WHO WILL REALLY BENEFIT FROM SENATOR KENNEDY’S $7.25 MINIMUM WAGE?
U.S. Census Data Show Just 15% of Minimum Wage Recipients Are Sole Earners in Families With Children
Publication Date: March 2005
Topics: Minimum Wage
Washington – As Congress weighs a hike in the federal minimum wage to $7.25, Senator Ted Kennedy (D-Mass.) and supporters of an increase suggest that the typical minimum wage employee is struggling to raise a family on a single income. The Employment Policies Institute (EPI) notes that U.S. Census Bureau data strongly dispute this portrait as simply untrue. Furthermore, the vast majority of the benefits of such an increase will not reach its intended target—working families.
An analysis of data compiled by the Census Bureau’s Current Population Survey shows that the average family income of employees who would benefit from a minimum wage increase to $7.25 is nearly $42,000 a year. Why? Because fully 85% of employees whose wages would be increased by this proposal either live with working parents or another relative, live alone, or have a working spouse. Former Clinton Labor Secretary Robert Reich once summed up these findings by stating pointedly, “After all, most minimum wage workers aren’t poor.”
Additionally, the majority of potential beneficiaries do not work full-time, and nearly 25 percent don’t even work 20 hours a week. Fully half of all beneficiaries are 25 years old or younger.
Just 15% of beneficiaries will be sole earners in families with children, and each of these sole earners has access to supplemental income through the federal and state earned income tax credit (EITC). Research from Michigan State University and the Federal Reserve found that the EITC is far more efficient at actually helping those in poverty than an increase in the minimum wage.
Of U.S. employees affected by the proposed $7.25 minimum wage:
· 41% of minimum wage earners live with a parent or relative
· 21% of minimum wage earners are a dual earner in a married couple
· 23% of minimum wage earners are a single earner with no kids
· Just 15% of minimum wage earners are single parents with kids or a single earner in a couple with kids, and each of these sole earners has access to supplemental income through the EITC.
“If the goal of Congress is to help low-income working families, then raising the minimum wage is a poorly targeted and ineffective way of doing so,” said EPI’s director of research, Craig Garthwaite. “The vast majority of benefits will not go to poor families and the majority of poor families will not receive a benefit.”
For a graphic representation of this data or to see figures for individual states, visit www.minimumwage.com