Minneapolis Fed studies find that Twin Cities minimum wage hikes cost jobs
Over the last few years, I have written a fair bit about the minimum wage hikes in the Twin Cities of Minneapolis and St. Paul. Simply put, all a minimum…
There are, surprisingly, a lot of facts that proponents of a higher federal minimum wage seem to ignore. The first one is that economic growth is a significant driver of wage growth. This can be seen especially with the growth in wages in recent years. Take 2019, for example; it was a year of growth. Between 2016 and 2019, a lot of households experienced growth in household incomes. Additionally, as reported by the Wall Street Journal,
According to the Bureau of Labor Statistics Usual Weekly Earnings survey, most workers’ wages rose a bit more than 10% from December 2016 through December 2019, and those in the bottom 10% got a raise of 15.6%.
However, despite this growth in the same year, we also saw increased advocacy for a higher minimum wage. For instance, the U.S. House of Representatives passed the Raise the Wage Act to raise the federal minimum wage to $15. And multiple groups intensified the push for a higher minimum wage.
Additionally, the minimum wage has been proven as an ineffective tool to pull adults and families out of poverty due to its makeup. Evidence shows that the minimum wage workforce has continuously been made up of a tiny and shrinking fraction of the workforce, contrary to some claims.
Moreover, the minimum wage workforce is rarely made of people that head households, but usually consists of teenagers and young adults working part-time. Let us look, for instance, at who made up the minimum wage labor force in 2019, the year we saw a big drive for the $15 minimum wage.
According to the Bureau of Labor Statistics (BLS)
In 2019, 82.3 million workers age 16 and older in the United States were paid at hourly rates, representing 58.1 percent of all wage and salary workers. Among those paid by the hour, 392,000 workers earned exactly the prevailing federal minimum wage of $7.25 per hour. About 1.2 million had wages below the federal minimum. Together, these 1.6 million workers with wages at or below the federal minimum made up 1.9 percent of all hourly paid workers.
The percentage of hourly paid workers earning the prevailing federal minimum wage or less edged down from 2.1 percent in 2018 to 1.9 percent in 2019. This remains well below the percentage of 13.4 recorded in 1979, when data were first collected on a regular basis.
Workers under 25 make up one-fifth of hourly-paid workers. However, they make up about two-fifths of those paid the federal minimum wage or less. Among employed teenagers (16 to 19) paid by the hour, about six percent earned the minimum wage or less, compared with about one percent of workers aged 25 and older.
When it came to education,
“among hourly-paid workers age 16 and older, about 3 percent of those without a high school diploma earned the federal minimum wage or less, compared with 2 percent of those who had a high school diploma (with no college), 2 percent of those with some college or an associate degree, and about 1 percent of college graduates”.
On top of that, minimum wage workers in 2019 were less likely to be married and more likely to be part-time workers. Workers were also concentrated in the leisure and hospitality industry in a service occupation. And there was no significant difference among different racial and ethnic groups on the amount of hourly-paid workers at or below the minimum wage.
Furthermore, the number of workers paid minimum wage or less has been dropping. For instance, in 2010, workers paid at the minimum wage level or less made up six percent of all hourly-paid workers (4.4 million) but in 2019, the number was just 1.9 percent (1.6 million). These estimates do not include tips, overtime pays or commissions, which may raise pay substantially in some instances. This means the number of workers paid minimum wage or less is likely much lower.