Who would benefit from a minimum wage hike?

SHARE Who would benefit from a minimum wage hike?

Politicians advocating for increasing the Illinois minimum wage like to tout how many people would benefit. Those against it like to talk about how many minimum-wage jobs would be lost. But both sides are typically vague about the exact numbers behind their claims. That’s because no one really knows how many people make the minimum wage.

In order to calculate the number of minimum wage earners, we would have to know, for every worker in Illinois, whether they are paid hourly, how much they make per hour, and how many hours they work in a week—for every job that every person holds.

No state or federal agency collects all of that data.

The closest we can get is with data from the U.S. Census Bureau, which conducts a fairly comprehensive survey each March called the Annual Social and Economic Supplement to the Current Population Survey (CPS).

RELATED: The faces of minimum wage: Trying to escape string of low-paying jobs

The survey collects demographic and economic information about a sample of Americans, including, for those people working hourly, how much money they make per hour at their primary job. Using these data, we can estimate the number of people in Illinois earning $8.25 per hour or less: About 400,000 people, as of 2012.

There are several issues with these data, including the fact that they only capture a worker’s primary job. So someone working two jobs, one of which pays minimum wage, isn’t counted. The data also exclude people who work in Illinois but live in a neighboring state. (Conversely, they include people who earn minimum wage in a neighboring state and live in Illinois—Indiana, Wisconsin, Iowa, and Missouri all have lower minimum wages than Illinois.) And they don’t count people who are salaried or self-employed but make the equivalent of the minimum wage.

Because of all these conditions in gathering the data, the number is probably an underestimate, says Amy Terpstra, director of the Social IMPACT Research Center, which first reported the 400,000 figure in 2012.

“Any survey effort and sample is an estimate. There are margins of error associated with it,” Terpstra says. “People balk at that a little bit, but that’s the reality.”

Still, knowing the caveats, it’s possible to—very roughly—estimate the number of people who might benefit from increasing the minimum wage to $10 per hour, as the state legislature has proposed.

According to the Census data, there are 400,000 additional people who make between $8.25 per hour and $10 per hour, meaning approximately 800,000 people living in Illinois make less than the proposed minimum wage.

Of course, not all of those people would benefit from a minimum wage hike. Employers with fewer than four employees are exempt from the minimum wage law, as are farm workers, college students working at public colleges, and domestic workers.

A hike for city workers?

What about Chicago, where Mayor Rahm Emanuel has proposed $13 per hour city minimum wage? Who would benefit from that?

Because the Current Population Survey data are only a sample—and some of the geographic data are removed to protect the privacy of the respondents—the more you limit the sample, the less reliable it is. Which means that it is impossible to get reliable data on the number of minimum wage earners in the City of Chicago.

What can be obtained are data on the Chicago-Naperville-Joliet metropolitan area. Obviously not everyone in this area would benefit from a Chicago-only minimum wage increase. But according to CPS data, averaged over three years to get a better estimate, there were about 300,000 people making the minimum wage or less in the Chicagoland area, and another 600,000 or so making between $8.25 per hour and $13 per hour. That’s about 20% of the entire Chicagoland workforce.

If that proportion were applied to Chicago, it would result in a large number of workers getting a raise.

But again, these are very rough estimates, which makes the case that any political claims on how many people would benefit from a wage hike ought to be viewed with skepticism.


EDITOR‘S NOTE:A previous version of this article stated that tipped workers are excluded from the minimum wage law. In fact, for tipped workers, the total of hourly wages and tips must add up to at least the minimum wage.

The Latest
Heat-related injuries and deaths have been top of mind for many Chicagoans as the city reached 100-degree temperatures for the second consecutive week.
So-called neonics add a much smaller amount of pesticides to the environment than widespread spraying, but they are absorbed by plants, which makes the entire plant deadly to some species.
The owners were bombarded with calls once news of the Bridgeport institution’s closure spread. “We know we are always busy, but the way they think about the food, and about everything is amazing,” co-owner Josie Rodriguez said.
Banning abortion is religious oppression.
The longtime West Side congressman is locked in a Democratic primary with community activist Kina Collins.