For other versions of this document, see http://wikileaks.org/wiki/CRS-RL33784
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Order Code RL33784
Minimum Wage: Characteristics of
Low-Wage Workers and Their Families
Updated January 21, 2008
Gerald Mayer
Analyst in Public Finance
Domestic Social Policy Division
Linda Levine
Specialist in Labor Economics
Domestic Social Policy Division
Minimum Wage: Characteristics of
Low-Wage Workers and Their Families
Summary
In May 2007, President George Bush signed a supplemental appropriations bill
(H.R. 2206, P.L. 110-28) that raised the basic federal minimum wage, in steps, from
$5.15 to $7.25 an hour. The minimum wage increased to $5.85 in July 2007. It will
rise to $6.55 in July 2008 and to $7.25 in July 2009. Several states have minimum
wage rates that are higher than the current (January 2008) federal minimum wage of
$5.85. P.L. 110-28 also extended the minimum wage on the U.S. mainland to the
Commonwealth of the Northern Mariana Islands (CNMI) and American Samoa.
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 one-
fourth 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 may be updated if issues
warrant.
Contents
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Legislation in the 110th Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
A Word About the Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
A Glimpse of What Follows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Social, Economic, and Demographic Characteristics of Low-Wage Workers . . . 4
Gender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Race and Hispanic Origin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Nativity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Age . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Education . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Occupation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Full-Time and Part-Time Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Union Membership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Characteristics of the Families of Low-Wage Workers . . . . . . . . . . . . . . . . . . . . 12
Family Income and Poverty Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Primary and Secondary Earners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Health Insurance Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Sources of Family Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Appendix: Data and Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Current Population Survey . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
List of Tables
Table 1. Distribution of Hourly Workers by Gender and Hourly Wage, 2005 . . . 5
Table 2. Distribution of Hourly Workers by Race, Hispanic Origin,
and Hourly Wage, 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Table 3. Distribution of Hourly Workers by Nativity and Hourly Wage, 2005 . . 6
Table 4. Distribution of Hourly Workers by Age and Hourly Wage, 2005 . . . . . 7
Table 5. Distribution of Hourly Workers by Education and Hourly Wage,
2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Table 6. Distribution of Hourly Workers by Occupation and Hourly Wage,
2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Table 7. Distribution of Hourly Workers by Full-Time or Part-Time Status
and Hourly Wage, 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Table 8. Distribution of Hourly Workers by Union Status and Hourly Wage,
2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Table 9. Distribution of Hourly Workers by Family Income, 2005 . . . . . . . . . . 14
Table 10. Distribution of Hourly Workers by Family Poverty Status, 2005 . . . . 15
Table 11. Distribution of Hourly Workers by Primary and Secondary Earner
Status, 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Table 12. Distribution of Hourly Workers by Health Insurance Coverage
and Hourly Wage, 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Table 13. Distribution of Hourly Workers by Family Receipt of Welfare,
2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Table 14. Distribution of Hourly Workers by Family Receipt of
Unemployment Compensation (UC), 2005 . . . . . . . . . . . . . . . . . . . . . . . . . 19
Table 15. Distribution of Hourly Workers by Family Receipt of
Workers' Compensation, 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Minimum Wage: Characteristics of
Low-Wage Workers and Their Families
Introduction
In May 2007, President George Bush signed a supplemental appropriations bill
(H.R. 2206, P.L. 110-28) that raised the basic federal minimum wage, in steps, from
$5.15 to $7.25 an hour.1 The minimum wage was increased to $5.85 in July 2007.2
It will rise to $6.55 in July 2008 and to $7.25 in July 2009. Several states have
minimum wage rates that are higher than the current (January 2008) federal minimum
wage of $5.85.
This report examines characteristics of workers and their families who may
benefit directly from an increase in the federal minimum wage.3 The first part of the
report provides information on the
! demographic and social characteristics (e.g., age, education) of
hourly workers who are paid less than $7.25 an hour, as well as
! the characteristics of the jobs they hold (e.g., occupation and part-
time/full-time hours) and
! the characteristics of the families in which they live (e.g., family
income, welfare receipt).
Some argue that raising the minimum wage is an effective way to alleviate
poverty among families supported by low-wage workers. A higher minimum wage
may raise their incomes and it may encourage greater labor force participation among
members of low-income families. Others assert that raising the minimum wage is not
an effective way to aid low-income families -- because many low-wage workers do
not live in low-income families or because many low-income families do not have
1
In addition to a basic minimum wage, the Fair Labor Standards Act (FLSA) has lower
minimum wage rates for tipped employees, certain new hires under the age of 20, full-time
students who work part-time, and handicapped persons. The FLSA also includes a number
of exemptions from the minimum wage. For additional information about the federal
minimum wage and legislative activity see CRS Report RL33754, Minimum Wage in the
110th Congress, by William G. Whittaker.
2
Until July 2007, the basic federal minimum wage had not been raised since September
1997.
3
In addition to employees who may benefit directly from an increase in the federal
minimum wage, some employees may benefit indirectly. In order to maintain internal
differences in wages between jobs, some firms may raise the wages of workers earning
above the proposed increase in the federal standard.
CRS-2
earners. Thus, the last section of the report examines characteristics of the families
of low-wage workers.
Legislation in the 110th Congress
On January 10, 2007, the house approved H.R. 2, which would have raised the
federal minimum wage, in steps, from $5.15 to $7.25 an hour. The minimum wage
on the U.S. mainland would have been extended to the Commonwealth of the
Northern Mariana Islands (CNMI). On February 1, 2007, the Senate adopted a
substitute to H.R. 2. The Senate-passed version of H.R. 2 would have raised the
minimum wage to $7.25, extended the federal minimum wage to CNMI, and
provided an estimated $8.3 billion (from FY2007 to FY2016) in tax cuts for business.
The tax cuts would have been offset by a package of revenue increases.4 The House,
on February 16, 2007, passed H.R. 976, its version of tax cuts for business. As
passed by the House, H.R. 976 was titled the Small Business Tax Relief Act of 2007.
The Senate did not act on this version of H.R. 976. Instead, text similar to S. 1893,
the Children's Health Insurance Program Reauthorization Act of 2007, was later
substituted for the House-passed version of H.R. 976.
On March 23, 2007, the House approved H.R. 1591, a supplemental
appropriations bill to fund the wars in Iraq and Afghanistan and for other matters.
