ANALYSIS OF THE PENNSYLVANIA MINIMUM WAGE

ANALYSIS OF THE

PENNSYLVANIA

MINIMUM WAGE

MINIMUM

WAGE

ADVISORY

BOARD

MARCH 2022

CWIA-15 REV 02-22

Commonwealth of Pennsylvania

Minimum Wage Advisory Board Members

Chairperson

Basil L. Merenda

Deputy Secretary

Pennsylvania Department of Labor & Industry

651 Boas St.

Harrisburg, PA 17121

Labor Representatives

Reesa Kossoff

Executive Director

SEIU PA State Council

1500 North 2nd Street, Suite 11

Harrisburg, PA 17102

Samantha Shewmaker

Communications Director

Pennsylvania AFL-CIO

600 N. 2

nd

Street

Harrisburg, PA 17101

Barbara Johnson

Representative

UFCW Local 1776

3031-A Walton Road

Suite 201

Plymouth Meeting, PA 19462

General Public Representatives

Nadia Hewka

Senior Staff Attorney

Community Legal Services

1424 Chestnut St.

Philadelphia, PA 19102

Stephen Herzenberg

Executive Director

Keystone Research Center

412 North 3rd Street

Harrisburg, PA 17101

John Meyerson

Convener

Raise the Wage PA!

www.raisethewagepa.org

[email protected]

Employer Representatives

Alex Halper

Director, Government Affairs

Pennsylvania Chamber of Business and Industry

417 Walnut Street

Harrisburg, PA 17101

Scott D. Briggs

Vice President of Human Resources & Communications

Knouse Foods, Inc.

800 Peach Glen-Idaville Road

Peach Glen, PA 17375

Warren Hudak

President

Hudak & Company

1013 Mumma Road

Lemoyne, PA 17043

Preface

The General Assembly of Pennsylvania, in 2006, via Act 2006-112, amended the Minimum

Wage Act and raised the state’s minimum wage from $5.15 an hour to $6.25 on Jan. 1, 2007,

and to $7.15 on July 1, 2007. The minimum wage had last been raised in 1997. Effectiv

e July

24, 2009, the federal minimum wage increased from $6.55 an hour to $7.25. This change

reflected the third and final federal minimum wage increase provided by the amended Fair

Labor Standards Act (FLSA). As mandated by Act 2006-112 and FLSA, Pennsylvania’s

minimum wage also increased to $7.25, which became effective the same date as the federal

minimum wage increase under the FLSA.

The amended Minimum Wage Act directs the Pennsylvania Department of Labor & Industry

to produce an annual report by March 1 detailing data on the previous calendar year’s

demographics and any other relevant characteristics of workers paid the minimum wage or

below. This duty is assigned by the Secretary of Labor & Industry to the Center for

Workforce Information & Analysis (CWIA).

Contents

Page

Introduction

1

Summary 3

I. Wage Distribution of All Hourly Workers 9

II. Comparison of Minimum Wage or Below Worker

Characteristics to Other Populations

11

III. Industry and Occupational Distributions

17

IV. Recent Historical Comparisons (One and Five Years)

21

V. A Historical Perspective on the Minimum Wage in

Relation to Inflation and the Poverty Threshold

27

VI. Other States 33

Appendixes

37

Terms, Definitions and Sources

38

Table of Industry Distributions

Table of Occupational Groups Distributions

40

41

Programs that May Assist Low Income Workers

Minimum Wage Changes: Pennsylvania and the U.S.

42

43

Minimum Wage Report 1

Introduction

This report contains statistical information on Pennsylvanians who earn hourly wages,

including those who earn the minimum wage or less, analyzes demographic

characteristics of such hourly workers, details the industry characteristics of those making at

or near the minimum wage, discusses the issues of inflation and poverty in relation to the

minimum wage, and considers other states’ minimum wage data.

Wage rates used in this report refer to the wage rates earned by hourly workers at

their main jobs, excluding overtime pay, tips and commissions. A portion of workers

reported as making minimum wage or below may have received additional compensation

such as tips. Employers are legally obligated to supplement the earnings of tipped

employees, as necessary, to ensure that hourly rates are never below the minimum wage.

Pennsylvania last raised its minimum wage on July 24, 2009, from $7.15 to $7.25, when the

federal minimum wage was increased from $6.55 to $7.25. It has remained at $7.25 since

then. While the nominal minimum wage has not changed since 2009, changes in the

economy and other factors have impacted those earning the minimum wage or less.

The primary data source used for this report is the Current Population Survey (CPS), a

nationwide monthly survey of about 60,000 households of which roughly 2,000 are in

Pennsylvania, conducted by the U.S. Bureau of the Census (Census) for the federal Bureau

of Labor Statistics (BLS). The CPS is the primary source of information on the labor force

characteristics of the civilian noninstitutional population. Respondents are interviewed to

obtain information about the employment status of each member of the household 15 years

of age or older. This report focuses on those 16 years of age and older.

Both federal and state law provide for several exemptions and lower thresholds to the

minimum wage for certain employers and certain job classifications. Farm workers, some

seasonal workers, and newspaper deliverers are exempt from both state and federal

minimum wage law while lower minimum wages are allowed for tipped employees and full-

time students. Other exemptions that were based on the number of employees employed by

the business or the age of the worker have expired. The CPS data lack direct indicators to

permit removal of exempt individuals.

The cohort of workers earning above but close to the minimum wage are considered “near

minimum wage,” a category without a precise range. A formal analysis of this cohort began

with the 2013 report at which time it was defined as $7.26 to $9.25. From 2015 to 2017, it

was defined as between $7.26 and $10.10. It has been defined as $7.26 to $12.00 since the

2018 report due to recent interest in a minimum wage of $12.00. As “near minimum wage”

is not standard, one should not compare characteristics of this group to previous reports.

