It's Getting Harder To Move Beyond A Minimum-Wage Job
Oct. 8, 2015 , at 7:11 AM
By Ben Casselman
Filed under Our Changing Economy
Protesters participate in a rally outside a McDonald's on Chicago's south side as labor organizers escalate their campaign raise the minimum wage for employees to $15 an hour.
M. Spencer Green / AP
Minimum-wage jobs are meant to be the first rung on a career ladder, a chance for entry-level workers to prove themselves before earning a promotion or moving on to other, better-paying jobs. But a growing number of Americans are getting stuck on that first rung for years, if they ever move up at all.
Anthony Kemp is one of them. In 2006, he took a job as a cook at a Kentucky Fried Chicken in Oak Park, Illinois. The job paid the state minimum wage, $6.50 an hour at the time, but Kemp figured he could work his way up.
"Normally, a good cook would make $14, $15, $17 an hour," Kemp said. "I thought that of course I'd make a better wage."
He never did; nine years later, the only raises Kemp, 44, has seen have been the ones required by state law. He earns $8.25, the state's current minimum wage.
Stories like Kemp's are becoming more common. During the strong labor market of the mid-1990s, only 1 in 5 minimum-wage workers was still earning minimum wage a year later.1 Today, that number is nearly 1 in 3, according to my analysis of government survey data.2 There has been a similar rise in the number of people staying in minimum-wage jobs for three years or longer. (For a more detailed explanation of how I conducted this analysis, see the footnote below.)3
Even those who do get a raise often don't get much of one: Two-thirds of minimum-wage workers in 2013 were still earning within 10 percent of the minimum wage a year later, up from about half in the 1990s. And two-fifths of Americans earning the minimum wage in 2008 were still in near-minimum-wage jobs five years later, despite the economy steadily improving during much of that time.4
The trend partly reflects the recession and slow recovery, which has brought weak wage growth for nearly all workers. But it also likely reflects longer-run shifts in the economy that have eroded workers' bargaining power, particularly for the less-educated. That sense of stagnation may be part of what is fueling the nationwide push for a higher minimum wage, which has gained significant momentum in recent years. Voters in five states, including Illinois, approved minimum-wage increases last November,5 and several cities, including Seattle, San Francisco and Los Angeles, have passed significant wage hikes. Kemp has joined fast-food workers across the country in demonstrations demanding higher pay as part of the union-backed "Fight for $15" movement.6
"They're saying that because of the cost of labor and the operating costs they can't afford to give anyone any raises, but I don't quite believe that," Kemp said.
Kemp is representative of the changing minimum-wage workforce in another way as well: At 44 years old, he is one of a growing number of middle-aged minimum-wage workers. Nearly a quarter of the 3.2 million minimum-wage workers in 2014 were over 40; half were 25 or older, up from about 40 percent two decades earlier.7 The face of the minimum wage has changed significantly in recent decades. As a group, today's minimum-wage workers are far more educated than in the 1980s or 1990s. They are also more likely to be men and more likely to have children. More than half of low-wage workers — significantly more than in past decades — are trying to support themselves, not living with their parents or supplementing a spouse's income.
That profile runs counter to the popular image of minimum-wage workers as mostly teenagers, less-educated immigrants or others trying to break into the workforce. Opponents of a higher minimum wage often warn that setting the wage floor too high could close off opportunities for people looking to gain a foothold in the working world. "Let's not lock millions of people out of entry-level employment by raising the minimum wage to $15 an hour," conservative commentator Reihan Salam wrote in Slate earlier this year.
That idea of the minimum wage as a stepping stone hasn't entirely disappeared. A large, though shrinking, percentage of minimum-wage earners are teenagers, and most of them do move on to better-paying jobs relatively quickly.8 But even young people are finding it harder to escape the minimum wage: More than a quarter of minimum-wage earners under 25 are still making minimum wage a year later, compared with about a sixth in the mid-1990s.
Older minimum-wage workers, perhaps unsurprisingly, face an even tougher time. More than 30 percent of those ages 25 or older are still working for minimum wage after a year. And more than 20 percent of those working for the minimum wage in 2008 were still in such jobs after about three years. Even those who did get raises often didn't get big ones: Nearly 70 percent were earning within 10 percent of the minimum wage after three years. That suggests that workers who are forced to take low-wage jobs later in life have a particularly hard time escaping them.
The large number of people getting trapped in entry-level jobs is at least partly the fault of the overall economy. The share of workers staying in low-wage jobs at least a year rose during the 2008-09 recession and has improved only modestly since then. Other research has found that "job ladders" failed in the wake of the recession: Workers were forced into jobs they were overqualified for and then weren't able to move up into better jobs the way they would during better economic times. And more generally, weak wage growth has been a hallmark of this recovery for workers across the economic spectrum.
But the recession isn't the entire explanation. Even before the economy collapsed, workers were spending longer in minimum-wage jobs. The decline in manufacturing is likely part of the story: Factories were a key source of well-paying jobs for men without a college education, a group that has become substantially more likely to work in low-wage occupations in recent years. The broader decline of private-sector unions, which helped workers negotiate for higher pay, also likely played a role, argued Cherrie Bucknor, who has studied the changing low-wage workforce for the Center for Economic and Policy Research, a liberal think tank.