In the House, H.R. 1591 included a provision that would have raised the federal
minimum wage to $7.25 and extended the mainland wage to both CNMI and
American Samoa.5 The Senate-version of H.R. 1591, approved on March 29, also
raised the minimum wage and extended the federal wage to CNMI (but not American
Samoa). The conference agreement on H.R. 1591 raised the federal minimum wage
from $5.15 to $7.25 an hour, and extended the mainland minimum wage to both
CNMI and American Samoa. Citing the bill's timetable for withdrawing U.S. troops
from Iraq and other matters, President Bush vetoed the measure on May 1, 2007. The
next day, an attempt to override the veto in the House failed by a vote of 222 to 203
(with a two-thirds vote needed to override the veto).
On May 10, 2007, the House approved H.R. 2206, a second supplemental
appropriations bill. The House and Senate approved the final measure on May 24,
and the bill was signed into law by President Bush on May 25, 2007 (P.L. 110-28).
Like previous measures, H.R. 2206 raised the minimum wage, in steps, from $5.15
to $7.25. The federal minimum wage was extended to both CNMI and American
Samoa. The minimum wage in CNMI was raised to $3.55 an hour beginning 60 days
after the date of enactment. In American Samoa, the minimum wage that applied to
each industry was raised by $0.50 an hour 60 days after the date of enactment. In
both territories, the minimum wage will rise by $0.50 an hour annually until the
4
For a discussion of tax benefits in the Senate-passed version of H.R. 2, see CRS Report
RL32275, Small Business Tax Preferences: Significant Legislative Proposals in the 110th
Congress, by Gary Guenther.
5
For more information on the minimum wage in CNMI and American Samoa, see CRS
Report RL34013, The Federal Minimum Wage and American Samoa, by William G.
Whittaker and CRS Report RL30235, Minimum Wage in the Territories and Possessions of
the United States: Application of the Fair Labor Standards Act, by William G. Whittaker.
CRS-3
minimum wage in the two territories is equal to the minimum wage on the U.S.
mainland. H.R. 2206 also directed the U.S. Department of Labor (through the
Bureau of Labor Statistics) to conduct a study of the impact of the increase in the
minimum wage and to project the impact on living standards and employment of
further increases in the minimum wage in CNMI and American Samoa. The
Department of Labor must report the findings of the study no later than eight months
after the date of enactment of H.R. 2206 (i.e., January 2008).
A Word About the Data
This report examines the wages of workers paid by the hour. The data are from
the Current Population Survey (CPS), which is a household survey conducted by the
Census Bureau for the Bureau of Labor Statistics (BLS). Although most workers are
covered by the minimum wage requirements of the FLSA, the CPS does not ask
workers if they are covered by the act.
The Congressional Research Service (CRS) used data from the monthly CPS for
2005 and the 2006 Annual Social and Economic (ASEC) Supplement to the CPS to
analyze the wages and family incomes of hourly workers; that is, employees paid an
hourly wage rather than a weekly or annual salary or a rate based on the quantity of
goods or services produced (i.e., a piece rate).6 The analysis does not include self-
employed persons.
As provided in the FLSA, the hourly wage shown in the tables that follow
consists of cash payments only (i.e., the value of employment-based benefits are not
included). A fuller explanation of the data and methodology used in this report
appears in the Appendix.
In this report, hourly workers who earned less than $7.25 an hour in 2005 are
sometimes referred to as low-wage workers. The phrase is used for the sake of
brevity. In the private sector in 2005, the average wage of nonmanagement
employees was $16.11 an hour, according to a BLS survey of employers.
A Glimpse of What Follows
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., age 16-24) or old (i.e., age 65 and above),
! lacking a high school degree,
! in service and sales occupations,
! working part-time (i.e., less than 35 hours a week), and
! not represented by a labor union.
6
The minimum wage provisions of the FLSA apply to workers paid on an hourly, salary,
or some other basis. (Commerce Clearing House, Labor Law Reporter: Wages Hours,
Chicago: Commerce Clearing House, 2006, p. 38,953.) Thus, some salaried and piece rate
workers may benefit directly or indirectly from an increase in the federal minimum wage.
CRS-4
The families of these low-wage workers were more likely than other families
in 2005 to have been
! 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. Whereas low-wage workers in higher
income families very often were teenagers, low-wage workers in lower income
families often were spouses in married couple families (with or without children) or
single parents.
Social, Economic, and Demographic
Characteristics of Low-Wage Workers
This section of the report examines selected demographic and labor market
characteristics of low-wage workers.
Gender
Women were overrepresented among low-wage workers in 2005: almost 7
million of the more than 11 million hourly workers who earned under $7.25 an hour
were women (60.1%); in contrast, women accounted for a smaller share of all hourly
workers (50.2%). (See the top and middle panels of Table 1.) It also appears that
relatively more working women than men might gain from a higher federal minimum
wage. As shown in the bottom panel of the table, 18.1% of all female hourly workers
earned below $7.25 per hour in 2005 compared to only 12.1% of men.
Race and Hispanic Origin
Minorities, particularly Hispanics, comprised larger shares of workers paid
below $7.25 an hour than they did of all hourly workers in 2005, as can be seen in the
middle panel of Table 2. Hispanics, who may be of any race, and black non-
Hispanics might benefit more than white non-Hispanics from a boost in the federal
minimum wage. Almost 2.5 million out of 12.5 million Hispanics employed on an
hourly basis -- or almost one in five -- earned less than $7.25 an hour in 2005.
Although relatively fewer black non-Hispanics (16.9%) were paid less than the
proposed minimum wage level, an even smaller proportion of white non-Hispanics
(13.7%) might have seen their pay increase if the federal minimum wage had been
$2.10 per hour higher in 2005. (See the bottom panel of Table 2.)
CRS-5
Table 1. Distribution of Hourly Workers
by Gender and Hourly Wage, 2005
Under $7.25 an Hour
Total Total
Hourly Under $5.15 $5.16 to $7.25
Gender Workers $7.25 or less $7.24 and above
Number (1,000s)
Total 75,609 11,422 1,882 9,540 64,187
Male 37,652 4,563 648 3,915 33,089
Female 37,957 6,859 1,234 5,626 31,098
Percent by Hourly Wage
Total 100.0 100.0 100.0 100.0 100.0
Male 49.8 39.9 34.4 41.0 51.6
Female 50.2 60.1 65.6 59.0 48.4
Percent by Gender
Total 100.0 15.1 2.5 12.6 84.9
Male 100.0 12.1 1.7 10.4 87.9
Female 100.0 18.1 3.3 14.8 81.9
Source: Calculated by CRS from the CPS.
Note: Details may not add to totals because of rounding.
