Who Earns Minimum Wage? A Statistical Profile

There's been some discussion recently among moneybloggers about writing more for those who earn the minimum wage, and for those who face other financial difficulties. This is a good thing. But all this talk made me wonder: How prevalent is the minimum wage? Who works minimum wage jobs? I decided to do some research.

According to the U.S. Department of Labor, the median annual income of a U.S. worker is $32,140. Federal minimum wage is currently $5.85 an hour, or about $11,500 per year — just above the poverty line. Of the 76.5 million people paid by the hour in the United States in 2006, 2.2% make minimum wage or less. Here are some generalizations we can make about minimum wage workers:

  • Most minimum wage earners are young. While 2.2% of all hourly workers earn minimum wage or less, just 1.4% of workers over the age of 25 are paid at or below the Federal minimum wage. More than half (51.2%) of minimum wage workers are between 16 and 24 years old. Another 21.2% are between 25 and 34.
  • Most minimum wage earners work in food service. Nearly two-thirds of those paid minimum wage (or less) are food service workers. Many of these people receive supplemental income in the form of tips, which the government does not track.
  • Most minimum wage earners never attended college. Just 1.2% of college graduates are paid the minimum wage. If you only have a high school degree, you're more likely (1.9%) to be paid minimum wage. Those without a high school degree are nearly three times as likely (3.7%) to earn minimum wage. 59.8% of all minimum wage workers have no advanced education.
  • Finally, as you might expect, part-time workers are five times more likely to be paid the minimum wage than full-time workers.

You can find more information at the official characteristics of minimum wage workers page, and in the page of data tables. Also, the Department of Labor has a map that shows how state minimum wage rates compare to Federal minimum wage rates:

These statistics mirror my own experience. When I earned minimum wage, I was working on farms or in restaurants. I was young. The other people I knew who earned minimum wage were also young. As an adult, I've known a few people who earned at (or just above) minimum wage. These people have usually lacked a college education. In many cases, they were actually working toward some sort of degree while they worked their minimum wage job. Most people don't see a minimum wage job as an end, but as a means to an end.

That's not to say that there aren't those who aren't stuck in bad situations. Research from the U.S. Bureau of Labor Statistics indicates:

Many workers begin their post-school careers in jobs paying the minimum or something close to it, but…the vast majority of workers move on to higher paying jobs as they accumulate experience. However, there is a nontrivial fraction of workers who spend substantial portions of their early careers consistently working in minimum wage jobs. […] Less educated persons, blacks, women with young children, and workers who reside outside of urban areas are much more likely to have such minimum wage careers.

The percentage of hourly workers paid at or below the Federal minimum wage has declined steadily (and significantly) since the numbers were first tracked in 1979. In 1980 and 1981, 15.1% of workers were paid at or below the minimum wage. In 2006, just 2.2% of workers were paid at or below the minimum wage. (A strong argument could be made that the minimum wage has failed to keep pace with the cost of living, and that employers have been raising wages on their own. In other words, this statistic may be meaningless.)

Enough numbers! Later today I'll explore ways for those trapped in minimum wage jobs to get ahead. It's not all about pinching pennies. I'd also like to hear stories from people who have worked minimum wage jobs in the past, and from those who still do. If I collect enough stories, I'll post them in a separate entry. (If you'd like to share your story, please drop me a line, or post it in this forum thread.)

Update: I've posted my piece on how to escape from minimum wage.

More about...Career

Become A Money Boss And Join 15,000 Others

Subscribe to the GRS Insider (FREE) and we’ll give you a copy of the Money Boss Manifesto (also FREE)

Yes! Sign up and get your free gift
Become A Money Boss And Join 15,000 Others
guest
45 Comments
Oldest
Newest Most Voted
Inline Feedbacks
View all comments
Amanda
Amanda
13 years ago

Firstly, food service does not necessarily mean you’re working in a restaurant where you get tips. Working in a cafeteria or McDonalds is food service without tips. Working in a deli or bakery is food service without tips. Secondly, you *are* required to pay taxes on tips. Taxes are usually determined by the cost of the meal assigned to you. Which means that you “win” if you get higher than average tips & lose if you get lower than average tips. Also, minimum wage for working where tips are an expected part of your income is lower than minimum wage… Read more »

