Facts About the Minimum Wage

Facts About the Minimum Wage

Reduced Opportunities to Gain Experience

• Studies find raising the minimum wage does not reduce poverty.[1] It is a completely ineffective anti-poverty policy.
• The primary value of minimum-wage jobs is that they are learning jobs. They teach inexperienced employees basic employment skills that make them more productive and enable them to earn raises or move to better jobs.
• Over half of all Americans started their careers making within $1 of the minimum wage.[2] Few stayed there long.
• Two-thirds of minimum-wage workers earn raises within a year—without the government’s help.[3]
• Correctly adjusted for inflation, the minimum wage currently stands above its historical average since 1950.[4]
• The minimum wage hike sponsored by some Members of Congress and supported by President Obama would raise the minimum wage to an unprecedented level—one-seventh above its inflation-adjusted all-time high.[5]
• This would cause employers to reduce hiring, leaving fewer people employed.[6] Macroeconomic modeling shows the proposed minimum wage increase would eliminate 300,000 jobs.[7] That means fewer opportunities for unskilled workers to get started in the labor market and move their way up.
• When businesses have to pay higher wages, businesses hire higher-skill workers, freezing the least productive, most disadvantaged workers out of the job market.[8][9] Consequently minimum wage hikes harm the very people that proponents of the laws most want to help.

Primarily Affects Younger Workers Without Family Responsibilities

• Only 2.9 percent of wage earners earn the federal minimum wage.[10][11][12]
• Most minimum-wage earners are teenagers or young adults, not heads of families.
• Over half of minimum-wage earners are between the ages of 16 and 24.[13]
• Two-thirds work part time (defined as less than 35 hours a week).[14]
• The average family income of a minimum-wage worker is $53,000 a year, less than the national average of $79,500 a year but well above the poverty level.[15]
• Two-thirds of minimum-wage workers live in families with incomes above 150 percent of the poverty line.[16]
• Just 4 percent of minimum-wage workers are single parents working full time, compared to 5.6 percent of all U.S. workers.[17]

Adds to Obamacare Burden

• The Obamacare employer mandate is already scheduled to raise the cost of hiring less-skilled workers. When the mandate takes effect in 2015 the minimum cost of hiring a full-time worker will rise to $10.30 an hour. That includes the minimum wage, employer payroll taxes, and the employer mandate.[18]
• From the employer’s perspective the cost of hiring workers has increased, but the additional money goes to the government instead of the employees.[19]
• The proposed minimum wage increase of $10.10 an hour would bring the minimum cost of hiring a full-time worker—including the Obamacare penalties—to $12.71 an hour.[20]