Table 2. Distribution of Hourly Workers
by Race, Hispanic Origin, and Hourly Wage, 2005
Under $7.25 an Hour
Total Total
Hourly Under $5.15 $5.16 to $7.25 and
Race Workers $7.25 or less $7.24 above
Number (thousands)
Total 75,609 11,422 1,882 9,540 64,187
White, Non-Hispanic 49,339 6,760 1,282 5,479 42,579
Black, Non-Hispanic 9,435 1,593 205 1,388 7,842
Hispanic 12,527 2,451 282 2,170 10,076
Other, Non-Hispanic 4,308 618 114 504 3,690
Percent by Hourly Wage
Total 100.0 100.0 100.0 100.0 100.0
White, Non-Hispanic 65.3 59.2 68.1 57.4 66.3
Black, Non-Hispanic 12.5 13.9 10.9 14.5 12.2
Hispanic 16.6 21.5 15.0 22.7 15.7
Other, Non-Hispanic 5.7 5.4 6.1 5.3 5.7
Percent by Race and Hispanic Origin
Total 100.0 15.1 2.5 12.6 84.9
White, Non-Hispanic 100.0 13.7 2.6 11.1 86.3
Black, Non-Hispanic 100.0 16.9 2.2 14.7 83.1
Hispanic 100.0 19.6 2.2 17.3 80.4
Other, Non-Hispanic 100.0 14.3 2.7 11.7 85.7
Source: Calculated by CRS from the CPS.
Note: Details may not add to totals because of rounding.
CRS-6
Nativity
Hourly workers born in a country other than the United States were slightly
overrepresented in the low-wage workforce, with the foreign-born comprising 18.7%
of persons paid under $7.25 per hour in 2005 as opposed to 16.0% of all hourly paid
workers.7 (See the middle panel of Table 3.) As shown in the bottom panel of the
table, relatively more foreign-born than native-born workers might gain from a
minimum wage increase (17.7% versus 14.6%, respectively).
Table 3. Distribution of Hourly Workers
by Nativity and Hourly Wage, 2005
Under $7.25 an Hour
Total Total
Native-Born or Hourly Under $5.15 $5.16 to $7.25
Foreign-Born Workers $7.25 or less $7.24 and above
Number (thousands)
Total 75,609 11,422 1,882 9,540 64,187
Native Born 63,494 9,284 1,640 7,644 54,210
Foreign Born 12,115 2,139 242 1,896 9,977
Percent by Hourly Wage
Total 100.0 100.0 100.0 100.0 100.0
Native Born 84.0 81.3 87.1 80.1 84.5
Foreign Born 16.0 18.7 12.9 19.9 15.5
Percent by Nativity
Total 100.0 15.1 2.5 12.6 84.9
Native Born 100.0 14.6 2.6 12.0 85.4
Foreign Born 100.0 17.7 2.0 15.7 82.3
Source: Calculated by CRS from the CPS.
Note: Details may not add to totals because of rounding.
Age
According to the data in the middle panel of Table 4, young workers -- 16 to
24 year olds -- made up a disproportionate share of individuals paid under $7.25 an
hour in 2005. Over one-half of hourly workers paid below the proposed federal
minimum wage were between 16 and 24 years old (27.7%, teenagers; 23.5%, 20-24
year olds). In contrast, these young workers accounted for much smaller proportions
of all hourly workers (7.3%, teenagers; 14.3%, 20-24 year olds).
A substantial percentage of young workers might be affected directly were the
minimum wage ro rise. Nearly three out five teenagers paid an hourly wage might
7
In this report, foreign-born persons include both citizens and noncitizens of the United
States. The CPS does not ask noncitizens if they are legal permanent residents,
nonimmigrants who are in the United States temporarily (e.g., visitors or guest workers), or
whether they are in the country without authorization. Therefore, in this report, foreign-born
persons include legal immigrants, legal nonimmigrants, and unauthorized aliens.
CRS-7
see their earnings increase if the federal standard goes to $7.25 per hour. Similarly,
one in four workers between 20 and 24 years old might get a pay raise. (See the
bottom panel of Table 4.)
An above-average share of older workers also might benefit from an increase
in the wage standard. While 15.1% of all hourly workers were paid under $7.25 per
hour in 2005, 18.2% of workers age 65 and over earned this hourly rate.
Table 4. Distribution of Hourly Workers
by Age and Hourly Wage, 2005
Under $7.25 an Hour
Total Total
Hourly Under $5.15 $5.16 to $7.25
Age Workers $7.25 or less $7.24 and above
Number (thousands)
Total 75,609 11,422 1,882 9,540 64,187
16-19 5,528 3,165 491 2,675 2,363
20-24 10,846 2,682 511 2,171 8,164
25-29 8,692 1,090 229 861 7,602
30-34 8,088 892 144 748 7,195
35-39 7,992 666 106 559 7,326
40-44 8,769 712 101 611 8,056
45-49 8,417 626 100 525 7,792
50-54 7,001 513 64 449 6,488
55-64 8,015 665 79 587 7,350
65 and over 2,261 411 56 355 1,851
Percent by Hourly Wage
Total 100.0 100.0 100.0 100.0 100.0
16-19 7.3 27.7 26.1 28.0 3.7
20-24 14.3 23.5 27.2 22.8 12.7
25-29 11.5 9.5 12.2 9.0 11.8
30-34 10.7 7.8 7.6 7.8 11.2
35-39 10.6 5.8 5.7 5.9 11.4
40-44 11.6 6.2 5.4 6.4 12.6
45-49 11.1 5.5 5.3 5.5 12.1
50-54 9.3 4.5 3.4 4.7 10.1
55-64 10.6 5.8 4.2 6.1 11.5
65 and over 3.0 3.6 3.0 3.7 2.9
Percent by Age
Total 100.0 15.1 2.5 12.6 84.9
16-19 100.0 57.3 8.9 48.4 42.7
20-24 100.0 24.7 4.7 20.0 75.3
25-29 100.0 12.5 2.6 9.9 87.5
30-34 100.0 11.0 1.8 9.3 89.0
35-39 100.0 8.3 1.3 7.0 91.7
40-44 100.0 8.1 1.2 7.0 91.9
45-49 100.0 7.4 1.2 6.2 92.6
50-54 100.0 7.3 0.9 6.4 92.7
55-64 100.0 8.3 1.0 7.3 91.7
65 and over 100.0 18.2 2.5 15.7 81.8
Source: Calculated by CRS from the CPS.
Note: Details may not add to totals because of rounding.