Pennsylvania’s minimum wage data and analyses in this report should be used with some

caution due to the small size of the CPS sample. It should also be noted that the report

utilizes the most current annual data available at the time of publication. Demographic data

from the CPS and inflation data from the Consumer Price Index (CPI) are from 2021, the

calendar year of the report. However, the most recent data on poverty thresholds and the

state’s average wage are lagged a year and based on 2020 data, because the data for the

most current calendar year will not be released until later this year.

Minimum Wage Report

2

Note: This report has been prepared using available data from the U.S. Bureau of the

Census and the federal Bureau of Labor Statistics. While it is a comprehensive analysis

of data collected on at or below minimum wage workers in the state and the nation, there

are limitations of the data. Details of the reliability of CPS estimates, in general, can be

found at, https://www.bls.gov/cps/eetech_methods.pdf, while limitations of subnational

(e.g., state) data can be found at https://www.bls.gov/opub/geographic-profile/home.htm.

While reliable data on minimum wage and price levels go back at least as far as the

inception of the Federal Minimum Wage Law (1938), reliable historical demographic data

of the minimum wage or below populations of years prior to 1994 are not readily available

and might not be comparable with the current minimum wage or below population due to

definitional and methodological changes over time. These would include changes in

categories of race and ethnicity, industry and occupational classifications, and methods of

collecting and weighting samples. Reliable estimates of the current percentage of at or

below minimum wage workers in Pennsylvania who are working part time involuntarily

(i.e., they would prefer to work full time and only work part time due to no full-time

opportunities) are also not currently available.

Although the survey can be used to analyze the minimum wage or below population, it

was not specifically designed to do so and therefore may lead to both overcounting and

undercounting of certain segments of the minimum wage or below population. For

instance, tipped employees, such as servers, may legally be paid a lower cash minimum

wage, which is usually referred to as the tipped minimum wage ($2.83 per hour in

Pennsylvania since 1997), due to the employer being able to offset the cash wage paid

with a tip credit; however, employers are legally obligated to supplement their earnings if

necessary to ensure that hourly rates are never below the minimum wage. Such

employees may inaccurately be included in the category of those earning below the

minimum wage although their combined earnings including tips may be at or above the

minimum wage. Alternatively, with respect to wage rate data, salaried and other non-

hourly workers are excluded from the survey. This may lead to undercounting the number

of workers earning at or below the minimum wage.

Further, many characteristics of the minimum wage or below population that might be

desirable to measure are not captured in the survey. For example, the average length of

time for which a person earns the minimum wage is not measured. The survey is a

federally taken snapshot in time and does not gather such information. Analysis of such

data would require the commissioning and conducting of an additional survey.

The previously mentioned caveats regarding potential shortcomings of the CPS are still

operative. In addition, the consequences of the pandemic that manifested itself in 2020

created complications in data collection that exacerbated these issues. These included

decreased employment generally and particularly in certain industries, changes in the

wage distribution, etc. which may make the 2020 data less typical and makes

comparisons of 2021 to the prior year harder to interpret. The decreased employment of

workers earning the minimum wage or below (and other subgroups) also makes the

sample sizes smaller, making estimates less reliable.

Minimum Wage Report 3

Summary

The purpose of the minimum wage is to set a minimum threshold of wages for workers. On

July 24, 2009, Pennsylvania raised the minimum wage to $7.25 as provided by the amended

Fair Labor Standards Act (FLSA). This report describes the characteristics of earners at or

below the minimum wage and the industries that employ them.

Wage Distribution of All Hourly Workers

• In 2021, there were an estimated 63,800 Pennsylvania workers earning minimum

wage or less. This is the lowest number of at or below minimum wage workers on

record in this annual report series. It is 10,600 (14.2 percent) lower than the previous

low of 2020 when it was 74,400. Workers earning minimum wage or less represented

2.0 percent of all hourly workers and 1.1 percent of all workers.

• From 2020 to 2021, Pennsylvania’s hourly employment increased by 91,300 (+2.9

percent), while Pennsylvania’s overall employment increased by 26,200 (+0.4

percent). U.S. hourly employment increased by 2,807,000 (+3.8 percent), while the

nation’s overall employment increased by 4,778,000 (+3.2 percent). The proportion of

all workers receiving hourly rates in 2021 increased slightly in both Pennsylvania and

the nation from 2020. In 2021, the percentage of the employed earning hourly rates

was higher in Pennsylvania (55 percent) than in the U.S. overall (50 percent).

• In 2021, there were an estimated 586,000 Pennsylvania workers earning near

minimum wage ($7.26-$12.00). This was 107,100 (-15.4 percent) lower than in 2020

when it was 693,100.

• Labor markets in the U.S. and Pennsylvania continued rebounding in both

employment and wages from the pandemic-induced recession. The increase in

employment and hourly workers was concentrated in higher wage workers which

contributed to both the absolute and relative changes in the wage distribution. The

volumes and proportions of hourly workers in the lower wage categories fell, while

increasing for those above $12.00 an hour. The median wage in Pennsylvania

increased from $16.50 in 2020 to $17.00 in 2021, while it rose from $16.32 to $17.00

in the nation.

• Pennsylvania had a higher percentage (2.0 percent) of workers at or below the federal

minimum wage of $7.25 than the nation (1.4 percent). About six out of every 10 wage

earners in both Pennsylvania and the U.S. were in the highest wage category (of above

$15.00). Pennsylvania’s share of wage earners in this category rose by 2.1 percentage

points to 59.0 percent, while the nation’s percentage rose 3.9 percentage points to 60.0

percent.

