Monday 720

 

Mostly summarized from Gregory Mankiw’s Principles of Economics, 5th Ed.

PART 9 The Real Economy in the Long Run

Chapter 28 of 36 Unemployment

Section 13 of 21

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In 2006, the Department of Labor released a study of what workers reported earnings at or below the federally-mandated minimum wage, which in 2006 was $5.15 per hour.

A wage below the minimum is possible because

· some workers are exempt from the statute

· enforcement is imperfect

· some workers round down to $5.00 when reporting their wages

Of workers paid hourly wages, about 2% of men and 3% of women reported wages at or below the federal minimum wage.

A summary of the findings follows.

...

Minimum-wage workers are largely the young.

About half of all hourly paid workers earning the minimum wage or less were under age 25, and about one-fourth were age 16-19.

Among employed teenagers 8% earned $5.15 or less compared with 1% of workers age 25 and older.

...

Minimum-wage workers tend to be less educated.

Among hourly paid workers age 16 and older, approximate percent of those who earned $5.15 or less:

· 4% of those without a high school diploma

· 2% of those who earned a high school diploma

· 1% of those who had earned a college degree

...

Minimum-wage workers are more likely to work part time.

Among those who worked less than 35 hours per week 6% were paid $5.15 or less compared to 1% of full-time workers.

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The leisure and hospitality industry had the highest proportion of workers, 13%, with reported hourly wages at or below $5.15.

About three-fifths of workers paid at or below the minimum wage were employed in this industry, mostly in food and drink services.

For many of these workers tips add to wages.

...

Since 1979, when regular data collection first began, the percentage of hourly wage workers earning the federal minimum wage or less has trended downward.

… ...

most workers who earn minimum wage are young

saitei chingin o kasegu hotondo no rōdō-sha wa wakai

最低賃金を稼ぐほとんどの労働者は若い

… …

Re. Figure 5 attached, Gemini:

The percentage of hourly workers earning the federal minimum wage or less has dropped significantly from its peak in the early 1980s.

This trend reflects macro-economic shifts, inflation eroding the real value of the static federal minimum wage ($7.25 since 2009), and many states setting their own higher minimums.

The blip around 2008–2010 represents the last time Congress raised the federal minimum wage, in three steps from $5.15 to $7.25.

Because the federal rate has not changed since July 2009, regular wage growth and rising state-level minimums have pushed the vast majority of hourly workers past that $7.25 floor.