Minimum Wage: Characteristics of Low-Wage Workers and Their Families

Publication Date: January 2007

Publisher: Library of Congress. Congressional Research Service

Author(s):

Research Area: Labor

Type:

Abstract:

The basic federal minimum wage of $5.15 an hour has not been raised since September 1997. Over half the states have established minimum wage rates that are higher than the federal minimum wage. In the 110th Congress, legislation has been introduced in the House (H.R. 2) and the Senate (S. 2) that would raise the basic federal minimum wage in steps from $5.15 to $7.25 an hour. Thus, there is more than the usual interest in who would benefit directly from an increase in the federal minimum wage.

The federal minimum wage standard for an individual employee has become part of the policy discussion about alleviating poverty among families supported by low-wage workers. It is viewed by some as a tool to encourage labor force participation among members of low-income families by making work more financially rewarding. Others assert that raising the minimum wage is not the most effective way to assist low-income families with earners -- in part because many low-wage workers do not live in low-income families. Accordingly, this report analyzes not only the individual characteristics of workers by their hourly wage rate, but also the characteristics of the families in which they live. The report does not address the arguments of proponents or opponents about the advisability of raising the minimum wage.

Compared to the typical worker paid an hourly wage, employees who earned below $7.25 per hour in 2005 were more likely to have been women, of Hispanic origin, young (i.e., ages 16 to 24) or old (i.e., age 65 and above), lacking a high school diploma, in service and sales occupations (e.g., waitresses and cashiers, respectively), working part-time (i.e., less than 35 hours a week), and not represented by a labor union. A larger proportion of working women than men, young workers than prime-age workers (i.e., 25 to 54 years old), and part-timers than full-timers, for example, may gain from a $2.10-an-hour increase in the federal minimum wage.

The families of hourly workers paid less than $7.25 an hour in 2005 more often were poor, receiving welfare, and lacking health insurance coverage from any source. Individuals who earned less than $7.25 an hour were more likely than higher-paid persons to be secondary earners in their families, but a substantial share of low-wage workers were the sole earners in their families. Some 29% of hourly workers who earned under $7.25 an hour in 2005 lived in families with incomes of $20,000 or less; another 26% lived in families with incomes from $20,001 to $40,000. About onefourth of these low-wage workers were spouses in married-couple families (with or without children), and some 13% were single parents. Another 12% were teenagers (i.e., 16 to 19 years old).

At the other end of the spectrum, 13% of hourly workers paid below $7.25 an hour lived in families with annual incomes of more than $100,000. In contrast to the pattern among low-income families, over one-half of the low-wage workers in these high-income families were teenagers (56%). This report will not be updated.