Minimum Wage Report

4

Comparison of Minimum Wage or Below Worker Characteristics to Other Populations

• A majority of Pennsylvania earners at or below the minimum wage in 2021 were from

one or more of the following groups vs. its percentage in the population 16 and over:

❑ Female 67% vs. 52%

❑ White 79% vs. 79%

❑ 16-to-24-year-olds 51% vs. 14%

❑ High school graduates or less 64% vs. 45%

❑ Never married 82% vs. 34%

• Females outnumbered males by over two to one (67.2 percent to 32.8 percent) among

at or below minimum wage workers in Pennsylvania during 2021.

• Pennsylvania’s workers who earned above the minimum wage were approximately

equally likely to be male or female and often were from one or more of the following

demographic groups vs. its percentage in the population 16 and over:

❑ White 76% vs. 79%

❑ 25-to-54-year-olds 55% vs. 45%

❑ High school graduates or more 91% vs. 89%

❑ Married (now or in the past) 56% vs. 66%

• Pennsylvania’s workers who earned near minimum wage were from one or more of

the following demographic groups vs. its percentage in the population 16 and over:

❑ Female 59% vs. 52%

❑ White 75% vs.79%

❑ 16-to-34-year-olds 63% vs. 30%

❑ High school graduates or less 58% vs. 45%

❑ Never married 65% vs. 34%

• The proportions of Pennsylvania earners at or below minimum wage who were

either female, 16-to-24-year-old, non-high school graduates, or never married were

higher than their corresponding proportions in the population. However, the

percentages of those demographic groups in the Pennsylvania minimum wage or

below population were most similar to the corresponding percentages of minimum

wage or below earners in the nation as a whole as well as those earning “near

minimum wage” in Pennsylvania. Whites, who constituted almost eight out of every

10 minimum wage or below earners in Pennsylvania, were almost identically

represented relative to their proportion in the total Pennsylvania population.

• Workers having no children of their own under age 18 made up 75 percent of those

earning the minimum wage or less in Pennsylvania. Married parents constituted 14

percent of minimum wage or below workers in Pennsylvania and 11 percent were

single parents. In 2021, almost two out of every three single parents in the

Pennsylvania minimum wage or below population had one child.

• Over 41 percent of those who earned the minimum wage or less were in families with

less than $50,000 per year and 19 percent were in families whose combined income

was less than $30,000 per year. In contrast, almost 43

percent had annual family

incomes of $75,000 or more a year and over 30 percent had annual family incomes

of $100,000 or more per year. See chart on page 15.

Minimum Wage Report 5

Industry and Occupational Distributions

• Pennsylvania workers earning at or below the minimum wage in 2021 were most likely to

be employed in the following industries: food services and drinking places, other

services, and arts, entertainment and recreation. Combined, these industries employed

74 percent of all minimum wage or below earners in 2021 with food services and drinking

places by itself accounting for 50 percent.

• In 2021, 54 percent of hourly wage workers in Pennsylvania earning the minimum wage

or less worked part time. Seventy-six percent of hourly wage workers earning above the

minimum wage worked full time.

• The retail trade industry in Pennsylvania employs many hourly-paid workers and accounted

for a large proportion of workers earning more than the minimum wage (15 percent) and a

higher proportion of those earning the near minimum wage (25 percent). Historically, a

large proportion of workers earning the minimum wage or below worked in retail trade, but

that was not the case in 2021, possibly due to steadily increasing entry-level wage rates in

the industry.

• In 2021, 40 percent of Pennsylvanians who earned the minimum wage or less worked in

food preparation & serving related occupations. Workers earning the minimum wage or

less also were likely to be employed in personal care & service occupations (22 percent)

or transportation & material moving occupations (9 percent).

• Food preparation & serving related occupations accounted for only 21 percent of workers

earning near minimum wage and 7 percent of those earning above the minimum wage.

Recent Historical Comparisons (One and Five Years)

• The number of at or below minimum wage workers fell by 81,600 (56.1 percent) from

2016 to 2021. The absolute decrease in the number of at or below minimum wage

workers from 2016 most likely reflects the relative decrease in the minimum wage

compared to the average wage in Pennsylvania which was exacerbated by the

pandemic’s impact.

• The relative predominance of food services and drinking places in the employment of at

or below minimum wage workers grew from 45.7 percent to 50.4 percent over the five-

year interval even as it decreased on an absolute scale by 34,300 workers (51.6

percent).

• The occupational category whose number and share of minimum wage or less earners

increased the most between 2016 and 2021 was personal care & service occupations

which rose by 15 percentage points. The share of minimum wage or below earners in the

sales and related occupations fell by 9 percentage points. Over the five-year interval,

food preparation & serving related occupations decreased its share by 8 percentage

points to 40 percent as the number of such workers declined by 64 percent. On an

absolute basis, the business & financial operations occupations, computer &

mathematical science occupations and healthcare support occupations also increased.

See chart on page 24.

Minimum Wage Report

6

A Historical Perspective on the Minimum Wage in Relation to Inflation and the Poverty

Threshold

• In 2006, Pennsylvania’s minimum wage was 26 percent of the average wage, a lower

percentage than at any point since the enactment of a federal minimum wage in 1938.

The increase in the minimum wage to $7.25 in 2009 brought the minimum wage up to 34

percent of the average wage. By 2020, Pennsylvania’s minimum wage had fallen to 24

percent of the average wage, a new all-time low.

• Inflation adversely affects the purchasing power of an unchanging minimum wage. In

2009, the last year in which the minimum wage increased, the purchasing power of the

minimum wage was $9.16 (in 2021 dollars) and has been steadily declining since then.

