The Bureau of Labor Statistics released their annual “Characteristics of Minimum Wage Workers” report the other day. It’s quite the interesting read for an econo-nerd.
– Just 3.9% of all hourly workers make at or below minimum wage. That’s down from 4.3% last year and significantly lower from the 13.4% level in 1979.
– Minimum wage workers are young: Half of those making minimum wage are under 25. Most of them are teens. Of the 16-19 year olds making hourly wages, 15% were paid at or below minimum. That figure drops to just 3% for 20-25.
-Education is a factor: 7% of those without a high school diploma earn minimum wage. That figure drops to 4% with a high school diploma, and just 2% for those with a college degree.
So, in other words, the vast majority of workers, even those with low skills, are earning above minimum wage!
What this also suggests to me is that the minimum wage could possibly be raised with minimal (and I stress minimal, not none) negative consequences as many workers are already making above the wage as it is. After all, if the price floor is below the equilibrium, it’s rather ineffective.
Of course, this is not to say that there will be no consequences. Those handful of workers who do make at or below minimum wage would surely face consequences: loss of hours, loss of non-monetary benefits, possibly loss of jobs.
I want to be crystal clear here: I am not advocating raising minimum wage (which I hold to be grossly immoral), but offering an explanation why hikes in the wage might show just minimal consequences.