[Sidenote: looks like Frank and I were simultaneously blogging on the same topic]

Recent data released by the BLS suggests that:

About 2 percent of workers age 25 and over earned the minimum wage or less. Among those age 65 and over, the proportion was 4 percent.

The press release goes on to mix sub-samples of the population, so you have to keep track of what the "denominator" is, however "[a]bout half of all hourly-paid workers earning $5.15 or less were under age 25."

Here's a picture of the percentage of workers paid hourly for which the minimum wage is binding (they are paid at or below the federal minimum wage):

What causes the spikes? Looks like every time the minimum wage is increased, more people are paid the minimum wage. How about the number of people who are priced out of the labor market?

D.pctminwage |      Coef.   Std. Err.      t    P>|t|   

minwageinc   |   1.966667   .3973271     4.95   0.000

_cons        |        -.9   .1421392    -6.33   0.000    

The dependent variable is the one-year change in the percentage of workers paid hourly that are paid at or below the minimum wage. These results suggest that in years when the minimum wage is increased, approximately 2% more of the hourly work force is paid at or below the minimum wage.

How about the number of people hired who are paid hourly? Contemporaneously there doesn't seem to be a statistically significant relationship between the number of hourly workers hired and an increase in the minmum wage. However, if you regress the yearly change in workers paid hourly against the one-period lagged value of a dummy variable that takes a value of one when the minimum wage is raised you get:

D.totalhrly    |      Coef.   Std. Err.      t    P>|t| 

lag minwageinc |  -887.5079   395.8992    -2.24   0.035 

_cons          |   1137.222   236.9102     4.80   0.000  

where the dependent variable is measured in thousands. What this simple regression suggests is that increasing the minimum wage causes a reduction in those paid hourly by 887,000 people. This doesn't capture those who are moved to salaried positions, so this number would seem to be an upper bound. I don't know this literature, perhaps one of my co-bloggers or a reader can indicate if this is consistent with the other evidence.

It seems that the largest proportion of minimum wage workers are in the service sector (duh) and it seems that most minimum wage workers are young (again, duh). Does this mean that raising the minimum wage will have no effect in the labor market? Nope, it just means that, excluding union contracts that tie union wages to the minimum wage, the minimum wage binds on a subset of the labor force that typically doesn't vote.