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By Stephen Pederson

Myths About Minimum Wage

What the Politicians Won’t Tell You About Minimum Wage

Every couple of years you will hear a discussion in the media about minimum wage earners in the U.S.  A politician or party will try to make a name for itself putting forth a movement to increase the minimum wage to some more livable standard.  At this point you will hear two groups step forward in the debate: one pro increase, the other other against it.  The arguments are:

1) The low minimum wage is unlivable and the single mothers and other poor individuals are trapped in a life of full time, minimum wage hell

2) The increase in minimum wage decreases the available jobs and the much needed jobs for those entering the labor market and needing experience are fewer - this lessens the opportunities for new entrants and traps them in the “I can’t get a job without experience but I need experience to get a job Catch-22

What you rarely hear in these types of debates are a full discussion of the facts.  You will hear “selective facts” to support one position or the other.

The Media Approach to the Minimum Wage Debate

The media tends to stylize this debate with a compression of the details into sound byte headlines to emphasize or dramatize a single fact.  Their approach is not so much a discussion of the facts, but creating an eye catching headline.  Eye catching headlines help sell more beer and car ads.  As we all know, the media is not in the business of truth, they are in the ad selling business.

Which leads everyone who is paying attention to a single question: who in this debate is correct?  This is where the data comes in.  As they say: check the facts.

At a cursory level, this is what we know about minimum wage earners:

  • Only 2.9% of all wage earners in the U.S. are paid minimum wage
  • Only 4% of single-parent families are minimum wage earners compared to 5.6% of average U.S. workers
  • Just over half of the minimum wage earners are aged 16 to 24 years – they work part-time and are going to school
  • The average family income of a minimum wage earner is > $53K per year (poverty line = $22.4K)
  • The average minimum wage earner is not the primary income earner of the household
  • The vast majority of below the poverty line Americans do not work full-time: only about 1/3 work and less than 10% have full time jobs

What these few data points show is that there are two demographic groups to think about when assessing minimum wage policies: those under 25 years and those over 25 years of age.  Here is the age of minimum wage earners in the U.S.:

A graph of minimum wage earners by age


What this graph also shows using U.S. Census Bureau data is that at any given age past 24 years old, the percentage of minimum wage earners are less then 3% of workers and this steadily drops to smaller fractions (less than 0.5%) of workers until 68 years of age.

Another relevent set of data is the demographic data on below poverty line incomes and the amount of employment participated in by low income families.

A graph of the amount of work that is participated in in low income households in the U.S.

Poverty and Work – courtesy www.heritage.org

 

What this graphic illustrates is that for the fast majority of households below the poverty line (91%) do not hold full-time, year round jobs.  In other words, 2/3rds of households would not even be impacted by a minimum wage increase since they do not work.  Another 1/4 of the households only held part-time positions where the increase would have a lesser impact on income than if working full-time.

The intersesting part about this data is that if the large majority (91%) of individuals living below the poverty line do not work a full time job, then how will a minimum wage increase have significant impact to their incomes?

What the data appears to show is that a raise in minimum wage will benefit suburban teenagers who are still in school, not the poor.  If that is intention of the policy, then it achieves it goal.  However, in most chases that is not how the policy is usually represented.  In most cases it is represented as a policy to eliminate poverty which it clearly does not as the vast majorirty below poverty individuals do not work at all or work full time jobs and the majority of minimum wage earners are kids in school living at home.

 

For further reading on this subject:

Updated: NY Minimum Wage Subsidy - http://www.breitbart.com/Big-Government/2013/03/30/NY-Taxpayers-Subsidize-Min-Wage-Hike

Who Earns the Minimum Wage” – www.heritage.org

The Foundry: 5 Myths about Minimum Wage” – www.heritage.org

 

 Images courtesy of www.heritage.org

See all posts on Demographics

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