The value of the 2021 minimum wage of $7.25 is projected to fall to $7.12 in 2022 and

$6.98 in 2023 after adjusting for estimated inflation.

• In 2020, the annual income for an individual working full time in Pennsylvania making

the minimum wage ($7.25) was $15,080. This income level exceeded the 2020 Federal

Poverty Threshold for a one-person household ($13,171) but fell short of the poverty

threshold for a two-person ($16,733) and a three-person household ($20,591).

Other States

• During 2021, 30 states had higher minimum wage rates than Pennsylvania ranging from

$8.75 to $14.00 per hour. States’ minimum wage rates are discussed on page 34.

• Since the beginning of 2015, all of Pennsylvania’s neighboring states have had higher

minimum wage rates than Pennsylvania. The 2021 minimum wage rates of Pennsylvania’s

neighboring states ranged from $8.75 to $13.20.

• Michigan, Missouri, Nevada, and New Mexico have scheduled annual increases in

their minimum wages until they reach $12.00. California, Connecticut, Delaware,

Florida, Illinois, Maryland, Massachusetts, New Jersey, New York, Rhode Island,

Vermont, and Virginia have scheduled increases in the coming years to reach a

minimum wage of $15.00. Fifteen states currently have (or will after their scheduled

increases) their minimum wages tied to the Consumer Price Index or other similar

measures to provide automatic increases that keep pace with inflation. Twenty-four

states raised minimum wages in 2021 and with significant overlap 25 states

(including New York) have already done so or are projected to do so in 2022.

• The tipped minimum wage in Pennsylvania has been at $2.83 since 1997. During

2021, 28 states had higher tipped minimum wage rates than Pennsylvania ranging

from $3.26 to $14.00 per hour.

Minimum Wage Report 7

Conclusion

• In 2021, there were an estimated 63,800 Pennsylvania workers earning minimum

wage or less. This is the lowest number of at or below minimum wage workers on

record in this annual report series. It is 10,600 (-14.2 percent) lower than the

previous low of 2020 when it was 74,400, at which time the minimum wage was at

the 2009 level of $7.25 per hour. Workers earning minimum wage or less

represented 2.0 percent of all hourly workers and 1.1 percent of all workers.

• In 2021, 586,000 Pennsylvania workers (18.2 percent) earned above $7.25 per hour

up to $12 per hour and another 671,200 (20.8 percent) earned between $12.01 and

3up to $15 per hour. Almost six of every 10 Pennsylvania hourly workers earned

above $15.00 per hour.

• Pennsylvania earners at or below the minimum wage tended to be from one or more

of the following groups: female, White, 16-to-24-year-olds, high school graduates or

less, or never married.

• Pennsylvanians earning from $7.26 per hour through $12.00 per hour tended to be

from one or more of the following groups: female, White, 16-to-34-year-olds, high

school graduates or more, or never married.

• The number of at or below minimum wage workers fell by 81,600 (56.1 percent) from

2016 to 2021. The absolute decrease in the number of at or below minimum wage

workers from 2016 most likely reflects the relative decrease in the minimum wage

compared to the average wage in Pennsylvania which was exacerbated by the

pandemic’s impact.

• Workers earning at or below the minimum wage were most likely to be employed in

the following industries: food services and drinking places, other services, and arts,

entertainment, & recreation. Part-time workers accounted for more than one half of

hourly workers earning the minimum wage or below.

• Inflation adversely affects the purchasing power of an unchanging minimum wage. In

2009, the last year in which the minimum wage increased, the purchasing power of the

minimum wage was $9.16 (in 2021 dollars) and has been steadily declining since then.

The value of the 2021 minimum wage of $7.25 is projected to fall to $7.12 in 2022 and

$6.98 in 2023 after adjusting for estimated inflation.

• In 2021, 30 states had higher minimum wage rates than Pennsylvania ranging from

$8.75 to $14.00. Since January 1, 2015, all of Pennsylvania’s neighboring states

have minimum wages exceeding Pennsylvania’s rate.

• Sixteen states scheduled increases of their minimum wage rates until it reaches

either $12.00 (4) or $15.00 (12). Fifteen states have (or will have after their

scheduled increase) their minimum wage rates tied to the Consumer Price Index or

other similar measures.

• The tipped minimum wage in Pennsylvania has been at $2.83 since 1997. During

2021, 28 states had higher tipped minimum wage rates than Pennsylvania.

Minimum Wage Report

8

Minimum Wage Report 9

W

AGE DISTRIBUTION OF ALL

HOURLY WORKERS

Minimum Wage Report

10

Pennsylvania and U.S. Employed Wage & Salary Workers Paid Hourly Rates

2021 Average Compared to 2020 Average (numbers of workers in thousands)

Source: U.S. Bureau of the Census, Current Population Survey

Both the U.S. minimum wage and the PA minimum wage were $7.25 during 2020 and 2021.

Totals and differences may not sum due to rounding

.

In 2021, there were an estimated 63,800 Pennsylvania workers earning minimum wage or

less. This is the lowest number of at or below minimum wage workers on record in this annual

report series. It is 10,600 (-14.2 percent) lower than the previous low in 2020 when it was

74,400. The decrease in 2021 was split almost evenly between those earning at and those

earning below the minimum wage. Workers earning minimum wage or less represented 2.0

percent of all hourly workers and 1.1 percent of all workers.

Pennsylvania’s hourly employment increased by 91,300 (+2.9 percent), while its overall

employment increased by 26,200 (+0.4 percent). U.S. hourly employment increased by

2,807,000 (+3.8 percent), while the nation’s overall employment increased by 4,778,000 (+3.2

percent). The proportion of all workers receiving hourly rates increased slightly in both

Pennsylvania and the nation from 2020. In 2021, the percentage of the employed earning

hourly rates was higher in Pennsylvania (55 percent) than in the U.S. overall (50 percent).

