Minimum-wage jobs may not be the dead-end they’re portrayed to be, according to the National Federation of Independent Business.
"The vast majority of minimum wage workers get a raise within a year," says an infographic posted on the website of the Virginia chapter of the small business lobby.
We emailed Nicole Riley, state director for the federation in Virginia, to see what that claim was based on. We heard back from Todd Pack, a federation spokesman for the group.
Pack pointed us to a 2004 report by the Employment Policies Institute, a fiscally conservative think tank. That study crunched U.S. Census Bureau data looking at the earnings of workers from 1979 to 2002. It examined how a minimum-wage worker’s pay in one year compared to the following year. Its conclusion:
"Over the 23 years of data studied in the report, nearly two-thirds of minimum-wage employees who continue employment are earning more than the minimum wage within 1–12 months," the report says.
We’ll note that passage includes the qualifier that it focuses on minimum wage workers who continue working. Some low-wage workers may leave the workforce or become unemployed before they get a pay bump.
Still, the report’s conclusion says minimum-wage employees get a pay bump based on their hard work and hence "Nearly two-thirds receive a raise within a year of starting employment."
One issue with the Employment Policies Institute report is its age. It looks at a time period that ended in 2002. That’s 14 years ago and five years before the Great Recession started to grip the U.S.
A more recent study examined this question.
Researchers at Texas A&M University revisited the issue as part of a broad look at the minimum wage and its effect on employment in a 2013 paper. They studied Census Bureau data from 1979 through 2012 in which minimum-wage workers were asked about their earnings in an initial survey and again in a second interview a year later.
The researchers found that among all minimum-wage workers, 16.55 percent of them left the labor force within a year and didn’t try to find a new jobs, and another 5.85 percent became unemployed but sought new work.
Among those who remained employed, 65.85 percent were paid more than the minimum wage in the following year. The median higher pay for those workers was an additional $1 an hour, according to the report.
When looking at all minimum-wage workers, including those who lost a job or left the labor force altogether, about 51 percent of them were earning higher than the minimum wage after a year on the job. Jonathan Meer, a co-author of the Texas A&M report and an economics professor there, told us workers who got a pay hike may have been at the same job or moved on to another employer.
We should note that the minimum wage included people who live in states that defer to the $7.25-an-hour federal minimum wage as well as in states that set the minimum at a higher rate. There are 29 states that have a higher minimum wage than the federal rate, but Virginia is not one of them, according to the National Conference of State Legislatures.
Jeremy West, the other co-author of the Texas A&M report, updated the figures for us. He said 72 percent of all minimum wage workers got a raise between 2014 and 2015. But about one-fifth of them got raises only because the minimum wage had been increased in their states. That means 57.5 percent of minimum wage earners got a raise at the discretion of their employers or because they found higher-paying jobs between 2014 and 2015.
A final note: Our colleagues at PunditFact back in 2014 examined a similar statement by Steve Forbes, the former GOP presidential candidate. Tara Sinclair, an economist at George Washington University, told them that people who keep their minimum-wage jobs for one year are proving they’re dedicated employees who can hold jobs and that might speak more to why they’re getting a raise than anything else.
As for those minimum-wage workers who instead leave the labor force entirely, they might be choosing to do so because they figure they can do about as well without a paycheck, Sinclair told PunditFact.
The National Federation of Independent Business here in Virginia says on its website that "the vast majority of minimum wage workers get a raise within a year."
The group finds support from an older report from 12 years ago that says two-thirds of workers who stayed on the job got a raise within a year.
The most recent numbers show that 72 percent of minimum wage workers got a raise between 2014 and 2015. But one-fifth of them got the boost only because their state had raised its minimum wage - a step the NFIB opposes. That means 57.5 percent of the workers got a raise at the discretion of their employers or because they had found better-paying jobs.
We rate the claim Half True.
National Federation of Independent Business in Virginia website, accessed May 17, 2016.
National Federation of Independent Business, "Infographic: Minimum wage myths busted," accessed May 17, 2016.
Email from Todd Pack, spokesman for the National Federation of Independent Business, May 17, 2016.
Employment Policies Institute, "Wage growth among minimum wage workers," June 2004.
PunditFact, "Steve Forbes says two-thirds of people who earn the minimum wage get a raise within one year," Feb. 16, 2014.
Texas A&M University, "Effects of the minimum wage on employment dynamics," December 2013.
Interview with Jonathan Meer, associate professor of economics at Texas A&M University, May 25, 2016.
Voice of San Diego, "Fact Check: Pay hikes for minimum wage workers," Feb. 10, 2014.
National Conference of State Legislatures, "State minimum wages," April 14, 2016.
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