, only 16.9 percent of the workers in poor households in 1991 were in jobs paying below the proposed boost in the statutory minimum to $5.15 an hour. Except for the possible indirect benefits, the other 83 percent of working-poor households would not be helped since their working members already earn wages above this level.

Most workers affected by the proposed minimum wage are adults, of whom many are parents. Table 1 shows that 53.2 percent of affected workers or 6 million, are adults (25 years or older). Over one-third (2.2 million) of these adults directly affected by the minimum wage are also parents (adults 25 and older with resident biological children less than 18 years old). Additional findings not show indicate that these parents have 1.6 million children less than 6 years old and 5.4 million children less than 18 years old. Many of these parents (0.7 million) are single parents, and 1.4 million are poor or are near-poor.4 These poor or near-poor parents have 1.0 million children less than 6 years old and 2.9 million children less than 18 years old.

A vast majority of teens and young adults who would be directly affected by the proposed minimum wage are also enrolled in school — 66.5 percent (or 3.6 million) of minimum wage workers (ages 16 to 24) are enrolled in high school or college. However, most of these teens and young adults enrolled in school do not live in poor families. Data from 1998 indicate that 82.6 percent (2.9 million) of enrolled teens and young adults live in families with incomes greater than 149 percent of poverty. Again, not all of these findings are show on the table.