Using broader income categories of minimum wage or below, near minimum wage ($7.26 -

$12.00), and above minimum wage, the U.S. and Pennsylvania had similar experiences. As

the labor market was rebounding (in employment and wages) from the pandemic-induced

recession the increase in employment and hourly workers was concentrated in higher wage

workers which contributed to both the absolute and relative changes in the wage distribution

discussed below. The volumes and proportions of hourly workers in the lower wage categories

fell, while increasing for those above $12.00 an hour. Pennsylvania’s share of above $15.00

per hour workers rose by 2.1 percentage points to 59.0 percent, while the nation’s percentage

rose 3.9 percentage points to 60.0 percent. The median wage in Pennsylvania increased from

$16.50 to $17.00, while it rose from $16.32 to $17.00 in the nation. Pennsylvania had a higher

percentage (2.0 percent) of workers at or below the federal minimum wage of $7.25 than the

nation (1.4 percent). In both Pennsylvania and the nation, the largest percentage point decline

amongst the categories was in those earning the near minimum wage.

1.6%

1.4%

1.2%

0.8%

0.6%

0.3%

0.2%

22.1%

18.2%

20.2%

16.4%

18.6%

20.8%

22.1%

22.2%

56.9%

59.0%

56.1%

60.0%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

PA 2020 PA 2021 U.S. 2020 U.S. 2021

Less than $7.25 At $7.25 $7.26 – $12.00 $12.01 – $15.00 More than $15.00

Total, 16 Years

and Over

2020

2021

US PA US PA

Total Paid an

Hourly Rate

73,379 3,130.0 76,186 3,221.3

Total at or below

$7.25

1,119 74.4 1,099 63.8

Less than $7.25 871 50.2 917 45.0

At $7.25 248 24.2 183 18.8

$7.26 – $12.00 14,856 693.1 12,459 586.0

$12.01 – $15.00 16,228 581.7 16,915 671.2

More than

$15.00

41,176 1,780.9 45,712 1,900.3

Median Wage $16.32 $16.50 $17.00 $17.00

Minimum Wage Report 11

C

OMPARISON OF MINIMUM WAGE

OR

BELOW WORKER

CHARACTERISTICS TO OTHER

POPULATIONS

Minimum Wage Report

12

Pennsylvania and U.S. 2021 Averages

Demographic Characteristics of Various Populations

(total numbers of workers in thousands, breakdown by characteristic in percent)

Demographic Characteristics

Minimum Wage or

Below

Above Minimum

Wage

All

Population 16 and Over

Near

Total

Employed

2

PA

1

U.S.

1

PA

U.S.

TOTAL

63.8

1,099

586.0

3,157.5

5,881.3

10,269.5

261,437

Gender

Male

32.8%

36.6%

40.8%

49.4%

51.8%

48.3%

48.4%

Female

67.2%

63.4%

59.2%

50.6%

48.2%

51.7%

51.6%

Race

Black, non-Hispanic

4.7%

12.8%

12.2%

10.9%

9.1%

10.2%

12.1%

Hispanic

2.5%

20.6%

9.5%

8.5%

6.4%

6.6%

17.2%

Other, non-Hispanic

14.1%

9.5%

3.3%

4.3%

4.8%

4.6%

8.8%

White, non-Hispanic

78.6%

57.1%

75.00%

76.2%

79.7%

78.7%

62.0%

Age

16-19

33.9%

17.5%

23.1%

6.7%

4.3%

6.4%

6.3%

20-24

16.7%

27.1%

24.8%

14.3%

9.6%

7.7%

8.0%

25-34

17.6%

24.7%

15.1%

21.9%

16.2%

17.1%

35-44

17.8%

10.7%

9.6%

17.0%

19.5%

14.4%

16.0%

45-54

6.8%

8.7%

6.2%

16.5%

18.7%

14.1%

15.1%

55-64

3.7%

8.0%

12.7%

17.8%

18.8%

16.8%

16.0%

65 and over

3.6%

3.3%

8.3%

5.8%

7.2%

24.4%

21.5%

Education

Less than a high school diploma

24.6%

15.2%

21.6%

8.6%

6.6%

10.9%

12.3%

High school graduates, no college

39.4%

34.4%

36.7%

38.5%

29.2%

34.4%

28.1%

Some college, no degree

16.2%

27.1%

22.2%

18.0%

13.5%

13.1%

16.4%

Associate degree

9.3%

8.7%

7.8%

12.3%

10.1%

8.8%

9.5%

Bachelor's degree or higher

10.5%

14.6%

11.6%

22.6%

40.7%

32.8%

33.7%

Marital Status

Married Spouse Present

13.8%

22.6%

26.0%

42.5%

51.1%

48.1%

48.7%

Marital Status Other

4.0%

11.2%

9.4%

13.9%

13.5%

18.3%

18.9%

Never Married

82.2%

66.2%

64.6%

43.6%

35.4%

33.5%

32.4%

1

Both the U.S. and PA minimum wages were $7.25 during 2021.

2

All Employed includes hourly workers (minimum wage or below and above minimum wage) and workers not earning an hourly wage.

Totals may not sum due to rounding.