IdeaSenator
IdeaSenator
13 years ago

Today I have a job that gets me 60K. However 3 months ago when I was in transition and was looking for a job, I worked over the weekends for a food business for 5/hour. I worked 30 hours in those 3 days for 4 weeks. Although there was no necessity for me to do this, but pinching my own savings was ridiculous to me. So doing this was sort of a temporary fund coming in to cover my basic expenses. However what I realised was that for the others who worked there this was a lifetime job and there… Read more »

Steve
Steve
13 years ago

Firstly, earning the minimum wage is not a “financial difficulty” it is a “motivation and brain power difficulty”. Ask anyone who writes in about earning the minimum wage (those who earn tip excluded) for more than 6 months to a year if they have ever ASKED for a raise. Ask them if they have done anything above and beyond the bare minimum that was required of them at work to stand out from the crowd and deserve a raise. Ask them, if after months with no raise, they looked around their town for other jobs, or merely moped all day… Read more »

Cricket
Cricket
7 years ago
Reply to  Steve

I realize this is an old post, but I object to letting blatant falsehoods stand. At least in Michigan, wait staff is paid considerably less than minimum wage, unless they can *prove* they made less in tips… then they’re only paid up to minimum wage – but taxed on it regardless. Since it’s almost impossible to prove you made *less* (unless tips are pooled – in which case how good a waitress you were doesn’t do you necessarily a lot of good), you make minimum wage unless you get very lucky. You might be able to hide/stash some cash tips,… Read more »

Jerry
Jerry
13 years ago

Even though most employers raise wages on their own, it is often not enough to keep pace with the cost of living. I urge you to watch a documentary called “The High cost of a low price.” Probably can rent it at blockbuster for a dollar or two as it’s a documentary, or buy it on Amazon for $10.00. Once people watch this then they may see a little more into why people who work for minimum wage, or more at these larger organizations still have a hard time making ends meet.

FinanceAndFat
FinanceAndFat
13 years ago

If you are earning minimum wage you absolutely have to do something to get beyond that. Take classes, read books, get a second job. There is no way a person could survive on that money. If someone is willing to settle for that long term, there is nothing a personal finance blog can do to help them.

Steve S
Steve S
13 years ago

I’ve seen the WalMart documentary, which doesn’t really apply here because last I heard WalMart average hourly employee makes about $9-10/hour. My whole point is this: Nobody is putting a gun to your head and making you put on that McDonalds hat for 40 hours a week serving fries and burgers. At some point in a person’s life, they have to make a conscious decision to either further their career, or stay stagnant (and then complain about it). As this website constantly points out, the BEST way to live below your means is to increase your means. Ramen can only… Read more »

Nicole
Nicole
13 years ago

I agree and disagree with the posters. I agree that it takes very little to get past making minimum wage for the average person with a little “common sense”. Unfortunately, common sense isn’t common and many people don’t have the basic skills to do better. We take for granted so much of what our parents/environment taught us. I live in Philly and I mentor a young woman who comes from the ghetto. Her sister is 24 and works a 15 hr./week job at Macy’s making minimum wage. Her IQ is so low she can barely handle that. The young woman… Read more »

Xias
Xias
13 years ago

Interesting, $11,500 annually eh? I think I could swing that..of course I don’t have kids or an expensive mortgage. I think this would be impossible to raise a family on (even if your spouse worked as well). In my area (near Philadelphia) minimum wage jobs are a rarety.

I wonder where most minimum wage earners are by region?

Ed
Ed
13 years ago

The IRS says you have to pay taxes on any income, that includes cash tips. If you do not report it because it can’t be ‘tracked’ then lets call it what it is, dishonesty, cheating on taxes, lack of moral compass, whatever.
Many people do it, but lets not rationalize it because my friends, cousins, brothers, sisters, aunt, uncles, etc., don’t feel bad about it.

Compounding
Compounding
13 years ago

Xias, That is an interesting point. If someone is only making $11.5K a year, it would be difficult to raise a family. I would think that the novel approach would be to not have kids if you can’t support them, or to increase your earnings. I have had those jobs before, and there were things that could be done, even then. In fast food, and many other restaurant jobs, turnover is high. Ask to be promoted if you don’t plan on getting out of that line of work. Heck, I was a shift manager for a year when I graduated… Read more »

Wesley
Wesley
13 years ago

Ha! I’m with Steve S…that’s just funny stuff. I worked a min wage job in high school (and through a portion of college). If you’re not getting tips, why do it? I had a really fun job delivering steaks, and made some decent money in hindsight.

I have a tough time feeling sorry for someone flipping burgers for min wage. I see “help wanted” signs all over the place. Unless you have a harsh criminal record, there are jobs out there.