CRS-8
Education
Educational attainment is considered a proxy for skill level or productivity (i.e.,
output per hour worked), which is difficult to measure directly. Because firms
reward workers based in part on their skill levels, educational attainment usually is
positively related to earnings level (i.e., lower wages are associated with less
schooling). It thus is not surprising that many workers paid below $7.25 per hour
have fairly limited formal education. (See the middle panel of Table 5.) Almost 7
of every 10 low-wage workers in 2005 either lacked a high school diploma or had
completed only high school. In fact, the least educated group was overrepresented
in the low-wage workforce: while employees who did not attend or complete high
school comprised fully 38.1% of hourly workers earning under $7.25 per hour, they
made up just 16.7% of all workers paid on an hourly basis.
Table 5. Distribution of Hourly Workers
by Education and Hourly Wage, 2005
Under $7.25 an Hour
Total Total $7.25
Hourly Under $5.15 $5.16 to and
Education Workers $7.25 or less $7.24 above
Number (thousands)
Total 75,609 11,422 1,882 9,540 64,187
Less Than a High School Diploma 12,647 4,350 561 3,789 8,296
High School Graduate 27,622 3,457 548 2,909 24,165
Some College, No Degree 16,857 2,566 536 2,030 14,291
Associate Degree 7,797 504 109 395 7,293
Bachelors Degree 8,485 470 113 357 8,015
Graduate or Professional Degree 2,201 75 15 61 2,126
Percent by Hourly Wage
Total 100.0 100.0 100.0 100.0 100.0
Less Than a High School Diploma 16.7 38.1 29.8 39.7 12.9
High School Graduate 36.5 30.3 29.1 30.5 37.6
Some College, No Degree 22.3 22.5 28.5 21.3 22.3
Associate Degree 10.3 4.4 5.8 4.1 11.4
Bachelors Degree 11.2 4.1 6.0 3.7 12.5
Graduate or Professional Degree 2.9 0.7 0.8 0.6 3.3
Percent by Education
Total 100.0 15.1 2.5 12.6 84.9
Less Than a High School Diploma 100.0 34.4 4.4 30.0 65.6
High School Graduate 100.0 12.5 2.0 10.5 87.5
Some College, No Degree 100.0 15.2 3.2 12.0 84.8
Associate Degree 100.0 6.5 1.4 5.1 93.5
Bachelors Degree 100.0 5.5 1.3 4.2 94.5
Graduate or Professional Degree 100.0 3.4 0.7 2.8 96.6
Source: Calculated by CRS from the CPS.
Note: Details may not add to totals because of rounding.
CRS-9
It could be argued that these findings partly reflect the previously discussed
overrepresentation of youth among low-wage workers. Because some of these
youngsters probably are still attending school, they might only briefly be members
of the low-skilled low-wage labor force. As shown in the bottom panel of Table 5,
34.4% of hourly workers ages 16 and older who lacked a high school diploma as of
2005 earned under $7.25 an hour. If, instead, hourly workers ages 25 and older are
examined (not shown in Table 5), thereby limiting the sample to persons more likely
to have completed their schooling, the proportion of workers without a high school
diploma earning below $7.25 an hour drops to 21.6%.8 In other words, perhaps one
of every five "permanently" low-skilled adults paid on an hourly basis might gain
from the proposed $2.10 rise in the federal minimum wage.
Occupation
Most hourly workers employed in jobs that paid less than $7.25 an hour in 2005
were clustered in two occupational groups. As shown in the middle panel of Table
6, the single largest concentration (46.2%) were employed in service occupations
(e.g., food preparation, building cleaning, health care support, personal care, and
protective support). Another 19.2% of low-wage workers were employed in sales
and related occupations (e.g., retail and personal services sales workers). Both these
figures were much larger than the occupational groups' presence among all hourly
paid workers (22.2% and 10.1%, respectively). Although total employment was
relatively small (an estimated 623,000 hourly workers), the only other occupational
group considerably overrepresented among low-wage hourly workers were farming,
fishing, and forestry occupations (2.1% versus 0.8% for all hourly workers).
According to CRS estimates (not shown in Table 6), one of every two hourly
workers employed in food preparation and service occupations was paid less than
$7.25 an hour in 2005. Half of these workers may be tipped employees (e.g., waiters,
waitresses, hosts, and hostesses) who under the FLSA must be paid at least $2.13 an
hour provided they receive at least $3.02 an hour in tips -- for total hourly pay of at
least $5.15.9 Those tipped employees who currently earn less than $7.25 an hour in
wages and tips would likely benefit directly from an increase in the basic minimum
wage to $7.25 an hour. Tipped employees who currently receive more than $7.25 an
hour in wages and tips may not benefit.
A much above-average share of hourly workers in sales occupations might
benefit if the basic federal minimum wage increased to $7.25 an hour. For example,
based on CRS estimates (not shown in Table 6), about two in five cashiers and a
similar share of counter and rental clerks might see their pay increase if the basic
minimum wage is raised by $2.10 an hour. An increase of this size also might affect
8
Data discussed in the text of this report that are not shown in the tables are available from
the authors upon request.
9
The $3.02 amount is commonly called a "tip credit." Some states allow a smaller tip
credit; others do not allow a credit. For more information on the tip credit, see CRS Report
RL33348, The Tip Credit Provisions of the Fair Labor Standards Act, by William G.
Whittaker.
CRS-10
three in ten retail salespersons, door-to-door sales workers as well as news and street
vendors, and telemarketers.