Source: U.S. Bureau of the Census, Current Population Survey

Gender

The gender composition of Pennsylvania’s at or below minimum wage workers was most

similar to that of other at or below minimum wage workers in the U.S. and to a lesser extent, to

those in Pennsylvania earning the near minimum wage ($7.26 to $12.00). The overall

population of those 16 years and older in both Pennsylvania and the U.S. was almost evenly

divided between males and females as was the total population of those earning above the

minimum wage in Pennsylvania. The Pennsylvania population of all employed was also almost

evenly divided between males and females, but with a higher proportion of males. In contrast,

females outnumbered males by 67.2 percent to 32.8 percent among at or below minimum

wage workers in Pennsylvania during 2021.

Race

White workers represented a significant majority of Pennsylvania’s at or below minimum wage

workers, as they did for all of Pennsylvania’s other reported wage categories. They were

slightly underrepresented in all of the wage categories depicted relative to their percentage of

all employed.

The second largest group of minimum wage or below workers was Other non-Hispanics,

which is the smallest group among the employed and population of those 16 and over in

Pennsylvania. Due to the group being a very small cohort, estimates of its percentage in

subgroups (e.g., minimum wage or below earners) are subject to large sampling errors and

consequently greater variability over time.

Minimum Wage Report 13

Black workers made up the next highest percentage of all those employed and of the

population in Pennsylvania. Their proportion of at or below minimum wage workers was about

half of their percentage of the employed in Pennsylvania and that of the population 16 and

older.

Nationally among at or below minimum wage workers, Black and Hispanic workers were

overrepresented, while White and Other workers were underrepresented relative to their

overall populations.

Age

Source: U.S. Bureau of the Census, Current Population Survey

About 51 percent of Pennsylvania’s minimum wage or below population was under 25 years

of age, while less than 14 percent of all employed were under 25 years of age. Roughly 42

percent of Pennsylvania’s minimum wage or below workers were between 25 and 54 years of

age, while over 60 percent of the all employed group was in that age range.

Slightly more than 7 percent of minimum wage or below workers were 55 years old or older

compared to 26 percent of the all employed population. The 55-64 and 65 and over age

groups together constituted over 41 percent of the Pennsylvania population who were at least

16 years old.

0%

5%

10%

15%

20%

25%

30%

35%

40%

16-19 20-24 25-34 35-44 45-54 55-64 65 and over

A Comparison of the 2021 Age Distributions of

Five Populations in Pennsylvania

MW and Below Near MW Above MW All Employed Population 16 and Over

Minimum Wage Report

14

Education

In general, at or below minimum wage workers in Pennsylvania tended to be less educated

than other employed workers in the state. Those with a high school diploma or less

accounted for 64 percent of those earning the minimum wage or less in 2021 as compared to

36 percent for all employed. At the other end of the education spectrum, less than 20 percent

of minimum wage or below workers had at least an associate’s degree while the percentage

of all employed with at least an associate’s degree was close to 51 percent. The difference

regarding bachelor’s degrees was more pronounced. Less than 11 percent of those earning

the minimum wage or less had bachelor’s degrees compared to almost 42 percent among all

employed in Pennsylvania.

Marital Status

Source: U.S. Bureau of the Census, Current Population Survey

A sizable majority (82.2 percent) of minimum wage earners had never been married. The

remainder was split between those who were married with spouse present at 13.8 percent

and those with a marital status of other (divorced, separated, or widowed) at 4.0 percent.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

PA Min Wage US Min Wage PA Near Min

Wage

PA Above Min

Wage

PA All Employed PA POP 16+ US POP 16+

Distributions of Marital Status:

Various Populations 2021

Never Married Marital Status Other Married Spouse Present

Minimum Wage Report 15

Family Status and Family Income of Workers Paid Hourly Rates:

2021 Selected Groups in Pennsylvania and the U.S.

(numbers of workers in thousands)

Characteristics

At or Below the Minimum

Wage

Above the Minimum Wage

Total Hourly

Workers

Near

Total

PA

1

U.S.

1

PA

U.S.

TOTAL 63.8 1,099 586.0 3,157.5 76,186

Family Status

2

No Children (Single or Married) 75% 78% 86% 75% 72%

Married Parent 14% 11% 6% 16% 19%

Single Parent 11% 11% 8% 8% 9%

1 child 7% 6% 5% 5% 5%

2 children

2%

1%

2%

3%

3 children

2% 1% 1% 1% 1%

4 or more children 0% 0% 0% 0% 0%

Family Annual Income

$9,999 or less

6%

5%

2%

3%

$10,000 to $19,999

2% 8% 5% 4% 5%

$20,000 to $29,999 11% 11% 9% 6% 8%

$30,000 to $39,999 7% 12% 10% 9% 11%

$40,000 to $49,999

15%

10%

12%

10%

9%

$50,000 to $59,999

9% 7% 11% 10% 9%

$60,000 To $74,999 8% 12% 10% 12% 13%

$75,000 To $99,999 12% 13% 11% 15% 15%

$100,000 To $149,999

19%

12%

16%

19%

16%

$150,000 and Over

11%

10%

14%

13%

12%

1

PA and U.S. minimum wages in 2021 were $7.25.

2

Classification of an individual as a parent requires having at least one own child under the age of 18. All references to children also refer to own children under the age of 18.

Totals in the table are rounded to the nearest percent and may differ from those in the text and may not sum correctly due to rounding.

Percentages less than one half of one percent were rounded to 0 percent.

Source: U.S. Bureau of the Census, Current Population Survey

Workers having no children made up 75 percent of those earning the minimum wage or less

in Pennsylvania. Among those earning near the minimum wage in Pennsylvania, married

parents constituted a smaller percentage (6 percent) than in the other U.S. and Pennsylvania

populations depicted above. The family status of those earning near the minimum wage in

Pennsylvania was slightly more like the nation’s at or below minimum wage population than

that of the Pennsylvania’s minimum wage or below population.

