Who’s Actually Working for Minimum Wage?
There’s been talk of raising the minimum wage for years. However, the COVID-19 pandemic further highlighted the need for this move, as many essential workers have been putting their lives on the line for very low pay.
In 2020, 73.5 million U.S. workers ages 16 and over were paid by the hour, according to the Bureau of Labor Statistics. Among this group, 247,000 earned the federal minimum wage of $7.25 per hour, while 865,000 were paid less than minimum wage. Together, these two groups of 1.1 million workers composed 1.5% of all hourly workers.
Breaking it down further, 12.1% of food preparation and serving-related workers — nearly 1 in 8 — earned at or below the minimum wage in 2019, according to the BLS. A much lower percentage, but still noteworthy, 3.2% of personal care and service workers and 1.7% of building and grounds cleaning and maintenance workers also fell into this category.
While higher than minimum wage, it’s also striking that cashiers earn an average of $11.37 per hour, rising slightly to $11.84 per hour for retail sales workers, according to the BLS. Additionally, child care workers earn an average of just $11.65 per hour.
Considering workers from most of these categories have been deemed essential throughout the pandemic, it’s amazing how little they’re actually paid. At the beginning of the COVID-19 crisis, many major retailers provided workers with hazard pay, but most stopped this practice within a few months.
One exception is Home Depot, which has continued to pay full-time employees an extra $100 per week and part-time employees an extra $50 per week. Target also gave team members five bonuses during 2020, including a $500 bonus at the end of the year for all hourly associates.
It’s possible employers that stopped offering hazard pay — or didn’t provide it in the first place — will start providing it again and even offer back hazard pay.
“A large number of employers, especially in the retail and grocery sectors, have seen bumper profitability in 2020 and yet done little or nothing at all to compensate their workers for the risks they took,” stated a fact sheet released by President Biden’s transition team on Jan. 14. “The president-elect believes these employers have a duty to do right by their frontline essential workers and acknowledge their sacrifices with generous back hazard pay for the risks they took across 2020 and up to today.”
More than just hazard pay, President Biden’s $1.9 trillion economic relief package initially included a measure to raise the minimum wage to $15 per hour. One employer this would not affect is Target, as the retailer has already made this move, opting to raise its starting wage to $15 per hour in June 2020.
Raising the minimum wage would allow many workers to get out of poverty, said Chris Abrams, a licensed insurance agent, investment advisor and the founder of Abrams Insurance Solutions.
“These workers traditionally use all of their income to pay for their living expenses,” he said. “With extra funds, minimum wage workers could enjoy financial benefits that others already have — such as investing in the stock markets, retirement funds or life insurance plans.”
Only time will tell if the minimum wage will be raised, but if it is, it will be life-changing for those who will receive a pay increase — including many essential workers.
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Last updated: June 14, 2021