Table 6. Distribution of Hourly Workers
by Occupation and Hourly Wage, 2005
Under $7.25 an Hour
Total Total $7.25
Hourly Under $5.15 $5.16 to and
Occupation Workers $7.25 or less $7.24 above
Number (thousands)
Total 75,609 11,422 1,882 9,540 64,187
Management, business, and financial 3,902 146 22 124 3,756
Professional and related 10,366 470 51 419 9,895
Service 16,751 5,279 1,394 3,885 11,472
Sales and related 7,612 2,196 142 2,055 5,415
Office and administrative support 13,318 1,156 98 1,058 12,161
Farming, fishing, and forestry 623 235 14 221 388
Construction and extraction 5,828 261 18 242 5,568
Installation, maintenance, and repair 3,449 104 15 89 3,345
Production 7,658 639 47 592 7,019
Transportation and material moving 6,103 936 80 855 5,167
Percent by Hourly Wage
Total 100.0 100.0 100.0 100.0 100.0
Management, business, and financial 5.2 1.3 1.2 1.3 5.9
Professional and related 13.7 4.1 2.7 4.4 15.4
a
Service 22.2 46.2 74.1 40.7 17.9
Sales and relateda 10.1 19.2 7.5 21.5 8.4
Office and administrative support 17.6 10.1 5.2 11.1 18.9
Farming, fishing, and forestry 0.8 2.1 0.8 2.3 0.6
Construction and extraction 7.7 2.3 1.0 2.5 8.7
Installation, maintenance, and repair 4.6 0.9 0.8 0.9 5.2
Production 10.1 5.6 2.5 6.2 10.9
Transportation and material moving 8.1 8.2 4.3 9.0 8.0
Percent by Occupation
Total 100.0 15.1 2.5 12.6 84.9
Management, business, and financial 100.0 3.7 0.6 3.2 96.3
Professional and related 100.0 4.5 0.5 4.0 95.5
Service 100.0 31.5 8.3 23.2 68.5
Sales and related 100.0 28.9 1.9 27.0 71.1
Office and administrative support 100.0 8.7 0.7 7.9 91.3
Farming, fishing, and forestry 100.0 37.7 2.3 35.4 62.3
Construction and extraction 100.0 4.5 0.3 4.2 95.5
Installation, maintenance, and repair 100.0 3.0 0.4 2.6 97.0
Production 100.0 8.3 0.6 7.7 91.7
Transportation and material moving 100.0 15.3 1.3 14.0 84.7
Source: Calculated by CRS from the CPS.
Note: Details may not add to totals because of rounding.
a. Service occupations include food preparation, building cleaning, health care support, personal care,
and protective support occupations. Sales and related occupations include sales representatives and
retail sales workers, such as cashiers and counter and rental clerks.
CRS-11
Full-Time and Part-Time Status
It is widely thought that workers employed part-time, even when they hold jobs
similar to full-time workers (i.e., persons employed for 35 or more hours a week), are
paid at a lower rate. As a result, part-timers should have a greater propensity for low-
wage employment. As shown in the bottom panel of Table 7, part-time workers
were four times more likely than full-time workers to have earned under $7.25 per
hour in 2005 (35.1% compared to 8.8%). About 6.4 million part-timers, or over one-
half of persons paid below $7.25 an hour, might have gotten a pay raise had the
federal minimum wage under consideration been effective in 2005. (See the top and
middle panels of the table.)
Table 7. Distribution of Hourly Workers
by Full-Time or Part-Time Status and Hourly Wage, 2005
Under $7.25 an Hour
Total Total
Full-Time or Hourly Under $5.15 $5.16 to $7.25
Part-Time Workers $7.25 or less $7.24 and above
Number (thousands)
Total 75,609 11,422 1,882 9,540 64,187
Full-time 57,385 5,031 752 4,279 52,354
Part-time 18,225 6,392 1,130 5,261 11,833
Percent by Hourly Wage
Total 100.0 100.0 100.0 100.0 100.0
Full-time 75.9 44.0 39.9 44.9 81.6
Part-time 24.1 56.0 60.1 55.1 18.4
Percent by Full-Time or Part-Time
Total 100.0 15.1 2.5 12.6 84.9
Full-time 100.0 8.8 1.3 7.5 91.2
Part-time 100.0 35.1 6.2 28.9 64.9
Source: Calculated by CRS from the CPS.
Note: Details may not add to totals because of rounding.
Union Membership
Because workers represented by labor unions usually enjoy a wage advantage
over nonrepresented workers, unionized workers should be less prone to low-wage
employment. Indeed, union members were less likely to have earned under $7.25 an
hour in 2005 than were nonmembers (4.3% compared to 16.7%). (See the bottom
panel of Table 8.) In other words, comparatively few workers represented by labor
unions stand to gain from the proposed increase in the federal minimum wage.
CRS-12
Table 8. Distribution of Hourly Workers
by Union Status and Hourly Wage, 2005
Under $7.25 an Hour
Total Total
Hourly Under $5.15 $5.16 to $7.25
Union Member Workers $7.25 or less $7.24 and above
Number (thousands)
Total 75,609 11,422 1,882 9,540 64,187
Union 9,755 418 51 367 9,337
Nonunion 65,854 11,005 1,831 9,173 54,850
Percent by Hourly Wage
Total 100.0 100.0 100.0 100.0 100.0
Union 12.9 3.7 2.7 3.8 14.5
Nonunion 87.1 96.3 97.3 96.2 85.5
Percent by Union Status
Total 100.0 15.1 2.5 12.6 84.9
Union 100.0 4.3 0.5 3.8 95.7
Nonunion 100.0 16.7 2.8 13.9 83.3
Source: Calculated by CRS from the CPS.
Note: Details may not add to totals because of rounding.
Characteristics of the Families
of Low-Wage Workers
While the first part of this report examined characteristics of individual low-
wage workers, the remainder looks at characteristics of the families of low-wage
workers.10 In this report, 82.7% of workers who earned less than $7.25 an hour in
2005 lived in families, where a family is defined as a group of two or more related
people living together.11 Families thus could include a husband and wife with or
without children, a single parent with one or more children, and siblings living with
a grandparent. The remaining 17.3% of low-wage hourly workers examined in this
report lived alone or with unrelated individuals in 2005.
Proponents of a higher minimum wage argue that raising the federal standard
will improve the financial situation of low-income working families.12 Opponents
assert that raising the minimum wage is not the most effective way to assist these
10
The data in Tables 1 through 8 are monthly averages for calendar year 2005 (i.e., an
estimated 75.6 million hourly workers). The 2005 family information in Tables 9 through
15 is for hourly workers in March 2006 (i.e., an estimated 73.8 million hourly workers). See
the Appendix for an explanation of the data and methodology used in this report.
11
A majority of workers who earned $7.25 or more an hour lived in families in 2005
(77.7%).
12
For example, see Economic Policy Institute, EPI Issue Guide: Minimum Wage, available
at [http://www.epi.org/issueguides/minwage/epi_minimum_wage_issue_guide.pdf], p. 6.
CRS-13
families because many low-wage workers do not live in low-income families.13 In
addition, an increase in the federal minimum wage will not raise the incomes of low-
income families that have no earners -- unless the higher wage standard entices
members of these families to enter the labor force and obtain employment.14 Some
argue, however, that a higher minimum wage could harm low-wage workers and their
families by causing job loss or reducing the rate of low-skilled job creation.15
Family Income and Poverty Status
Over one-half of workers paid less than $7.25 an hour lived in families with
incomes of $40,000 or less.16 (See the middle panel of Table 9.) According to CRS
estimates (not shown in Table 9), about one-fourth (25.9%) of low-wage workers in
families with incomes of $40,000 or less were spouses in married-couple families
(with or without children). Some 13.4% were single parents.17 Another 11.9% were
teenagers.
