Printer Friendly

Workers at the minimum wage or less: who they are and the jobs they hold.

Workers at the minimum wage or less: who they are and the jobs they hold

The current debate over changing the Federal minimum wage--whether it should be increased, by how much, who might benefit or lose from an increase, and what the increase might cost--has raised a large number of questions: How many persons are working at or below the minimum wage? Who are they? What jobs do they hold? How have their numbers changed over the years? How many are earning just above the current minimum?

Answers to many of these questions can be derived from data obtained through the Current Population Survey (CPS), a monthly survey conducted for the Bureau of Labor Statistics by the Bureau of the Census. The CPS provides data on unemployment and the size and makeup of the Nation's labor force. While other surveys conducted by the BLS through employers provide the most accurate and detailed data on average earnings by industry and geographic area, these surveys generally yield no information on the characteristics of individual workers and do not identify workers who might be working at or below the minimum wage. In contrast, the focus of the CPS is on individuals. The survey obtains the hourly earnings rate for each member of the household who is reported as being paid an hourly rate.1 Thus, the CPS identifies those workers whose wages are at, below, or just above the minimum. In 1986, hourly paid workers represented about three-fifths of the Nation's 96.9 million wage and salary workers, and their median hourly earnings were $6.33.(2)


This report focuses on the 5.1 million workers paid hourly rates (including 3.3 million who usually work part time) identified through the CPS during 1986 at earning the prevailing Federal minimum wage ($3.35 per hour) or less.3 The report also looks briefly at workers with wage rates up to $1 above the minimum.

The current minimum, which has been $3.35 per hour since January 1981, was established by the 1977 amendments to the Fair Labor Standards Act. In 1986, about 3.5 million workers were reported as earning exactly $3.35, and 1.6 million were reported as earning less. Together, these wage earners constituted 8.8 percent of all hourly paid workers. In 1981, 7.8 million workers, about 15 percent of the hourly paid workers, received the minimum rate or lower. So, while the minimum wage has remained unchanged for more than 5 years, the number of workers whose earnings were either at or below it has declined considerably.

The presence of a sizable group of hourly paid workers receiving less than $3.35 does not necessarily indicate widespread violations of the Fair Labor Standards Act, because a number of exemptions to its minimum wage provisions exist. These exemptions include employees in outside saleswork, low-volume retail trade and service firms, and seasonal amusement establishments. Furthermore, tips, which are not part of the stated hourly rate, can partially fulfill the minimum wage requirement.4


For the most part, those workers earning $3.35 or less in 1986 were young. About 37 percent were teenagers and an additional 23 percent were 20 to 24 years old. Among teenagers alone, the proportion of workers earning $3.35 or less was 32 percent. This proportion declined with increasing age to 4 percent for the 35- to 44- and 45- to 54-age groups, but then rose to 14 percent for the 65 and over category.

About 12 percent of women earned hourly wages at or below $3.35, about double the proportion among men. Only among part-time workers (those who usually work less than 35 hours per week) were men slightly more likely than women to be paid at or below the minimum wage; this is because men who are working part time tend to be young, while women are spread more evenly throughout the age range. Overall, part-time workers were nearly six times as likely as full-time workers to be paid $3.35 or less. While part-time workers made up about one-quarter of all workers paid hourly rates, they accounted for nearly two-thirds of those workers at or below $3.35. (See table 1.)

Just under 2 percent of husbands, but 7 percent of wives, earned the prevailing minimum wage of less. Among women maintaining families (without a husband present), the proportion earning the minimum wage or less was about 10 percent. Other family members, primarily sons and daughters, were far more likely to earn $3.35 or less, with an incidence of almost 20 percent; this group accounts for just over half of all minimum wage workers.

A look at minimum wage workers by race and ethnicity shows that only a slightly higher proportion of blacks and Hispanics than whites earned $3.35 or less--about 10 percent versus 8.6 percent. Unlike white and Hispanic women, who were about twice as likely as men to be paid at or below the minimum wage, black women were only half again as likely as black men to receive this amount.

