Minimum Wage Careers

Business opponents of the minimum wage often argue that it is little more than an "entry-level" wage--water-wings for those workers taking their first dip in the labor pool--and therefore needn't be high enough to sustain a worker over many years. A recent study by two government economists, William Carrington at the Bureau of Labor Statistics and Bruce Fallick of the Federal Reserve Board, however, has found that a significant number of new workers stay at or near the minimum wage long after their initial foray into the labor market.

"Minimum Wage Careers?" followed young people for up to 10 years after they finished school and found that while the minimum wage had little or no effect on the careers of most workers, a "non-trivial fraction of workers ... spend substantial portions of their post-school career on minimum or near-minimum wage jobs." Ten years into the work world, 13.2 percent of all workers had spent half or more of their careers within $1.50 of the minimum wage.

Not surprisingly, women and blacks--who are overrepresented at the low end of the labor market--are much more likely to end up in a "minimum wage career." About one in six blacks and about the same share of women spent half or more of their first 10 working years in jobs paying at or near the minimum wage. Thus legislation affecting the minimum wage can have, according to Carrington and Fallick, "non-negligible effects on the lifetime opportunities of a significant minority of workers." It remains to be seen whether this finding will spur Congress to nudge the minimum wage higher than its current $5.15 an hour.

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