At the other end of the spectrum, 12.9% of workers who earned less than $7.25
an hour lived in families with annual incomes of more than $100,000. Over one-half
of the low-wage workers in these high-income families were teenagers (55.7%),
according to CRS estimates. Another 13.5% was comprised of husbands or wives
in married-couple families, while just 1.0% were single parents.
13
For example, see Richard V. Burkhauser and Joseph J. Sabia, Raising the Minimum Wage:
Another Empty Promise to the Working Poor, Washington: Employment Policy Institute,
August 2005, pp. 6-9.
14
CRS estimates that, in 2005, about one-half (50.7%) of people ages 16 and older in the
civilian noninstitutional population who lived in poor families (i.e., below the poverty
income level) lived in families with no wage earners. Some 28.4% of people at least 16
years old who lived in near poor families lived in families that lacked wage earners. A near
poor family is a family with income between 1.00 and 1.99 times the poverty level. These
poor families may not have had wage earners because the members were retired, younger
members were in school, working-age members were unemployed, or for other reasons.
15
For different perspectives, see David Neumark and William Wascher, Minimum Wages
and Employment: A Review of Evidence from the New Minimum Wage Research, NBER
Working Paper No. 12663, available at [http://www.nber.org/papers/w12663], November
2006 and Liana Fox, Minimum Wage Trends: Understanding Past and Contemporary
Research, EPI Briefing Paper No. 178, available at [http://www.epi.org/briefingpapers/
178/bp178.pdf], October 2006.
16
Family income includes wages and salaries, self-employment income, Social Security
benefits, Supplemental Security Income, pension payments, interest, dividends, rent,
unemployment compensation, public assistance payments, veterans' benefits, workers'
compensation, alimony, and child support. It excludes fringe benefits and in-kind transfers
(e.g., for food, housing, or health care). U.S. Census Bureau, Current Population Survey,
2006 Annual Social and Economic (ASEC) Supplement; [http://www.census.gov/apsd/
techdoc/cps/cpsmar06.pdf], pp. 9-3 to 9-4.
17
A single parent is defined here as an unmarried head of a "primary" family with at least
one child under the age of 18. See the Appendix for a discussion of primary families.
CRS-14
Table 9. Distribution of Hourly Workers by Family Income, 2005
Under $7.25 an Hour
Total Total
Hourly Under $5.15 $5.16 to $7.25 and
Family Income Workers $7.25 or less $7.24 above
Number (thousands)
Total 73,799 10,210 1,717 8,493 63,589
$20,000 or less 11,005 2,931 680 2,251 8,074
$20,001 to $40,000 17,117 2,648 455 2,194 14,469
$40,001 to $60,000 15,163 1,635 180 1,455 13,529
$60,001 to $80,000 11,452 986 91 895 10,466
$80,001 to $100,000 7,320 694 89 605 6,626
Over $100,000 11,742 1,317 223 1,094 10,425
Percent by Hourly Wage
Total 100.0 100.0 100.0 100.0 100.0
$20,000 or less 14.9 28.7 39.6 26.5 12.7
$20,001 to $40,000 23.2 25.9 26.5 25.8 22.8
$40,001 to $60,000 20.5 16.0 10.5 17.1 21.3
$60,001 to $80,000 15.5 9.7 5.3 10.5 16.5
$80,001 to $100,000 9.9 6.8 5.2 7.1 10.4
Over $100,000 15.9 12.9 13.0 12.9 16.4
Percent by Family Income
Total 100.0 13.8 2.3 11.5 86.2
$20,000 or less 100.0 26.6 6.2 20.5 73.4
$20,001 to $40,000 100.0 15.5 2.7 12.8 84.5
$40,001 to $60,000 100.0 10.8 1.2 9.6 89.2
$60,001 to $80,000 100.0 8.6 0.8 7.8 91.4
$80,001 to $100,000 100.0 9.5 1.2 8.3 90.5
Over $100,000 100.0 11.2 1.9 9.3 88.8
Source: Calculated by CRS from the CPS.
Note: Details may not add to totals because of rounding.
The income data in Table 9 do not take into account family size, which can
greatly affect living standards at a given income level. In contrast, Census poverty
income levels vary both by family size and composition. For example, in 2005 the
poverty level for a family of three with one child under age 18 was $15,720. For a
two-person family with a child under age 18, the poverty level was $13,410.18
Table 10 shows the relationship of family income to the poverty level of
income. As shown in the table's middle panel, hourly workers who earned less than
$7.25 an hour in 2005 were more likely to live in poor families compared to workers
paid at least $7.25 an hour (18.1% versus 6.0%). Hourly workers who earned less
than $7.25 an hour also were more often "near poor" than higher paid workers:
28.9% of workers who earned under $7.25 an hour lived in families with incomes
18
U.S. Census Bureau, Poverty Thresholds 2005, available at [http://www.census.gov/hhes/
www/poverty/threshld/thresh05.html].
CRS-15
between 1.00 and 1.99 times the poverty level; relatively fewer (16.6%) higher paid
workers lived in near poor families.
Many poor and near poor families might be affected directly by an increase in
the basic federal minimum wage. If the pay of hourly wage workers rises to $7.25
an hour, 32.7% of workers in poor families might benefit. Similarly, 21.9% of
workers in near-poor families stand to gain. (See the bottom panel of Table 10.)
Table 10. Distribution of Hourly Workers
by Family Poverty Status, 2005
Under $7.25 an Hour
Total Total
Ratio of Family Income Hourly Under $5.15 $5.16 to $7.25 and
to Poverty Level Workers $7.25 or less $7.24 above
Number (thousands)
Total 73,799 10,210 1,717 8,493 63,589
Below Poverty 5,655 1,849 374 1,476 3,806
1.00 to 1.99 13,515 2,954 569 2,385 10,561
2.00 to 2.99 13,977 1,936 350 1,586 12,041
3.00 to 3.99 12,685 1,183 78 1,104 11,502
4.00 to 4.99 9,742 802 133 669 8,940
5.00 and over 18,225 1,486 213 1,273 16,739
Percent by Hourly Wage
Total 100.0 100.0 100.0 100.0 100.0
Below Poverty 7.7 18.1 21.8 17.4 6.0
1.00 to 1.99 18.3 28.9 33.2 28.1 16.6
2.00 to 2.99 18.9 19.0 20.4 18.7 18.9
3.00 to 3.99 17.2 11.6 4.6 13.0 18.1
4.00 to 4.99 13.2 7.9 7.7 7.9 14.1
5.00 and over 24.7 14.6 12.4 15.0 26.3
Percent by Poverty Status
Total 100.0 13.8 2.3 11.5 86.2
Below Poverty 100.0 32.7 6.6 26.1 67.3
1.00 to 1.99 100.0 21.9 4.2 17.6 78.1
2.00 to 2.99 100.0 13.9 2.5 11.3 86.1
3.00 to 3.99 100.0 9.3 0.6 8.7 90.7
4.00 to 4.99 100.0 8.2 1.4 6.9 91.8
5.00 and over 100.0 8.2 1.2 7.0 91.8
Source: Calculated by CRS from the CPS.