A generation ago, someone like Kemp — a widower who never completed high school — might have held a union job in a factory. Today, he is frying chicken for $8.25 an hour with little hope of advancement.
Making ends meet isn't easy. Kemp's daily commute is two and a half hours, round-trip, and the train costs $2.25 each way, meaning that he has to work more than half an hour just to pay for his commute. He rents a room from a family in Evanston, north of Chicago, for $150 every two weeks — more than 18 hours of work, pre-tax. Working on his feet all day, he goes through a pair of shoes every two months; good shoes that don't slip on the greasy kitchen floor can cost $50, six hours of work. He supplements part-time hours from the restaurant with odd jobs handing out fliers for local businesses; even so, he said he has had to borrow money from friends to pay his bills and regularly relies on food pantries when he can't afford groceries.
"I do like being a cook. … I am grateful for working," Kemp said. But as someone with a steady job, he said, "In America, we shouldn't have to stand in food pantry lines every other week to get a handout."
CORRECTION (Oct. 8, 10:47 a.m.): An earlier version of the third chart in this story incorrectly presented data on the demographics of minimum wage earners. We've corrected the chart.
For the purposes of this article, the phrase "minimum-wage workers" refers only to people earning exactly their state's minimum wage at the time. People earning below minimum wage aren't counted as "minimum-wage workers" because many of them are waiters or other tipped employees, who can usually be paid less than the minimum but might earn more when tips are included; tips aren't counted in the government's calculation of hourly earnings, so it is impossible to know how much these workers earn.
It's important to note a few potential shortcomings in this analysis. First, some local governments have imposed minimum wages that are higher than their state minimums; minimum-wage workers in those cities won't show up in my analysis. On the other hand, not all workers are covered by the minimum wage. Some states exempt small businesses, teenagers or others from their minimum-wage laws, and even the federal minimum only applies to certain types of workers and employers.
The initial idea for this analysis came from Jim Tankersley at The Washington Post.
This analysis is based on two separate government surveys: The Current Population Survey (CPS) and the Survey of Income and Program Participation (SIPP).
The CPS is a monthly survey of about 60,000 households that is used to calculate the unemployment rate and other labor force statistics. Households are in the survey for four months in a row, then out of the survey for eight months and back in it for four more months. That means it is possible to observe individuals in the survey at one-year intervals.
The SIPP is significantly smaller than the CPS but offers two major advantages. First, it intentionally "oversamples" lower-income households in order to collect detailed data on people who participate in government anti-poverty programs. Second, it tracks the same households over a longer period of time, usually two to four years. The survey is set up as a series of panels: One group of households will be interviewed regularly for several years, and then a new group will be selected and tracked. In my analysis, I primarily track people through the first nine "waves" of interviews, which cover a roughly three-year period. (The panel that started in 2008 was unusually long, lasting 16 waves, or about five years.)
My basic approach was the same in both surveys: I identified workers who reported hourly earnings that matched their state's minimum wage at the time and then looked at how much they were earning in a later period (one year later in the CPS, about three years later in the SIPP). Workers count as "still earning" minimum wage if their hourly earnings in the later period match their state's minimum wage at the time; in other words, Kemp counts as being a minimum-wage worker at all times in the past nine years even though his pay has gone up along with the minimum wage over that time.
All these statistics are conditional on workers having earnings in the second period. So someone who stops working altogether (voluntarily or otherwise) isn't counted at all. Similarly, someone who drops out of the survey isn't counted. This is a possible source of error because certain groups, such as the poor and the unemployed, are more likely than others to drop out of surveys.
A few technical notes:
Data on state minimum wages through 2013 comes from J.M. Ian Salinas, who built on earlier research by Neumark, Salas, and Wascher and the Tax Policy Center. (Special thanks to Dan Teles on Twitter for pointing me toward this data.) I added 2014 and 2015 data from state government websites and other sources.
The Census Bureau, which conducts both surveys, fills in missing earnings data by "imputing" what the individual likely earned based on other characteristics. I dropped imputed earnings from my analysis. However, the trends are largely the same when those records are included.
All differences noted in this story (both over time and between groups) are statistically significant at the 95 percent confidence interval.
My count of "near-minimum-wage" workers includes anyone earning up to 110 percent of their state's minimum wage, including people earning less than minimum wage.
Illinois's measure, unlike the other four, was non-binding. A bill to raise the minimum is still working its way through the state legislature.
Fight for $15 arranged my interview with Kemp, and a communications staffer sat in on the phone call.
According to the Current Population Survey. These numbers differ from those in the Bureau of Labor Statistics' annual report on minimum-wage workers because that report looks at people earning at or under the federal minimum wage, not the state minimums.
Conditional on their continuing to work. Many teenagers, of course, work erratically or not at all.
Ben Casselman is a senior editor and the chief economics writer for FiveThirtyEight. @bencasselman
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