The minimum wage is one of the most important laws regarding workers’ rights introduced in the last century.
But many things have changed in the US (and the world) since Franklin D. Roosevelt introduced the bill—read on to learn what the recent minimum wage statistics show us about the current state of employment and worker’s rights.
The year 2020 has been challenging in every possible way, but—aside from fundamentally changing our day-to-day lives—the economy has suffered and, by extension, impacted people more than anything else.
This is especially true for the essential workforce that risked (and lost) their lives during the outbreak. Let’s see what numbers tell us about the general state of wages in the US today.
Crucial Statistics About Minimum Wage (Editor’s Choice)
- The current federal minimum wage is $7.25.
- Essential workers make for almost one-half of all workers in the lowest-paid occupations.
- The $15 minimum wage would lift 900,000 Americans out of poverty.
- 48% of workers earning minimum wage or less are under 26 years old.
- Only 0.1 percent of workers making minimum wage in the US can afford to buy a one-bedroom apartment.
- California has the highest state minimum wage in the US—$14.
US Minimum Wage 2021
1. The current federal minimum wage is $7.25.
Some of the states have their own minimum wages. In this case, every worker is entitled to a higher salary of the two.
Many states have higher minimum wages than that of the federal level. In fact, there are 29 states—plus the District of Columbia—with wages higher than the federal minimum.
The current official minimum wage hasn’t changed since 2009.
2. A person on minimum wage earns around $15,000 in a year.
How much do minimum wage workers make a year?
Before getting to the calculation, it’s important to note that many people earn even less than the federal minimum wage—due to many reparations and variations in the working arrangements.
This is the calculation made with the premise that the person works 40 hours per week, 52 weeks a year. In the states that have adopted the federal minimum wage of $7.25, the annual salary is not higher than $15,080.
3. 13% of American workers earned the minimum wage in 1980, compared to 2% that do so today.
The number of workers who earn the federal minimum wage has seen a steady decrease since 1980. Back then, the number of minimum wage workers was about 7.7 million people, whereas, in 2018, it was just 1.7 million people.
Statistics show that this is partly because some states have set minimum wages that are higher than those set by the federal government.
4. Essential workers make for almost one-half of all workers in the lowest-paid occupations.
The proposed increase of a minimum wage to $15 an hour by the Biden Administration would hugely benefit the essential workers. Statistics show that 47% earn less than that currently—despite the fact that millions have worked throughout the pandemic, and thousands have even lost their lives.
Statistics on Raising the Minimum Wage—How Would It Change the Financial State?
Raising the minimum wage has been a subject of the political conversation in Washington, D.C.—and broader—for the last few years. How much would it impact the economy?
5. Almost one million Americans would be lifted out of poverty.
The Congressional Budget Office has projected that poverty would be significantly reduced, as around 900,000 people would be helped out of it, as the minimum wage statistics indicate.
This would, in turn, notably decrease the budget necessary for the services and relief to those Americans that—on a household level—earn less than a living wage.
6. 1.4 million jobs will be lost if the federal minimum wage is increased to $15 per hour.
As alarming as it may sound, many employers simply can’t afford to pay $15 an hour to their workers, which would lead to the loss of well over a million jobs. The minimum wage facts show that younger and less educated are more likely to hold the lowest-paying jobs.
The report from 2019, on the other hand, showed a slightly lower number of jobs lost due to this change—1.3 million.
7. A proposed $15 minimum wage would be implemented gradually over five years.
The idea is that the minimum wage would reach the desired amount in a step-by-step manner. The process would start in June 2021, and wages would be lifted each year accordingly to reach $15 per hour in June 2025.
Minimum Wage History
Introduced as a way to combat the Great Depression in the thirties through Roosevelt’s New Deal, the minimum wage was one of the crucial segments of the economic recovery.
8. Workers awarded a minimum wage today receive 27% less than they would 50 years ago.
The historical charts will show that—ever since 1938, when the minimum wage was established in the US—minimum wage had been growing over time. However, the data might be misleading, as minimum wage increases have never kept the inflation trends’ pace.
9. The minimum wage in the US has been raised three times since 1938 and currently stands at $7.25.
The first minimum wage in the United States was $0.25/hour, which is around $4.64/hour in 2021, adjusted for inflation—the minimum wage statistics show. By 1956, it was $1/hour. Today, it’s $7.25/hour.
Most states also have regulations on minimum wage. The employer is entitled to the lower of the two minimum wages when an employee is subject to both state and federal minimum wage laws.
10. The minimum wage today is worth 17% less than it was a decade ago.
According to this worrying minimum wage vs inflation stat, people who earned the federal minimum wage ($7.25) 10 years ago were paid the equivalent of $8.70/hour (inflation-adjusted).
What’s worse—today's federal-minimum-earning workers are paid 31% less than the $10.54/ hour they would have earned in 1968 when the minimum wage hit its peak (inflation-adjusted) level. More precisely, full-time workers pay $6,800 less per year at the federal minimum wage than their counterparts five decades ago in actual wage earnings.
Characteristics of Minimum Wage Workers in 2020
If we consider the demographics of people working for a minimum hourly wage, it’s clear that it’s mostly younger people. Another common denominator is lower education level.
11. 48% of workers earning minimum wage or less are 25 or younger.
Additionally, statistics about minimum wage earners by age show that teenagers aged 16–19 represent 5% of those working for the floor wage.
Only 1% of the workforce aged over 25 are awarded a minimum wage.
12. Workers who are younger than 20 can earn $4.25/hour for the first 90 days after getting a job.
Some minimum wage regulations come with exceptions, the minimum wage workers statistics show.
In jobs where tips are a significant source of income, as is the case with waiters and bartenders, the minimum wage can be as low as $2.13/hour, provided the amount earned in total (tips plus the hourly wages) is at least equal to the federal minimum wage.