Note: Details may not add to totals because of rounding.
CRS-16
Primary and Secondary Earners19
As shown in the middle panel of Table 11, relatively more low-wage than high-
wage hourly workers were the secondary earners in their families (59.1% and 37.1%,
respectively) -- which is not surprising given the previously discussed age and
gender composition of hourly workers earning below $7.25 an hour. But, a
substantial proportion of workers paid less than $7.25 an hour were the sole earners
in their families: the paychecks of 32.4% of low-wage hourly workers accounted for
all of their families' earned income. Some of these sole-earner families might have
income from other sources, however. For example, workers ages 65 or older (who
previously were mentioned as being overrepresented among low-wage workers) may
receive Social Security retirement benefits or private pension payments.
Table 11. Distribution of Hourly Workers
by Primary and Secondary Earner Status, 2005
Under $7.25 an Hour
Total Total
Hourly Under $5.15 $5.16 to $7.25 and
Earner Status Workers $7.25 or less $7.24 above
Number (thousands)
Total 73,032a 9,965 1,667 8,299 63,066
Primary Earner 43,724 4,081 808 3,273 39,643
Sole Earner 27,664 3,232 662 2,570 24,432
Secondary Earner 29,308 5,885 858 5,026 23,423
Percent by Hourly Wage
Total 100.0 100.0 100.0 100.0 100.0
Primary Earner 59.9 40.9 48.5 39.4 62.9
Sole Earner 37.9 32.4 39.7 31.0 38.7
Secondary Earner 40.1 59.1 51.5 60.6 37.1
Percent by Primary and Secondary Earner
Total 100.0 13.6 2.3 11.4 86.4
Primary Earner 100.0 9.3 1.8 7.5 90.7
Sole Earner 100.0 11.7 2.4 9.3 88.3
Secondary Earner 100.0 20.1 2.9 17.2 79.9
Source: Calculated by CRS from the CPS.
Note: Details may not add to totals because of rounding.
a. The number of workers in this table is less than the number of workers in other tables in this section
of the report because some hourly workers in March 2006 did not have earnings in 2005.
19
Primary earners are defined as workers whose wages make up more than half of a family's
earnings. Sole earners are primary earners who are the only earners in their families.
Secondary earners receive less than half of a family's earnings.
CRS-17
Health Insurance Coverage
As noted earlier, individual earnings and family income do not include fringe
benefits. Employer-provided health insurance is a large share of employee
compensation (i.e., wages and benefits) and government-provided health insurance
and health care services are a large share of public expenditures (e.g., for Medicare
and Medicaid). For low-wage workers who buy their own health insurance or pay
for health care out-of-pocket, the high cost may consume much of their income.
Lower-paid workers are less likely than higher-paid workers to have health
insurance coverage. Over one-third of hourly workers who earned less than $7.25
an hour were uninsured throughout 2005, compared to almost one-fifth of workers
with higher hourly wage rates. (See the middle panel of Table 12.) Because some
of the workers classified in the table as being insured might only have been covered
during part of the year, the percentage without insurance at a particular point in 2005
might have been greater than shown below.
Table 12. Distribution of Hourly Workers
by Health Insurance Coverage and Hourly Wage, 2005
Under $7.25 an Hour
Total Total
Health Insurance Hourly Under $5.15 $5.16 to $7.25 and
Coverage Workers $7.25 or less $7.24 above
Number (thousands)
Total 73,799 10,210 1,717 8,493 63,589
Insured 58,465 6,617 1,015 5,603 51,848
Uninsured 15,334 3,593 703 2,890 11,741
Percent by Hourly Wage
Total 100.0 100.0 100.0 100.0 100.0
Insured 79.2 64.8 59.1 66.0 81.5
Uninsured 20.8 35.2 40.9 34.0 18.5
Percent by Health Insurance Coverage
Total 100.0 13.8 2.3 11.5 86.2
Insured 100.0 11.3 1.7 9.6 88.7
Uninsured 100.0 23.4 4.6 18.9 76.6
Source: Calculated by CRS from the CPS.
Note: Details may not add to totals because of rounding.
Sources of Family Income
Income can come from sources other than work. It may come from one's
savings and investments in the form of interest and dividends. Other assets can
provide rental income to their owners. The government also provides income
support for many individuals and families. Still other forms of income are related to
past or current work such as private or public pension payments, unemployment
compensation, and workers' compensation.
CRS-18
As shown in the middle panel of Table 13, the share of low-wage hourly
workers who received welfare was about twice that of workers paid at least $7.25 an
hour (1.7% versus 0.8%). Workers were classified as having receiving welfare if
they received public assistance payments such as Temporary Assistance for Needy
Families (TANF) or general assistance.
One-fourth of hourly workers who lived in families that received welfare earned
under $7.25 an hour. Although these workers might benefit from a $2.10 an hour
increase in the federal minimum wage, some might have their families' welfare
benefits reduced or eliminated as a result of the pay raise. (See the bottom panel of
Table 13.)
Table 13. Distribution of Hourly Workers
by Family Receipt of Welfare, 2005
Under $7.25 an Hour
Total Total
Hourly Under $5.15 $5.16 to $7.25 and
Income Workers $7.25 or less $7.24 above
Number (thousands)
Total 73,799 10,210 1,717 8,493 63,589
Received Welfare 707 175 15 159 532
Did Not Receive
Welfare 73,092 10,036 1,702 8,334 63,057
Percent by Hourly Wage
Total 100.0 100.0 100.0 100.0 100.0
Received Welfare 1.0 1.7 0.9 1.9 0.8
Did Not Receive
Welfare 99.0 98.3 99.1 98.1 99.2
Percent by Family Receipt of Welfare
Total 100.0 13.8 2.3 11.5 86.2
Received Welfare 100.0 24.7 2.2 22.5 75.3
Did Not Receive
Welfare 100.0 13.7 2.3 11.4 86.3
Source: Calculated by CRS from the CPS.
