Minimum wage factoids

For years I've had fun at cocktail parties by asking people what percent of all the people who work in the U.S. were paid minimum wage or less. Of all the people I've asked, only one has come even close to the right answer. The vast majority of the answers I've received (try it yourself!) range from 10% to as much as 50%. Clearly, the public doesn't have a clue, and that's why politicians are able to exploit the minimum wage issue for political gain.

But don't take my word for it, just look at the facts as calculated by the BLS, in their Characteristics of Minimum Wage Workers 2012:

In 2012, 75.3 million workers in the United States age 16 and over were paid at hourly rates, representing 59.0 percent of all wage and salary workers. 1 Among those paid by the hour, 1.6 million earned exactly the prevailing federal minimum wage of $7.25 per hour. About 2.0 million had wages below the federal minimum.2 Together, these 3.6 million workers with wages at or below the federal minimum made up 4.7 percent of all hourly paid workers.

The BLS also tells us that, as of the end of 2012, there were roughly 140 million non-farm employees in the U.S. So the percentage of all the people working who were making minimum wage or less is (1.6 + 2.0)/140 = 2.6%. Less than 3% of all those who work in the U.S. make minimum wage or less, and over half of those earn less than the minimum wage. By the same logic, over 97% of those who work already make more than the minimum wage without any help from government fiats.

But there's more, and its impressive: "About three-fifths of workers earning the minimum wage or less in 2012 were employed in service occupations, mostly in food preparation and serving related jobs." In other words, 60% of those making minimum wage or less work in restaurants, where they undoubtedly make more than minimum wage if you count their tip income. That means that approximately 1% of those who work (40% of 2.6%) in the U.S. actually make minimum wage or less for their hourly efforts. Fully 99% of those who work effectively earn more than the minimum wage.

Raising the minimum wage would therefore benefit only 1-2% of the working population, but it would probably make life miserable for young and inexperienced workers, who could find that the jobs available to them have vanished because the minimum wage has been set at a level that exceeds their productivity. The unemployment rate for those aged 16-19 is already sky-high, at almost 24%.

Let's not make things worse for those who need a low minimum wage in order to get their first job.