May 5, 2005
At the federal, state and local government levels, debates continue over raising the minimum wage. Advocates of hiking the minimum wage, however, ignore economic reality. Published just last month, the U.S. Bureau of Labor Statistics (BLS) provided valuable data in a report titled "Characteristics of Minimum Wage Workers: 2004." Based on that data, consider the following about the federal minimum wage: - Those earning the minimum wage or less (due to exemptions) in 2004 accounted for only 1.6% of all wage and salary workers, and 2.7% of hourly-paid workers.
- More than half of minimum wage earners are under 25 years of age.
- Part-time hourly-paid workers were far more likely to be paid the minimum wage than full-time hourly earners - 7 percent versus 1 percent.
- Twenty-nine percent of minimum wage earners had less than a high school diploma, and 61% had a high school diploma or less.
- Finally, the trend over the years regarding minimum wage earners is worth noting, as the number and share of hourly-paid workers at or below the minimum wage have declined steadily over the past two-plus decades:
| Select Years | Number of Minimum Wage Workers (in thousands) | Percent of Hourly Paid | | 1980 | 7,773 | 15.10% | | 1985 | 5,538 | 9.90% | | 1990 | 3,228 | 5.10% | | 1995 | 3,656 | 5.30% | | 2000 | 2,650 | 3.60% | | 2004 | 2,003 | 2.70% |
For good measure, it must be understood that earners do not remain at the minimum wage for very long. As they gain work experience and improve productivity, they earn more money. This, of course, explains why an increase in the minimum wage by government hurts most those workers it is supposed to help. A higher minimum wage often prices young, low-skilled workers out of the market, so they do not get valuable work experience needed to climb the economic ladder. Raymond J. Keating
Chief Economist
Small Business & Entrepreneurship Council
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