Jenn
Jenn
13 years ago

Here in West Virginia the most prevalent industry is the service industry (i.e. retail, food, etc.). However, the overall economy is poor. (Despite the service industry being prevalent, it is no where near as large as in other states. Because there simply isn’t enough money in the state to support it.)

People who make minimum wage do not get to earn above it. When I worked in Robinson, PA I easily made $8/hour. But down here, without the good economy and competition, people are paid the normal $5 and change per hour.

Jenn
Jenn
13 years ago

Re: Steve There are people who do as you suggest: go above and beyond, ask for raises, etc. I’ve been one of those people. But you have to understand that the retail/food service industries see minimum-wage workers as disposable items. They’re just a means to an end, if you will. And the turn over is so great, that they know they can easily replace you with someone else if you leave. Raises are especially hard to come by. You have to be promoted (such as into management) in order to obtain one. Also, companies like to cut your hours. I… Read more »

Norman
Norman
13 years ago

Amanda in #1
“Also, minimum wage for working where tips are an expected part of your income is lower than minimum wage elsewhere.”

Not in Oregon. It’s the higher state min. wage (7.80) + tips.

In other states with tip credit, the Fed law says if you are earning less than the min. wage and your tips don’t bring you up to it, then the employer is on the hook to make up the difference.

FMF
FMF
13 years ago

J.D. —

I’m waiting for the storm that is about to come. 😉

Mary
Mary
13 years ago

I worked a minimum wage job (+ minimal bar tips) this summer while finishing my degree – and while it was easy to get mimimum wage work, hardly any of the summer jobs available in my city paid any more.
The difference being, though, that I’m a Scot, and the minimum wage here for over 22s is now £5.52/hour, which works out at a more than respectable $11.25/hour for you.

Matt
Matt
13 years ago

I make just above minimum wage. My hourly wage works out to just below $7/hour, I get paid salary but I work 80 hours a week or more. I work at one of the best restaurants in the country and we make about as much as the average McDonald’s employee and I don’t get any benefits. Kind of makes me wonder why I paid all that money for the Bachelor’s degree in Culinary Arts. But I’m not complaining, right now. I CHOSE this job. For now I like it but I’ll probably only last another year until I get a… Read more »

nolandda
nolandda
13 years ago

I worked in a local greasy-spoon diner when I was young. We had to fill out a form at the end of the shift declaring how much we made in tips. The boss didn’t care what we put so long as our base pay plus tips exceeded 4.25 USD/hour (otherwise he had to make up the difference). I can agree with others that this system was abused. However, unlike some of them, I have a hard time working up a great deal of moral indignation at the lowest wage earners in our society dodging a few taxes. Compared to the… Read more »

Sam
Sam
13 years ago

A great book to read on this topic is Nickeled and Dimed in which a journalist goes undercover to work a variety of low paying wages to see if she can support herself. I think the % of folks making min. wage is pretty small these days (many states now have min. wages that are above the fed. min. wage) but there are still a big chunk of folks who make more than min. wage but are still below the poverty level while working full time. It seems to me, in my humble opinion, that someone working a full time… Read more »

Sam
Sam
13 years ago

One other interesting factoid from this post that I wanted to comment on. Companies that have factories in the AS islands are able to put a made in the USA tag on goods but the AS islands pays well below the min. wage for the USA. I pretty sure that there was recent (2007) legislation that changed or is changing that, but doesn’t seem fair to me.

MizD
MizD
13 years ago

Something often forgotten by those who are quick to blame minimum wage workers for their own plight: At that level of employment it’s quite likely the employee has either poor health coverage or no health coverage. Before judging everyone in this state and slapping them with the label of “lazy” or “unmotivated,” consider the possibility that many of them may suffer from chronic physical or mental health conditions that have gone untreated or possibly even undiagnosed, and that these conditions are very real and unmovable roadblocks, preventing them from changing their lives for the better.

Steve
Steve
13 years ago

MizD: That is why you need the free market to determine wages, benefits, and so on. All the government wants to do is place you in a group. Guy A is a “poor black man” so he gets welfare and doesn’t pay taxes, Guy B is a “rich while capitalistic pig” so he gets extra taxes…by placing people in groups we aren’t taking into account their individual situations. By making the group “minimum wage earners” and targeting them for a select set of benefits, you can’t weed out the lazy ones from the those who have experienced real catastrophe. My… Read more »

Nathan
Nathan
13 years ago

Unless I am reading something incorrectly, the Department of Labor page you link to indicates that 2.2% of hourly workers make minimum wage or less, not 2.9% as you have posted. The 1.4% for people over 25 years is the same.

