Meet the Author

Murat Tasci |

Research Economist

Murat Tasci

Murat Tasci is a research economist in the Research Department of the Federal Reserve Bank of Cleveland. He is primarily interested in macroeconomics and labor economics. His current work focuses on business cycles and labor markets, labor market policies, and search frictions.

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03.30.07

Economic Trends

Minimum Wage Earners

Murat Tasci and Cara Stepanczuk

Minimum-wage workers tend to be young. More than one-half of workers earning the federal minimum or less in 2006 were 25 or younger. One-quarter were teenagers between 16 and 19. Of course, most of teenagers have yet to earn their high school diploma, and as a group, minimum-wage earners have less education than those who earn more.

Of the nation’s hourly paid workforce, however, minimum-wage workers are a tiny minority: Only 2.2 percent of hourly paid workers earn at or below the minimum wage. Even among youthful hourly paid workers, the percentage is small; for hourly paid workers 25 and under, only 5.2 percent earn at most $5.15 an hour.

Most minimum-wage workers also tend to be employed in service occupations (more than 70 percent). This is not the case for higher-earning workers who are paid by the hour, however; only 7.3 percent of all workers who are paid by the hour work in service jobs. The next-highest concentrations of minimum-wage earners occur in sales and office occupations (with 13.3 percent) and production, transportation, and moving occupations (with 6.9 percent).

More women than men earn minimum wage or less, and this has been the case ever since the minimum wage was introduced. For example, in 1980, more than 20 percent of hourly wage earners who earned the minimum or less were women as opposed to only 9.7 percent for men. Those numbers have fallen in the interim, and today, 2.9 percent are women, and 1.5 percent are men.

In fact, the fraction of workers paid at or below the federal minimum wage has been declining for both men and women since 1980, except for two years—1991 and 1997. These two episodes coincide with major increases of the federal minimum wage. In 1991, the minimum was raised to $4.25 (from $3.80), and in 1996 and 1997, it was raised once each year, first to $4.75 and then to $5.15, where it stands today.