13. 2% of hourly wage workers at a minimum age of 16 without a high school diploma earned the federal minimum wage.
Minimum wage data shows that there is a slight correlation between income and education. 2% of hourly paid workers who are at least 16 years with a high school diploma or those with an associate's degree or some college degree earned the federal minimum wage or lower than that—compared to 1% of college graduates.
14. 8% of people working in hospitality and leisure earn the federal minimum wage or lower.
The demographics of minimum wage workers indicate that the number of these employees varies from industry to industry. However, statistics show that the industry with the highest percentage is hospitality/leisure.
About three–fifths of those paid at or just above the minimum wage in this industry work in restaurants, bars, or food service. For a lot of them, decent tips are the only way to make ends meet.
Minimum Wage and Poverty Statistics
The idea of the minimum wage was to prevent poverty. However, as the decades passed, minimum wage increases haven’t followed inflation, so people’s lives haven’t improved as much as was expected.
15. 20% of workers earning lower wages in the United States are from low-income families.
As many as one in five low-wage workers live in lower-income families, minimum wage and poverty statistics show.
In comparison, nearly 30% of wage-earners and 40% of casual wage-earners in India earning less than minimum wage at the state level live in poor households.
16. One out of four Americans have been unemployed or lived on poverty-level wages in October 2020.
Poverty-level represents anyone earning $20,000 on an annual level. At that period, the employment level was 6.9%, a significant drop from April’s 14.7%, the lowest in American history.
17. Only 0.1 percent of workers making minimum wage in the US can afford to buy a one-bedroom apartment.
Affordability was characterized by the person’s ability to pay up to 30% of their income on housing costs, which generally includes taxes, mortgages, and insurance.
Clearly, the cost of housing in the United States has risen to the extent that a one-bedroom apartment is out of reach for the vast majority of minimum wage earners.
Minimum Wage Statistics by State
Despite the imposed federal minimum wage, 29 states and the District of Columbia have higher wages on a state level. Being entitled to the higher of the two, workers in most states earn more than what is minimum on a federal level.
18. Montana has the lowest percentage of minimum wage workers at 0.5%.
When we talk about the percentage of minimum wage workers by state, South Carolina has the most people working for a floor wage, as 5.4% of the workforce is awarded minimal pay.
Only two more states had over 4% of minimum wage workers—Louisiana at 4.6% and Mississippi at 4%.
19. Washington, D.C. has a $15 minimum wage—higher than any other area in the country.
The District of Columbia is the national leader when it comes to wages for its workers. Not only does the area have the highest minimum wage nationwide, but D.C. also has a $13.69 minimum wage for businesses of all sizes, which is also a nation–high.
20. Georgia is the state with the lowest minimum wage in the US.
The wage currently stands at $5.15 per hour. This means that Georgia is still stuck to the pre–2009 minimum wage.
Another state with a significantly lower minimum wage than the normal federal is Wyoming, where workers are paid $5.17 per hour.
21. The minimum wage for the workers in Massachusetts has increased to $13.50 per hour.
While Congress is still debating whether lifting the minimum wage to $15 by June 2025 is the right step, some states have their own plans in place—Massachusetts is moving towards reaching a $15/hour by January 2023.
The more recent Massachusetts minimum wage history wasn’t as progressive; the wage was last increased in 2008 and wasn’t lifted until January 2021.
22. 29 states and DC have a higher minimum wage higher than the federal minimum.
Some states follow the federal minimum wage of $7.25. These include Alabama, Idaho, Iowa, Kansas, Kentucky, and Louisiana.
Minnesota, Oregon, New York, Missouri, and Vermont are among the states with a higher minimum wage.
23. California has the highest state minimum wage in the US—$14.
It’s important to stress out that this wage applies only to companies employing over 25 workers. For businesses with 25 or fewer employees, the state demands that the workers are paid a minimum wage of $13.
24. Minimum wage in Alaska was increased to $10.34 in January 2021.
This is an increase from the previous minimum wage of $10.19. It doesn’t seem like a significant change—it’s only $312 more per year. However, Alaska is one of only 25 states raising their state minimum wages.
The recent history of the minimum wage in Alaska shows consistent growth, though. In 2017, the compensation was $9.80, marking a yearly increase ever since.
25. 4.5% of workers in Louisiana earn the federal minimum wage or less.
Some states have more people earning the minimum wage than others. For example, 4.5% of hourly workers in Louisiana—49,000 people—make the federal minimum wage or less. Around 1% of hourly workers (13,000 individuals) earn the federal minimum wage or less in the state of Washington.
Minimum Wage by Country
26. The minimum wage in Shanghai, China, is $382/month.
China is a huge country with enormous regional differences in the cost of living, which is why there is no national minimum wage. The system adopted in China is that each province sets its level while following the government’s guidance.
27. The average minimum wage in Canada rose by 3.5% yearly from 1998 to 2018.
The average minimum pay in Canada rose faster than the average wage for all workers compared to 1998. By contrasting the actual marginal minimum wage with the real gross wage in 2018, it is clear that minimum wage earners did relatively better.
The average wage increased by 2.7% per year over these 20 years, while the minimum wage rose by 3.5% per year.
Minimum Wage Stats—The Takeaway
There have been arguments for both lower and higher minimum wages.
Some believe that minimum wage employees cannot keep up with the rising costs and propose that the minimum wage should increase at the same rates as inflation and the cost of living. In contrast, others say that raising the minimum wage does more harm than good to the economy.
As long as there are wages, there will always be different opinions on minimum wage laws. We hope these numbers have given you insight into the various issues, demographics, and disparities in minimum wages across countries, states, and industries.