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New School economist Teresa Ghilarducci said one-quarter of American workers earn less than $18,000. Is that correct? New School economist Teresa Ghilarducci said one-quarter of American workers earn less than $18,000. Is that correct?

New School economist Teresa Ghilarducci said one-quarter of American workers earn less than $18,000. Is that correct?

Louis Jacobson
By Louis Jacobson December 23, 2013

Economist Teresa Ghilarducci says a quarter of U.S. workers earn $18,000 or less

Amid growing debate about whether to raise the nation’s $7.25 minimum wage, Teresa Ghilarducci, a labor economist with the New School in New York City, offered a statistic that sought to gauge how many American workers are poor.

"We are No. 1 in the world in creating low-wage jobs," Ghilarducci said on the Dec. 15, 2013, edition of the MSNBC show Up. "One out of four workers in the United States is a low-wage worker, meaning that they make 45 percent of the median wage, which is now $18,000 per year. So a quarter of our workers make $18,000 per year. And no other industrialized country has that kind of record."

We wondered if she was correct that "a quarter of our workers make $18,000 per year."

We found data from the U.S. Census Bureau that addresses the question.

The Census data

The Census Bureau data breaks down wage and salaried workers by ranges of income, from "$1 to $2,499" to "$100,000 and up."

The data shows that 148.3 million Americans age 15 and up earned some wage or salary income in 2012.

Of these workers, 33.5 million earned $17,500 or less. But to square it with Ghilarducci’s income ranges, we need to adjust upwards a bit to account for those earning between $17,500 and $18,000. This adjustment makes the number approximately 35 million.

If you divide these 35 million low-income workers by the total 148.3 million workers, the result is 24 percent -- right on target for Ghilarducci’s claim.

Some caveats

However, we’ll note a few important bits of context.

Part-time workers. As it turns out, the bulk of these 35 million low-income workers -- 23.5 million, or about two-thirds -- worked part time.

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Now, some percentage of these 23.5 million workers -- perhaps a large percentage, given the slow economic recovery -- is working part time because they want a full-time job but can’t find one. But others may prefer working part time, such as students or parents of young children.

When we contacted Ghilarducci, she agreed that this was an issue and forwarded recent data from the Bureau of Labor Statistics suggesting that about one-third of part time workers are doing so because they can’t find an acceptable full-time job, while two-thirds are working for non-economic reasons. This suggests that it’s wrong to assume that all, or even most, part-time workers are doing so because of the poor economy.

Partial-year workers. The Census data also tracks how much of the year workers spent on the job. The data shows that 14.8 million people who earned less than $18,000 worked 26 weeks or less. In other words, 42 percent of all workers earning under $18,000 worked for half the year or less. They might have earned well above that if they’d been paid at that rate for the full year.

This offers another reminder that it’s wrong to view Ghilarducci’s statistic as suggesting that one-quarter of all workers with a full-time, full-year job are making $18,000 or less.

An alternative number

So let’s take a look at just the workers who had a full-time job and worked all year.

The Census data shows that 98.3 million workers had full-time jobs for the whole year. Of those, about 8.8 million earned $18,000 or less -- just shy of 9 percent.

Is this a better number? Not necessarily -- both have merit, and both are imperfect. Ghilarducci’s one-quarter overestimates the number of low-income workers because it includes Americans working part-time voluntarily, or who, by choice or not, may have worked for only for a part of the year.

At the same time, the alternative number -- 9 percent -- does the reverse, underestimating the number of low-income workers by not including Americans who are working part-time jobs when they would actually like to have a full-time job.

Ghilarducci thanked PunditFact for checking up on her work. "It is important for yakkers on TV to footnote!" she said. "I think I will change my behavior and not give interviews without a follow up with footnotes of my own. So you saved me work. Thank you."

Our ruling

Ghilarducci said that "a quarter of our workers make $18,000 per year." Census data backs up this top-line number, but beneath the surface, there are reasons for caution.

The number she cites does not refer exclusively to full-year, full-time jobs. Rather, it includes lots of people who had a low income because they worked in a part-time job, or worked for just part of the year. The statement is partially accurate but leaves out important details, so we rate it Half True.

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Economist Teresa Ghilarducci says a quarter of U.S. workers earn $18,000 or less

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