Not surprisingly, the highest proportion of workers with hourly earnings at or below $3.35 was found among those workers with the fewest years of schooling completed. For example, 10 percent of workers age 25 and over with only 8 or fewer years of education earned $3.35 or less, as did 5 percent of those finishing high school but no college; however, only 2 percent of those workers finishing at least 5 years of college earned the minimum wage or below. Altogether, workers who had not completed high school accounted for almost two-fifths of those workers age 25 years and over whose hourly wage was $3.35 or less.

Among the four broad census geographic regions, the Northeast had the lowest proportion of hourly workers at or below $3.35 (6.7 percent), and the South had the highest (10.7 percent). At the narrower geographic division level, the proportions ranged from 4.2 percent in the New England States to 13.3 percent in the East South Central States.5

Occupational and industrial groups

Among the major occupational groups, the proportion of workers whose earnings were at or below $3.35 was as high as 25 percent for service workers overall, and 53 percent for private household workers. Just over half of all employees with earnings at the minimum wage or below were in service jobs, a field that accounted for three-quarters of the workers with wages below $3.35. At the other extreme, only about 1 percent of the executive, administrative, and managerial workers; technicians; and precision production, craft, and repair workers were in this low-earning category. (See table 2.)

A look at more detailed occupational data shows that 39 percent of the 4.5 million hourly workers employed in food service jobs earned $3.35 or less; about half of these workers had stated hourly rates below $3.35. Retail and personal service salesworkers also had a high incidence of minimum wage earnings, 16.5 percent. The 2.5 million employed as food service workers and as retail and personal service salesworkers alone accounted for half of all minimum wage workers. However, many people working in these occupations receive tips and commissions which supplement (to varying degrees) the hourly wages received.

The proportion of workers with earnings at or below the minimum wage was greater in the private than in the public sector. In the private sector, the proportion was 9 percent: 3 percent in goods-producing industries and 13 percent in service-producing industries. In the public sector, the incidence was 6 percent. (See table 3.)

Among the major industrial groups, the proportion of workers at $3.35 or less was highest in private households (48 percent), retail trade (22 percent), entertainment and recreation (19 percent), and agriculture (18 percent). Retail trade alone accounted for more than half of all minimum wage workers, but as noted before, this industry employs many food service workers and salesworkers, some of whose earnings are supplemented by tips or commissions. However, in many industries, the proportion of workers with hourly rates at or below the $3.35 minimum did not exceed 2 percent. These industries included mining; construction; durable goods manufacturing; transportation, communications, and public utilities; hospitals; and the Federal Government.

Earning just above 3.35

Another area of current interest, particularly in any discussion of a possible increase in the minimum wage, is the number of workers whose wages were just above the $3.35 rate. The $4.35 boundary is noteworthy because it is close to the current minimum adjusted for the change in consumer prices since January 1981. The 1986 data show that about 600,000 persons earned $3.36-$3.49 an hour, 2.9 million earned $3.50-$3.74, 1.5 million earned $3.75-$3.99, and 4.6 million earned $4-$4.35. Altogether, these 9.6 million workers, 17 percent of all those paid by the hour, reported hourly earnings up to $1 above the current minimum wage. The number of these workers who would be directly affected by a minimum wage increase would, of course, depend largely on the level at which a new rate would be set, and on the extent to which employers might continue to pay some groups of workers above the minimum wage.

Of the 9.6 million workers, exactly one-quarter were teenagers, and another quarter were young adults age 20 to 24 years. Women age 25 years and over accounted for an additional 35 percent of this population. (See table 4.) In general, the groups with relatively high proportions of workers earning $3.35 or less also had relatively high proportions of workers earning $3.36 to $4.35; for example, about 42 percent of teenagers, 24 percent of young adults, 17 percent of wives, and 19 percent of women maintaining families were in this category. In contrast, only 5 percent of husbands were in this $3.36-$4.35 category. Women were nearly twice as likely as men (21 versus 12 percent) to earn in the $3.36-$4.35 range, while blacks and Hispanics (both about 19 percent) had only slightly higher proportions than whites (16 percent) in this earnings category.

