Statistics of Minimum Wage Workers
The concept of a government mandated minimum wage, or wage floor, has sparked debate since it was established in the U.S. in 1938. Today, it is generally accepted that workers should be provided a reasonable minimum wage.
Part of the problem with a minimum wage mandate is that the amount tends to be fixed and static, while the actual economic conditions are always dynamic and in flux. Some argue that a minimum wage rate that might have sufficed in 2009 is no longer sufficient in 2018.
Despite the state of the American economy at any given time, a large segment of the working class has always been comprised of low-wage and minimum wage workers.
Who Are the Low-Wage/Minimum Wage Workers of America?
The nation’s Bureau of Labor Statistics (BLS) has been tracking data on American workers regularly since 1979. The most recent complete statistics have been compiled for 2016. According to the BLS, in 2016, almost 80 million workers in the United States age 16 and older were paid hourly rates. These represented almost 59 percent of all wage and salary workers in the United States.
About 6 percent of those who were paid the federal minimum wage or less were part-time workers. This was defined as employees who usually work fewer than 35 hours per week. Only about 2 percent of full-time workers earned the federal minimum wage or less.
Among those hourly wage earners in 2016, just over 700,000 were being paid the prevailing federal minimum wage of $7.25 per hour. This number would not include those minimum wage earners in states whose minimum wage amount exceed the federal government’s.
There were approximately 1.5 million being paid below the federal minimum. This would be the exceptions to the federal minimum wage law such as student workers and tipped employees. This means that in 2016 almost 2.2 million workers were being paid at or below the federal minimum, which represents 2.7 percent of all hourly wage employees in the U.S.
An interesting trend is the percentage of those workers earning the federal minimum wage or less went down from 3.3 percent in 2015 to 2.7 percent in 2016. This is quite a contrast to the 13.4 percent of workers making at or under the federal minimum wage back in 1979, when the BLS data was first collected on a regular basis.
One reason for this decline is the increase in state minimum wages in many states throughout the U.S.
Minimum Wage Worker Demographics
A common misconception is that most minimum wage workers are in their teens. In fact, workers under the age of 25 represented only about one-fifth of hourly paid workers. And, of these, they made up less than half of those paid the federal minimum wage or less.
Teenage hourly employees from ages 16 and 19 represented about 10 percent of those earning the minimum wage or less, compared with about 2 percent of workers age 25 and older.
In other words, less than half, about 45%, of the 2.6 million hourly workers earning at or below the federal minimum were in the 16 to 24 age range. There were more than 23 percent who were between 25 to 34, a trend that has been relatively consistent for the past decade.
Also, the 2.6 million who earn at or under the federal minimum wage only represents less than 2% of all wage and salary workers in the U.S.
The percentage of hourly paid workers with wages at or below the federal minimum represented about 3 percent of women and about 2 percent of men working in America. Of these, about 3 percent were, White, about 3 percent African American, and only 2 percent being Asian and Hispanic workers.
As might be expected, education is a factor in earning levels. About 5 percent of all U.S. workers without a high school diploma earned the federal minimum wage or less, compared to about 3 percent of those with only a high school diploma or those with some college or an associate degree. Even college graduates, however, made up about 2 percent of those workers earning the federal minimum wage or less.
Another common misconception is that of the family breadwinner earning minimum wage. However, only 1 percent of married workers earned the federal minimum wage or less. Most of those workers were young, unmarried and made up about 5 percent of the total workers.
Where Minimum Wage Employees Work
Among major occupational groups, the highest percentage of hourly paid workers earning at or below the federal minimum wage was in service occupations, at about 7 percent. Two-thirds of workers earning the minimum wage or less in 2016 were employed in service occupations, mostly in food preparation and serving related jobs.
The restaurant and food service industry is the biggest employer of low wage and minimum wage workers. The Pew Research Center found that about 18% of these workers, or 3.75 million people, work in that industry. Of these, about 2.5 million aged 30 or younger work in restaurants and many are tipped. This means their actual, or gross, pay may be closer to $10 an hour.
The next four industries that employ the majority of minimum or near-minimum wage workers are:
- Grocery stores
- Department and discount stores
- Elementary and secondary schools
Almost 25 percent of the total number of hourly minimum or near-minimum wage workers are employed in these occupations:
- Retail salespeople
- Waiters and waitresses (servers)
- Janitors and building cleaners
The Minimum Wage Directly Impacts “Low Wage” Salaries
The Bureau of Labor Statistics estimates that about 20.6 million people, or 30% of all hourly, non-self-employed workers 18 and older, are considered “near-minimum-wage” workers. This is defined as those who make more than the minimum wage in their state but less than $10.10 an hour.
It is presumed that these workers would also benefit if the federal minimum is raised to, or close to, that amount. “Near-minimum-wage workers” are comprised of younger people with almost 50 percent age 30 or younger, mostly white at 76 percent, with slightly more of them being women than men, at 54 percent compared to 46 percent.
Of all of these “near-minimum-wage workers” most of them, 56 percent, have no more than a high-school education.
Who is Paying the Lowest Minimum Wage
29 states currently require a minimum wage higher than the federal rate. These hourly state minimum wage rates range from $7.50 in New Mexico to $12.50 in D.C., according to the U.S. Department of Labor’s Wage and Hour Division.
Based on U.S. Census Bureau data., these states represent about 61% of the nation’s working-age population, age 16 and older. In 12 of these states, the minimum wage rises automatically each year based on a cost-of-living formula.
On the other side of the minimum wage scale, there are 27 states that either have no state-mandated minimum wage or have a rate equal to the federal minimum wage rate. In addition, there are two states, Wyoming and Georgia, whose state wage rate is actually lower than the federal rate.
The five states with the highest percentages (at or about 5 percent) of hourly paid workers earning at or below the federal minimum wage are:
- South Carolina
Alaska, California, and Oregon have the lowest percentages of hourly paid workers earning at or below the federal minimum wage at 1 percent or less.
Stay Compliant With Minimum Wage Laws
New regulations, such as minimum wage requirements, often increase both the costs and the risks for employers, requiring new workplace postings or changes to existing workplace policies. Because of this, it is recommended that all employers consult with experienced employment counsel to ensure payroll compliance. If you have any additional questions about minimum wage, check out our California Minimum Wage page for everything you need to know.
In addition, new management and compliance practices are required for every HR and every payroll professional. All of this can become burdensome and time consuming. But there are options.
Accuchex, a reputable payroll and workforce management services provider, can not only relieve you of the burden of your ongoing payroll process demands, but can potentially provide other cost-effective solutions, as well.
Call Accuchex Payroll and Workforce Management Services at 877-422-2824 to get your free Payroll Outsourcing Guide, or click the button below and let us help you learn more about your labor law compliance needs.