Something to consider: 1.4% of the population has an IQ of 67 or less. Obviously, IQ is not a good indicator for someone’s potential to make money, but being that low (67 is over 2 standard deviations from the mean) can make it difficult to compete with other employees.

J.D.
J.D.
13 years ago

Unless I am reading something incorrectly, the Department of Labor page you link to indicates that 2.2% of hourly workers make minimum wage or less, not 2.9% as you have posted Nathan, the truth is that page makes my head hurt. And I like statistics. It’s true that the DoL prose cites a 2.2% figure, but if you look at the actual tables, the number is 2.9%. I suspect there’s some data clipping going on someplace. (In other words, there are some “cohorts” that aren’t included in the 2.2% number.) Also, by definition, isn’t a 67 IQ 3.3 standard deviations… Read more »

Tim
Tim
13 years ago

if you get audited, it looks awful funny when you have lots of stuff that does not equal what you reported in tips. yes, people like to work in service industry that deals with cash, because they can pocket much of cash without reporting even though they are supposed to report. many people choose these jobs, because they can make a lot of cash under the table. folks with illnesses and disabilities grave enough to limit job opportunities is an insignificant percentage. This does not mean you are insignificant, it just means that, yes, we are generalizing, but in general… Read more »

Nathan
Nathan
13 years ago

I see 2.2 on the first row, tenth column of tables 1-9.

The IQ normal distribution has a mean of 100 and a standard deviation of 15, so 67 would be (100-67)/15 = 2.2 standard deviations from the mean.

J.D.
J.D.
13 years ago

@Nathan

Ah, I was laboring under a misapprenension regarding IQs. I thought that the scale had a standard deviation of 10. There goes a decade-old misconception. 🙁

I went back through the tables, and you’re absolutely correct. Minimum wage workers represent 2.2% of hourly workers. For the life of me, I can’t see what made me change the number to 2.9%. I know that it happened late last night in final editing, so I’ll use that as a lame excuse. 🙂

Thanks for setting me straight on my statistics!

Miss Cellania
Miss Cellania
13 years ago

These statistics don’t really tell much about labor, since only 2.2% make minimum wage. If you are hired at minimum wage, you may get a nickel raise after six months, and then are not considered in such a survey. Look up how many people make between $5.86 and $6.85 an hour, and then you can get a handle on low-wage workers.

plonkee
plonkee
13 years ago

Tim said:
“folks with illnesses and disabilities grave enough to limit job opportunities is an insignificant percentage.”

I’d be interested to know whether or not that’s true.

Mulan
Mulan
13 years ago

I am PISSED that they said that a majority of those who earn this type of income are BLACKS???!?!?!, single women with children. Come on man!!! Get REAL. I am 24 years old and make a GREAT income. actually 100,000 a year! More than some of these WHITE folks that act like they are so much better. I am so sick of white people thinking they are superior! Whats up with that! Its all about that persons potential! So, Even being a mother at 20 years old I made at least 15.00 per hour. I know Im not the only… Read more »

Lisa
Lisa
12 years ago

Hi! The people who work at the low paying jobs , are for the majority not lazy people in any way.My husband works at a custom molding plastics factory. He has been there for 7 and 3/4 years. He makes $11.27 per hour. We are a family of 3. We are making it, but it’s a bit tough at times. We also pay $331.07 per month for health insurance. Our bring home is $650 every 2 weeks. Lately he has had overtime of 8 hours a week. He is a real hard worker and has gotten raises , but the… Read more »

Jerry
Jerry
12 years ago

Lisa’s post is a thought-provoking one. The cost of insurance for her family, while high, is actually relatively cheap compared to some other parts of the country (Maine, New Jersey, etc.). Having worked both ends of the wage spectrum myself, (well, never SUPER high income, but certainly comfortable), I can confidently say that there are both lazy and industrious workers making minimum wage, just as there are both lazy and industrious people pulling in six-figure incomes. I think the main determining factors which lead to better money are education, creativity and opportunity.

Minimum Wage
Minimum Wage
12 years ago

I am 24 years old and make a GREAT income. actually 100,000 a year! More than some of these WHITE folks that act like they are so much better. I am so sick of white people thinking they are superior! Whats up with that! Its all about that persons potential! So, Even being a mother at 20 years old I made at least 15.00 per hour. I know Im not the only exception!

