The Truth About Minimum Wages and Who Earns Them

If there is one thing political ideologues can’t stomach it is good news that contradicts their talking points. Some people get very irate if their favored scare story is debunked. This is true for all political groups from far right to far left and most in-between. Conservatives continues to insist crime is out of control and rising, and not near the low for the last century plus and declining. Progressives still want us to think massive numbers of people earn the minimum wage and can’t feed their spouse and three children. Also not true.

That is one of the more pervasive “dirty tricks” used in economic discussions: define all issues in terms of minimum wage employees, in spite of there being so few of them. More absurdly, to ramp up the fear, they will often shout how the “a family of four with a minimum wage sole worker can’t do X.”

The problem with that use of numbers is not only do very few workers earn the minimum, but almost none of them are the sole provider for a family of four. In fact, most American families average under 3 people per family these days.

The Bureau of Labor Statistics has released the data for 2018 regarding who is and isn’t earning minimum wages and how many fall into that category. I quote the BLS:

“The percentage of hourly paid workers earning the prevailing federal minimum wage or less edged down from 2.3 percent in 2017 to 2.1 percent in 2018. This remains well below the percentage of 13.4 recorded in 1979, when data were first collected on a regular basis.”

Another important number is how many of them are teens working after school and how many are adults. According to the BLS 8% of teens earn minimum wage but only 1% of all workers over the age of 25 do. Very few teens are the sole providers of a family of four. In fact, very few workers who are married earn minimum wage. According to BLS only 1% of married employees are paid the minimum. “Among workers paid an hourly wage, those who were never married, who tend to be young, were more likely (about 4 percent) than married workers (1 percent) to earn the federal minimum wage or less.”

The percentage earning minimum drops rapidly with age. Where 7.6% of working teens earn the minimum, it drops to 4% for those 20 to 24 yers of ages, and the it drops in half again for those 25–29 (2%). Among older workers it is 1.5%.

Another critical fact is how few full-time workers are earning minimum. Only 1% of the full-time employed earn the minimum wage and only 5% of part-time workers do.

Another important variable is where people live. There is a national minimum wage which is the same everywhere but the cost of living varies dramatically from state to state. The states with the lowest cost of living have the highest percentages of workers earning the minimum. The BLS reports:

The states with the highest percentages of hourly paid workers earning at or below the minimum wage were in the South: Louisiana (about 5 percent) and South Carolina (about 4 percent). In the District of Columbia, about 4 percent of workers were paid at or below the federal minimum. The states with the lowest percentages of hourly paid workers earning at or below the federal minimum wage were in the West or Midwest: Alaska, Minnesota, Oregon, and Washington (all were less than 1 percent).

While an average of 2.1% of all workers earn the minimum, in many states the percentage is far lower, while in states with lower costs of living the percentage is higher, pushing up the national average.

Alaska 0.8%
California 1%
Georgia 2.2%
Indiana 2.6%
Kentucky 2.6%
Louisiana 4.5%
Minnesota 0.7%
Mississippi 3%
Montana 1%
North Carolina 3.1%
Oregon 0.8%
South Carolina 4.1%
Tennessee 3.4%
Texas 3.4%
Washington 0.7%

Another factor to consider is that a handful of states, mostly in the South, inflate the national average. While the national average in 2018 was 2.1%, the average regionally varied dramatically. The Northeast, Midwest and Western states average below the 2.1%. It is 2% in the Northeast, 1.9% in the Midwest and 1.1% in the West. However, average percentage in the South is 2.9%

It is also helpful to see how the percentages have dropped over the years. The first data was collected in 1979 and 13.4% of all employed individuals earned the minimum then, it had edged up to 15.1% by 1980. By the end of Reagan’s first term in office it was down to 11%, and by the end of his second term it had dropped to 6.5%. During the Bush presidency (1993) it stagnated and then increased slightly to 6.7%. Under Clinton the numbers started falling again ending his second term at 3.6%. During the presidency of George W. Bush it remained around 3% but fell to 2.2% in 2006 before ticking up to end his term at 4.9%.

The first year of Obama’s term the percentage had increased to 6%, but during the first years of any presidency the rate is the result of actions taken in the years before. At the end of the Obama presidency the percentage earning the minimum was down to 2.3%, and one year later was 2.1%.

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