Notes: Details may not add to totals because of rounding. "Received welfare" means receipt of
Temporary Assistance for Needy Families (TANF) or general assistance.
In contrast, the wage rate that a worker earned per hour made little difference
in their families' relative receipt of unemployment compensation and workers'
compensation. Specifically, 6.1% of hourly workers paid under $7.25 an hour lived
in families that received unemployment compensation in 2005, compared to 6.2% of
higher-paid workers. (See the middle panel of Table 14.) Similarly, 1.5% of hourly
workers who earned below $7.25 an hour and 1.5% of those who earned at least
$7.25 an hour lived in families that received workers' compensation in 2005. (See
the middle panel of Table 15.)
CRS-19
Table 14. Distribution of Hourly Workers
by Family Receipt of Unemployment Compensation (UC), 2005
Under $7.25 an Hour
Total Total
Hourly Under $5.15 $5.16 to $7.25 and
Income Workers $7.25 or less $7.24 above
Number (thousands)
Total 73,799 10,210 1,717 8,493 63,589
Received UC 4,586 625 55 571 3,961
Did Not Receive UC 69,213 9,585 1,662 7,922 59,628
Percent by Hourly Wage
Total 100.0 100.0 100.0 100.0 100.0
Received UC 6.2 6.1 3.2 6.7 6.2
Did Not Receive UC 93.8 93.9 96.8 93.3 93.8
Percent by Family Receipt of UC
Total 100.0 13.8 2.3 11.5 86.2
Received UC 100.0 13.6 1.2 12.4 86.4
Did Not Receive UC 100.0 13.8 2.4 11.4 86.2
Source: Calculated by CRS from the CPS.
Note: Details may not add to totals because of rounding.
Table 15. Distribution of Hourly Workers
by Family Receipt of Workers' Compensation, 2005
Under $7.25 an Hour
Total Total
Hourly Under $5.15 $5.16 to $7.25 and
Income Workers $7.25 or less $7.24 above
Number (thousands)
Total 73,799 10,210 1,717 8,493 63,589
Received Workers'
Compensation 1,111 151 61 90 960
Did Not Receive
Workers' Compensation 72,688 10,059 1,656 8,403 62,629
Percent by Hourly Wage
Total 100.0 100.0 100.0 100.0 100.0
Received Workers'
Compensation 1.5 1.5 3.6 1.1 1.5
Did Not Receive
Workers' Compensation 98.5 98.5 96.4 98.9 98.5
Percent by Receipt of Workers' Compensation
Total 100.0 13.8 2.3 11.5 86.2
Received Workers'
Compensation 100.0 13.6 5.5 8.1 86.4
Did Not Receive
Workers' Compensation 100.0 13.8 2.3 11.6 86.2
Source: Calculated by CRS from the CPS.
Note: Details may not add to totals because of rounding.
CRS-20
Appendix: Data and Limitations
Current Population Survey
CRS derived the data in this report from the Current Population Survey (CPS),
a Census Bureau survey of households. The monthly CPS is the source of the
monthly national unemployment rate and of other labor market information. The
CPS sample is representative of the civilian noninstitutional population ages 16 and
older. It does not include persons on active duty in the Armed Forces or persons in
institutions such as nursing homes or correctional facilities. In March 2006, about
54,000 households were interviewed for the basic CPS.20
Each month, one-fourth of the CPS sample is asked questions about current
earnings. Hourly wages are wages paid by the employer and do not include tips or
fringe benefits.21 Hourly wages are wages before taxes and other deductions. The
data in Tables 1 through 8 are averages for the twelve months of calendar year 2005.
Thus, the number of hourly workers shown in Tables 1 to 8 (i.e., 75.6 million) is a
monthly average for 2005.
Each year, the Annual Social and Economic (ASEC) supplement to the basic
CPS asks questions about individual and family earnings and income for the previous
year. Thus, in the 2006 supplement, the survey collected information on individual
and family earnings and income for 2005. Tables 9 through 15 provide family
information for 2005 for hourly workers in the March 2006 basic survey. In March
2006, there were an estimated 73.8 million hourly workers.
Limitations
The CPS has certain limitations for analyzing the impact of an increase in the
federal minimum wage. First, the FLSA includes a number of exceptions and
exemptions from the minimum wage. The CPS does not ask respondents if they are
covered by the FLSA. Thus, some people who are paid less than $7.25 an hour may
not be covered by the FLSA and may not receive an increase in their hourly wage
when the federal minimum wage is raised. Second, the FLSA allows for lower
minimum wage rates for tipped employees, certain new hires under the age of 20,
full-time students who work part-time, handicapped persons, and others. A higher
basic minimum wage may not affect these workers.22
20
U.S. Census Bureau, Current Population Survey, 2006 Annual Social and Economic
(ASEC) Supplement, available at [http://www.census.gov/apsd/techdoc/cps/cpsmar06.pdf],
p. G-2.
21
U.S. Census Bureau, Basic Monthly Survey Interviewer's Manual, available at
[http://www.bls.census.gov/cps/intmantc.htm], chap. 5, section B.2.
22
In addition, estimates based on a sample of households are subject to nonsampling and
sampling error. Examples of nonsampling error include information that is misreported
(e.g., some respondents may round off their earnings) and errors made in processing
information that is collected. Sampling error occurs because a sample, and not the entire
(continued...)
CRS-21
A limitation of the methodology in this report pertains to annual earnings and
family income in 2005 of hourly workers in March 2006. In March 2006, hourly
workers may have been earning either more or less than they earned in 2005. Some
workers may not have had any earnings in 2005 (e.g., they may have been new to the
labor force in March 2006). As a result, the wages of hourly workers in March 2006
may not be the same as their hourly wage in 2005. Similarly, some workers who had
earnings in 2005 may not have been employed or they were salaried, and not hourly,
workers in March 2006; therefore, they are not included in the analysis of annual
earnings or family income for 2005.
Another limitation of the methodology is that, in the CPS, a primary family may
include what the CPS calls a "related subfamily." For example, an unmarried mother
with a dependent child may be living with her parents or a married couple may be
living with relatives. In the CPS, the income of persons in a related subfamily is
included in the total income of the primary family. This could have a tendency to
understate the number of low-wage workers living in low-income families (i.e.,
because the incomes of related subfamilies are included in the incomes of primary
families). On the other hand, unmarried couples (who are not living with relatives)
are treated either as separate individuals or, if they have children, as a primary family
and an unrelated individual. This could have a tendency to overstate the number of
low-income households (i.e., because the incomes of unmarried couples are treated
separately rather than together).
22
(...continued)
population, of households is surveyed.
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