Discussion: (130 comments)
Comments are closed.
A public policy blog from AEI
View related content: Carpe Diem
Cartoon by Henry Payne.
President Obama (from last night’s State of the Union speech): “We know our economy’s stronger when we reward an honest day’s work with honest wages. But today, a full-time worker making the minimum wage earns $14,500 a year. Even with the tax relief we’ve put in place, a family with two kids that earns the minimum wage still lives below the poverty line. That’s wrong.
Tonight, let’s declare that, in the wealthiest nation on Earth, no one who works full time should have to live in poverty — and raise the federal minimum wage to $9 an hour.”
As I wrote recently about the minimum wage, the president is recycling a liberal narrative that there are millions of struggling adults working full-time and trying to raise a family, but are stuck in jobs that pay only the minimum wage, which then justifies increases in the minimum wage to “help the poor.” But consider these facts about the minimum wage based on BLS data here and here:
1. In 2011, there were 112,564,000 Americans working full-time, and 111,821,000 of those workers, or 99.4%, were earning more than the minimum wage. Only 743,000 of those full-time workers were earning the minimum wage (or less), or 0.66% of the full-time workforce.
2. There were almost 45 million workers nationwide who were paid hourly wages and working full-time (40 hours or more) in 2011. Of those full-time hourly workers, 98.3% were earning more than the minimum wage, and only 743,000 (and 1.7%) were earning the minimum wage or less.
3. There were 3,936,000 teenagers (16-19 years) working at an hourly wage in 2011, and more than 3 million (3,037,000), and 77.2%, of those hourly teenage workers were earning an hourly wage higher than the legally-mandated minimum wage.
4. For the age group 25 years and over, there were 59,490,000 hourly workers, and 57,557,000 (and 96.75%) were earning more than the minimum wage, and only 1,933,000 (and 3.25%) were earning the minimum wage or less.
Bottom Line: The notion that there are millions of full-time workers struggling to raise a family, but are stuck in jobs paying the minimum wage for long periods of time is more myth than fact. Almost all full-time workers (99.4%) are earning more than the minimum wage, and almost all full-time hourly workers (98.3%) are earning more than the minimum wage. Most importantly, the fact that more than three out of four teenagers (77.2%), who are the least skilled and least educated group of workers, earned more than the minimum wage in 2011 would suggest the minimum wage is mostly an entry-level wage for beginning workers with no skills. The reality of the labor market is that even a large majority of previously unskilled teenage workers are earning more than the minimum wage as soon as they acquire minimal jobs skills and work habits, and can demonstrate their value to employers.
If more than three-quarters of teenagers earn more than the minimum wage, then any hardworking adult certainly can, and it must be a false narrative that full-time workers “are stuck” in minimum wage jobs and trying to raise a family, but mired in a life of poverty. The real issue is that there are many unskilled workers who desperately need that first job that allows them to acquire the skills and experience that leads to higher wages as the teenage data demonstrate. But the minimum wage law prices many of those unskilled workers out of the labor market (especially minority populations), and they are denied the employment opportunities they desperately need (see cartoon above). The real tragedy isn’t that some full-time workers are initially earning $7.25 per hour and supposedly “living in poverty,” but that there are millions of unemployed Americans willing to work but are earning $0.00 per hour and living in poverty because of the minimum wage law.
Comments are closed.
1150 17th Street, N.W. Washington, D.C. 20036
© 2016 American Enterprise Institute for Public Policy Research