A Project of The Annenberg Public Policy Center

Minimum Wage Workers and Poverty


Q: Is a minimum-wage worker officially in poverty?

A: A single person working full time at the minimum wage would be barely above the poverty line. A single parent would be below it.

FULL QUESTION

I have always believed that the poverty line was below minimum wage. Is the poverty line usually less than minimum wage? Historically has this situation improved over time?

FULL ANSWER:

The federal minimum wage has been $5.85 per hour since July 24, 2007. At that rate, a person working a 40-hour week for all 52 weeks in a year would earn $12,168.

By comparison, the official Census Bureau poverty threshold in 2007 was $10,787 for a single person under age 65, with no dependents.

For a single parent with one child, however, the official poverty line was $14,291, and for a single parent with two children, it was $16,705. So anyone trying to support even the smallest of families on a single minimum-wage job would qualify as poor.

Until the most recent increase, the federal minimum wage hadn’t increased for nearly a decade, since Sept. 1, 1997, when it was set at $5.15 per hour. Then as now, the minimum wage would put a single, full-time worker’s income ($10,712)  just above the poverty threshold for 1997 for a single person ($8,183),  but it wasn’t enough for a single parent with one child to rise above the official poverty line ($11,063).

Under current law, the federal minimum wage is set to increase to $6.55 per hour effective July 24, 2008, and to $7.25 per hour effective July 24, 2009.

We haven’t tried to adjust any of these figures for the value of Food Stamps, Medicaid benefits or other state or federal programs for which a minimum-wage worker might qualify, depending on his or her circumstances. And the official measure of poverty is, of course, somewhat arbitrary. We should also note that some who work at minimum-wage jobs are spouses or children working for "pin money" in families where the principle breadwinner may have a much better-paying job.

But by and large, a full-time job at the minimum wage is hardly a sure ticket out of poverty.

Brooks Jackson 

Sources

U.S. Department of Labor. "Wages: Minimum Wage," Web site accessed 12 Feb. 2008.

U.S. Census Bureau. "Poverty Thresholds 2007: Poverty Thresholds for 2007 by Size of Family and Number of Related Children Under 18 Years," Web site accessed 12 Feb. 2008.

U.S. Department of Labor. "History of Changes to the Minimum Wage Law," Website accessed 12 Feb. 2008.