In 2021, almost two out of every three single parents in the Pennsylvania minimum wage or

below population had one child. The remaining percentage was split evenly between those

having two children and those with three children.

The family income of those who earned the minimum wage or less in Pennsylvania varied

greatly. Slightly more than 41 percent of such workers were in families whose combined

income was less than $50,000 per year and 19 percent were in families with less than

$30,000 per year. In contrast, almost 43 percent had annual family incomes of $75,000 or

more a year and over 30 percent had annual family incomes of $100,000 or more per year.

The family income distribution of near minimum wage workers in Pennsylvania was similar to

that of both the U.S. and Pennsylvania minimum wage or below populations with fewer in

families whose combined income was less than $50,000 per year and more in households

with annual family incomes of $150,000 or more per year.

Minimum Wage Report

16

Minimum Wage Report 17

I

NDUSTRY AND OCCUPATIONAL

DISTRIBUTIONS

Minimum Wage Report

18

Source: U.S. Bureau of the Census, Current Population Survey

PA and U.S. minimum wages in 2021 were both at $7.25.

In Pennsylvania, workers earning at or below the minimum wage were most likely to be

employed in the following industries: food services and drinking places, other services, and

arts, entertainment, & recreation. Combined, these industries employed 74 percent of all

minimum wage earners in 2021.

Fifty percent of minimum wage or below earners worked at food services and drinking places.

In contrast, only 8 percent of those earning above minimum wage worked in this industry.

Workers in this industry may earn above the minimum wage when tips are included; however,

they are counted as below minimum wage earners since the measured wage excludes tips.

As the number of minimum wage or below workers has declined, minimum wage workers were

represented in fewer industry groups. In 2021, minimum wage workers were present in slightly

less than half of the industry groups shown above.

The retail trade industry in Pennsylvania employs many hourly-paid workers and accounted for

a large proportion of workers earning more than the minimum wage (15 percent) and a higher

proportion of those earning the near minimum wage (25 percent). Historically, a large

proportion of workers earning the minimum wage or below were in retail trade, but that was

not the case in 2021, possibly due to steadily increasing entry-level wage rates in the industry.

Retail trade, in combination with manufacturing and non-hospital health care services,

accounted for 38 percent of all those earning above the minimum wage in 2021.

More detailed information on these industry distributions as well as that of the near minimum

wage population can be found in the Appendix on page 40.

0% 10% 20% 30% 40% 50% 60% 70%

Wholesale trade

Transportation and utilities

Social assistance

Retail trade

Public administration

Professional and business services

Other services

Mining

Manufacturing

Information

Hospitals

Health care services, except hospitals

Food services and drinking places

Financial activities

Educational services

Construction

Arts, entertainment, and recreation

Agriculture, forestry, fishing, and hunting

Accommodation

A Comparison of Industry Distributions in 2021 of Various Populations:

Pennsylvania and the United States

PA Above Minimum Wage

U.S. Minimum Wage or Below

PA Minimum Wage or Below

Minimum Wage Report 19

Source: U.S. Bureau of the Census, Current Population Survey

PA and U.S. minimum wages in 2021 were both at $7.25.

Any worker who works at least 35 hours for pay (aggregate) in the survey week is classified by

the Census as full time. This is irrespective of whether those hours were worked at one or

more jobs. Conversely, any worker whose cumulative hours worked in the survey week was

between one and 34 hours is classified as part time.

In 2021, slightly less than one half of at or below minimum wage earners in Pennsylvania

worked full time. More than three out of four of all hourly workers earning above the minimum

wage in Pennsylvania worked full time. The ratio of full-time to part-time minimum wage or

below workers was closest to that of the nation’s minimum wage or below population, while

Pennsylvania’s near minimum wage workers had the lowest ratio (73 percent).

46.2%

49.0%

42.2%

75.6%

53.8%

51.0%

57.8%

24.4%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

PA Minimum Wage and Below U.S. Minimum Wage and Below PA Near Minimum Wage PA Above Minimum Wage

Distribution of Workers Between Full Time and Part Time:

2021 Various Populations

Full-time Part-time

Minimum Wage Report

20

Both the PA and U.S. minimum wages were $7.25 in 2021.

Source: U.S. Bureau of the Census, Current Population Survey

In 2021, 40 percent of Pennsylvanians who earned the minimum wage or less worked in food

preparation & serving related occupations, 22 percent were employed in personal care & service

occupations and 9 percent in transportation & material moving occupations. Minimum wage or

below workers in the U.S. were more concentrated in the food preparation & serving

occupational group than those of Pennsylvania (59 percent compared with 40 percent) but had

a more diverse distribution otherwise.

The distribution of occupations for Pennsylvanians who earned above the minimum wage was

more diverse than those who earned the minimum wage or less. Their top four occupational

groups were office and administrative support (14 percent), transportation & material moving

(13 percent), production (9 percent), and sales & related (8 percent). Food preparation &

serving related occupations accounted for only 21 percent of workers earning near minimum

wage and 7 percent of those earning above the minimum wage. Workers earning above the

minimum wage were represented in all 22 of the listed occupational groups, while only 41

percent of them had representation from the at or below minimum wage cohort.

More detailed information on these occupational distributions as well as that of the near

minimum wage population can be found in the Appendix on page 41.