I am a white male twice your age earning minimum wage. Where do I sign up for such a GREAT income?

Luna
Luna
12 years ago

Jenn,

You are right on the money. Unfortunately, many times to be prompt and hard working is one’s demise. Those who see one performing with excellence and are above them, will see them as a threat. They might even create rumors about them. And they will try to bring them down. They will cut one’s hours, put them on call, regardless of their dependability and level of commitment to the company. The fact of the matter is: one has got to have education – then they will be in demand and on command.

Debbie
Debbie
12 years ago

I find it interesting though that companies pay a minimum wage. Someone MUST work these jobs or else these jobs and their companies would go under. I feel a “living wage” would make much more sense. I guess minimum wage is fine if it is ONLY used for “dependents” (ie, students). Yes, although it IS true that people can “better themselves” by improving their skills and going to college, the fact does remain that SOMEONE MUST work these jobs. Does it imply someone is not “good enough” if they are working these type of jobs? Maybe the actually enjoy “flipping… Read more »

Jane
Jane
12 years ago

I agree with Debbie. As long as we accept a minimum wage as opposed to a living wage, then nothing will change. It is wrong that someone should work a full time job and still not be able to live on the money they make.

bryan
bryan
12 years ago

jane, your comment makes me sick. an employer is obligated to pay based on gov’t requirements and from there needs to raise pay enough to attract/retain good employees. if you are working a job peeling potatoes and you are worth $7.50 an hour to your boss, then that is what you should and will be paid. if you don’t like peeling potatoes for $7.50, go get a job pushing a broom for $10/hr. or go to school and get an education so you can make $20 an hour as an entry level accountant. go get a law degree so you… Read more »

Dana Seilhan
Dana Seilhan
12 years ago

I don’t know why PF bloggers keep trotting out statistics about “who works for minimum wage” as if this completely invalidates the experiences of those who are NOT just high school or college kids using the jobs as a means to an end. I know you added all kinds of qualifiers to your post but those were toward the end and most of your focus was on why MOST minimum wage earners actually don’t think it is a big deal. It’s like thinking that a war that “only” kills 1000 people is better than a war that kills 100,000 people.… Read more »

Minimum Wage
Minimum Wage
11 years ago

Steve said: Firstly, earning the minimum wage is not a “financial difficulty” it is a “motivation and brain power difficulty”. Ask anyone who writes in about earning the minimum wage (those who earn tip excluded) for more than 6 months to a year if they have ever ASKED for a raise. Ask them if they have done anything above and beyond the bare minimum that was required of them at work to stand out from the crowd and deserve a raise. Ask them, if after months with no raise, they looked around their town for other jobs, or merely moped… Read more »

Minimum Wage
Minimum Wage
11 years ago

Note that people earning state minimum wages which are higher than the federal minimum wage are NOT counted as earning minimum wage, even though those living independently effectively enjoy a minimum wage standard of living

ohioreporter
ohioreporter
11 years ago

There is one issue that never seems to be factored in. The median household income in the U.S. has not risen significantly for many years while the median cost of houses, education costs, energy costs, etc., have risen significantly. If the minimum wage never increases by any realistic margin, other levels of income are not likely to increase either. The minimum wage probably provides important “upward” pressure throughout the wage continuum. Would that lead to inflation? Probably, but how else will the mediam household income be pressed to keep up with costs. We are in a financial crisis because borrowed… Read more »

John
John
11 years ago

Everyone says you’ve got to have a degree to override the minimum wage gap. Unfortunately, a minority cannot pay for a degree on minimum wage. Most minorities do not have parents who were wealthy or parents who planned for their college expenses because the parents themselves were trying to survive in order to raise their family. The few who paid for their own college are just that, “A few”. Meanwhile the upperclass continues to pay for expensive colleges that cater to highly paid football coaches.

Debra
Debra
8 years ago

You can’t just say, in a blanket statement, that all people who are in a minimum wage job are at fault for being there. Sometimes it’s their own high school’s fault. Their high school, just as mine did, might focus on lesser classes, in effect dumbing down the curriculum offered. It then takes on a mammoth effort to over come that set back.

Alex
Alex
8 years ago

48.8% of 1.2% of 72 million workers is 498000 people who are not under 24. Meaning, the older adults.

That is a lot of people and that is a number that very alarming.

Also, there are millions who are barely above that minimum wage by just a few cents. Just because you make $2 per hour above minimum wage does not mean you are out of poverty. How many is that? Another… 5 million ? That is a high percentage from 72 million.

shares