IN SUMMARY, the 5.1 million workers with earnings at the minimum wage or below consisted largely of young persons and women. The majority were part-time workers and mostly in service and sales occupations. Because many of these workers have earnings from tips and commissions supplementing their hourly wage, the proportion actually earning $3.35 or less among workers paid hourly rates may be overstated by the numbers presented here. However, among workers not paid an hourly rate--for example, salaried workers or those paid at daily rates or piece rates-- there may be some who have average hourly earnings of $3.35 or less; their numbers cannot be reliably estimated from the survey data.6 About 9.6 million workers paid at hourly rates were reported as earning between $3.36 and $4.35 per hour (that is, up to $1 above the current minimum wage); their demographic characteristics were very similar to those of workers earning the minimum wage or below.

1 See BLS Measures of Compensation, Bulletin 2239 (Bureau of Labor Statistics, 1986) for a complete description of the earnings series available from the Current Population Survey as well as from other BLS surveys such as the Current Employment Statistics Survey, Area Wage Surveys, and Industry Wage Surveys.

2 Information for 1984 was published in Earl F. Mellor and Steven E. Haugen, "Hourly paid workers: who they are and what they earn,' Monthly Labor Review, February 1986, pp. 20-26.

3 Some States and the District of Columbia have minimums different from the Federal level. For example, four of the New England States had minimums of $3.45-$3.55 during part or all of 1986. The District of Columbia has minimums which differ by occupation and industry, such as a $4.50 rate in beauty culture occupations in 1986. Many States have minimums at or below $3.35. In cases where an employee is covered by both State and Federal minimums, and the rates differ, he or she is entitled to the higher wage.

4 See Report of the Minimum Wage Study Commission, vol. I, p. 107, for a more complete list of full and partial exemptions.

5 The Northeast region includes the New England States: Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont; and the Middle Atlantic States: New Jersey, New York, and Pennsylvania. The South includes the South Atlantic States: Delaware, District of Columbia, Florida, Georgia, Maryland, North Carolina, South Carolina, Virginia, and West Virginia; the East South Central States: Alabama, Kentucky, Mississippi, and Tennessee; and the West South Central States: Arkansas, Louisiana, Oklahoma, and Texas.

6 Crude estimates of the hourly earnings of all wage and salary workers can be made by dividing usual weekly earnings by usual weekly hours. However, an error of as little as $1 or 1 hour in the reported numbers can result in an "above minimum wage' earner estimated as earning below, or vice versa. In a situation where a small error can make a large analytical difference, hourly earnings estimated by a procedure requiring precise reponses to two separate questions may not be reliable. For information on a test to gauge the accuracy in reporting of earnings data, see Larry Carstensen and Henry Woltman, "Comparing Earnings Data from the CPS and Employer Records,' Proceedings of the Social Statistics Section (American Statistical Association, 1979), pp. 168-73.

Table: 1. Employed wage and salary workers paid hourly rates with earnings at or below the prevailing minimum wage, by selected characteristics, 1986 annual averages

Table: 2. Employed wage and salary workers paid hourly rates with earnings at or below the prevailing minimum wage, by occupation, 1986 annual averages

Table: 3. Employed wage and salary workers paid hourly rates with earnings at or below the prevailing minimum wage, by industry, 1986 annual averages

Table: 4. Employed wage and salary workers paid hourly rates with earnings between $3.36 and $4.35 per hour, by selected characteristics, 1986 annual averages
COPYRIGHT 1987 U.S. Bureau of Labor Statistics
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1987 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Author:Mellor, Earl F.
Publication:Monthly Labor Review
Date:Jul 1, 1987
Previous Article:Characteristics of workers in nonprofit organizations.
Next Article:Occupational pay structure in nursing and personal care facilities.

Related Articles
The minimum wage: its relation to incomes and poverty.
Estimating the number of minimum wage workers.
Do legal minimum wages create rents? A re-examination of the evidence.
Minimum wages, on-the-job training, and wage growth.
Do some workers have minimum wage careers?
The wage and employment dynamics of minimum wage workers.
Legal minimum wages and employment duration.
Minimum wage earners.
Teens deserve to earn same salary as adults; 10 YEARS OF MINIMUM WAGE: Welsh unions' call for 18-year-olds.
$7.25 an hour: is it all good news? this summer's minimum-wage hike means more money in the pockets of working teens. But is there a downside?

Terms of use | Copyright © 2017 Farlex, Inc. | Feedback | For webmasters