Here's Where America's Minimum Wage Earners Work

The bulk of America’s minimum wage earners work in the food services industry, reports Morgan Stanley’s John Glass.

Nearly 45% of those earning minimum wage are involved in either the preparation or the service of food.

The federal minimum wage has bee $US7.25 since 2009.

Following food services is retail services, capturing 11% of the minimum wage earners. Other major minimum wage industries include personal care, transportation, cleaning, and office work – all of which capture about 7% of the group. Finally, 18% of minimum wage workers earn their livings with “other” jobs.

It’s important to note that tipped workers, mostly found in restaurants and food service industries, are not included in this statistic. Why? Because they are generally paid less than the minimum hourly wage. Employers operate on the assumption that the combination of their hourly wages and tips will either equal or surpass the standard hourly minimum wage. As such, they are exempted from the Federal minimum wage.

Theoretically, this makes sense. In an ideal world, this sort of commission based wage-earning should not cause significant financial changes for the employee. However, by placing the fiscal power in the customer’s hands, the employee may suffer – especially on days when service is slow.

Currently, in the recovering economy where income inequality is growing, a Federal minimum wage increase is being considered. Democrats traditionally campaign for minimum wage increase proposal, but now even Republicans like Mitt Romney are advocating for an increased federal minimum wage.

Even during economic recoveries, service-based industries will experience up and downs. As a result, there is a Federal proposal for federal tipped minimum wage to be raised to help workers in these industries. Currently, that wage is set at $US2.13 – and has not been changed since 1991 – and the proposal advocates raising it to $US4.68 by 2017. By 2020, this proposal aims for tipped minimum wage to be 70% of the federal minimum wage.

Federal proposals to increase minimum wages will not only help the minimum wage workers to combat the growing inequality. They might also help tipped workers, whose significantly lower salaries could also be raised.

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