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Special Report – Minimum Wage

Special Report by Erin Shannon,
Director, Center for Small Business
Washington Policy Center

 

Jan. 2015

 

Snapshot of Minimum Wage Earners in Washington State

  • The average family income of a minimum wage earner in Washington State is $47,540.
  • In Washington State, just 8 percent of minimum wage earners are single parents with children.
  • Nearly 60 percent of minimum wage earners in Washington State live with a family member or have a spouse who also works.
  • In Washington State, fewer than 4 percent of minimum wage workers have a college degree.

Who earns the minimum wage?

Less than 3 percent of all workers in the U.S. earn the federal minimum wage

  • This does not include tip income earned by these minimum wage earners; many of these workers, mostly in the service industry, earn more than the minimum wage when tip income is included.

85 percent of workers who earn minimum wage live with their parents or another relative, live alone or have a working spouse.

  • 25 percent are single or married with no kids
  • 42 percent live with a relative
  • 18 percent are a second income earner who is married, with or without children

15 percent are sole earners in families with children.

  • 4 percent are single-parents working full time.

Only 3 percent of all workers age 25 and over earn the minimum wage.

Only 2 percent of full-time workers earn the minimum wage.

66 percent of all adult workers earning the minimum wage have a high school education or less.

62 percent of minimum wage earners under 25 are currently enrolled in school.

 

Do Most Minimum Wage Earners Live in Poverty?

No. The average family income of a minimum wage earner is $53,000 per year.

In 94 percent of families with an adult who works a job that pays at or below the minimum wage, the spouse works as well, making a two-income household.

In 8 out of 10 of the families with children present, the minimum wage accounts for less than 20 percent of the household’s total income. Two-thirds of adults living below the poverty line do not work.

  • Only 9 percent of adults living below the poverty line work full time.
  • 25 percent of adults living below the poverty line work part time.

Are Most Minimum Wage Earners Stuck in a “Dead End” Job?

No. Two-thirds of minimum wage earners receive a raise within a year.

Over half of Americans entered the workforce earning within one dollar of the minimum wage.

A minimum wage worker who works 35 or more hours per week is 13 percent more likely to be promoted within a year than a minimum wage worker at 10 hours per week.

What Happens to Employment When the Minimum Wage is Raised?

Employment for low-skilled workers tends to decline when the minimum wage is raised. A summary of the last two decades of research from economists at the University of California-Irvine and the Federal Reserve Board found that 85% of the most credible studies on the minimum wage point to job loss for less-skilled employees.

A study from Ball State University found there were 550,000 fewer part-time jobs as a result of the 40 percent increase in the federal min­imum wage between July 2007-July 2009.

A study of New Jersey’s minimum wage increase found that the higher wage resulted in reduced employment. An earlier study by David Card and Alan Krueger claiming that the increase created jobs was found to be based on a significantly flawed dataset.

Economists from Miami and Trinity University found the 2007-2009 increase in the federal minimum wage reduced teen employment by 6.9 percent.

Labor policy researchers at Cornell University found a 10 percent increase in the minimum wage caused four times more employment loss for employees without a high school diploma and African American young adults than it does for more educated and non-black em­ployees.

Does a Higher Minimum Wage Stimulate the Economy?

There is little or no relation between an increased minimum wage and economic growth. Three economists at the Federal Reserve Bank of Chicago found an increase in the minimum wage spurs a temporary increase in spending on vehicle purchases, but no increase in the ongoing purchase of non-durable goods, such as groceries, fuel and clothing.

 

Research from an economist at San Diego State University found no relationship between an increase in the minimum wage and chang­es in Gross Domestic Product.

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