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 55% 60% 65%

Transportation & Material Moving

Sales & Related

Protective Service

Production

Personal Care & Service

Office & Administrative Support

Management

Life, Physical & Social Service

Legal

Installation, Maintenance & Repair

Healthcare Support

Healthcare Practitioner & Technical

Food Preparation & Serving Related

Farming, Fishing & Forestry

Education, Training & Library

Construction & Extraction

Computer & Mathematical Science

Community & Social Service

Business & Financial Operations

Building and Grounds Cleaning & Maintenance

Arts, Design, Entertainment, Sports & Media

Architecture & Engineering

2021 Occupational Group Distributions: Pennsylvania’s Minimum Wage and Below

Population Compared to its Above Minimum Wage Population and the Minimum Wage

and Below Population of the U.S.

PA Above Minimum Wage

U.S. Minimum Wage and Below

PA Minimum Wage and Below

Minimum Wage Report 21

R

ECENT HISTORICAL COMPARISONS

(ONE AND FIVE YEARS)

Minimum Wage Report

22

Pennsylvania

Demographic Characteristics of Workers Paid Hourly Rates at or Below the Minimum Wage

Annual Average 2021 Compared to Annual Average 2020 and 2016

(total numbers of workers in thousands, all other numbers in percent)

Demographic Characteristics

2016 2020 2021

Percentage

Point Change

PA

1

PA

2

PA

2

2016 to 2021 2020 to 2021

TOTAL

145.4

74.4

63.8

-

Gender

Male

41%

23%

33%

-8%

10%

Female

59%

77%

67%

8%

-10%

Race

Black, non-Hispanic

9%

11%

5%

-4%

-6%

Hispanic

5%

6%

3%

-2%

-3%

Other, non-Hispanic

8%

15%

14%

7%

-1%

White, non-Hispanic

79%

68%

79%

0%

10%

Age

16-19

22%

27%

34%

12%

7%

20-24

29%

43%

17%

-12%

-26%

25-34

13%

14%

18%

4%

35-44

9%

7%

18%

9%

11%

45-54

11%

4%

7%

-4%

2%

55-64

12%

2%

4%

-8%

2%

65 and over

5%

3%

4%

-1%

1%

Education

Less than a high school diploma

17%

14%

25%

8%

11%

High school graduates, no college

41%

40%

39%

-1%

Some college, no degree

34%

35%

16%

-18%

-19%

Associate degree

7%

6%

9%

3%

4%

Bachelor's degree or higher

2%

6%

11%

9%

5%

Marital Status

Married Spouse Present

17%

11%

14%

-3%

3%

Marital Status Other

13%

3%

4%

-9%

1%

Never Married

70%

86%

82%

12%

-4%

1

The minimum wage in 2016, 2020, and 2021 was $7.25 and was unchanged during those years.

Totals and changes may not sum due to rounding.

Source: U.S. Bureau of the Census: Current Population Survey

From 2016 through 2021, the minimum wage in Pennsylvania was constant at $7.25, having last

been increased in July 2009. During that period, the number of minimum wage or below workers in

Pennsylvania dramatically declined by 81,600 or 56.1 percent. Labor market conditions from 2016

through 2019 improved in Pennsylvania as evidenced by the growth in employment as well as by

an increase in average wages. The pandemic and the public response to it in 2020 caused a steep

decline in total and hourly employment (particularly in March and April), while average wages

increased as many of the jobs lost were low wage. The employment recovery which began in

2020 continued in 2021 and labor shortages (still pandemic related) led to further increases in

wages. The increased wages led to the continued trend of fewer minimum wage or below workers

as employment remained below its pre-pandemic level.

In 2021, males comprised 33 percent of minimum wage or below workers. This represented a

decrease of 8 percentage points from 2016 and an increase of 10 percentage point from 2020.

From 2016 to 2021, the proportion of Pennsylvania’s minimum wage or below earners under 25

years of age was unchanged, while those over 44 decreased by 13 percentage points.

Over this period, there was also a shift in the composition of minimum wage or below workers

towards Other non-Hispanics and away from non-Hispanic Blacks and Hispanics.

The changes from 2020 to 2021 were generally more volatile than those from five years ago due to

the drastic pandemic-induced changes in 2020. The small sample of minimum wage or below

workers may also explain some of the recent volatility in some of the demographic characteristics.

Minimum Wage Report 23

1

The minimum wage was constant at $7.25 from 2016 through 2021.

Source: U.S. Bureau of the Census: Current Population Survey

In 2016 and 2020, workers earning at or below the minimum wage were most likely to be

employed in the industries of food services and drinking places or retail trade. In 2021 food

services and drinking places still had the largest number of workers earning at or below the

minimum wage while retail trade dropped to zero such workers. The number of workers earning

minimum wage or below in retail trade has been falling for a while and dropped by 38 percent

from 2016 to 2020. The further decrease in 2021 may be due to steadily increasing beginning

wage rates in that industry, particularly among large employers. The relative predominance of

food services and drinking places grew from 45.7 percent to 50.4 percent over the five-year

interval even as it decreased on an absolute scale by 34,300 workers (51.6 percent).

The decrease in workers earning minimum wage or below from 2016 to 2021 has been

accompanied by fewer industry groups having representation of such workers. In 2016 mining,

public administration, and wholesale trade were the only three industry groups without

representation by such workers. In 2021 they were joined by accommodation, construction,

information, manufacturing, retail trade, social assistance, and transportation & utilities. The

number of minimum wage or below workers in non-hospital health care services decreased by

73.6 percent over the five-year interval, leading to their relative share declining by 1.5

percentage points. The number of minimum wage or below workers in professional and

business services fell by 66.9 percent resulting in its share falling by 0.9 percentage points. The

only two industry groups that experienced growth in their absolute number of minimum wage or

below workers over the five-year period were educational services and hospitals.

Between 2016 and 2021, the proportion of hourly workers earning the minimum wage or less

who worked part time decreased from 71.6 percent to 53.8 percent as their absolute number fell

by 67.0 percent.

0% 10% 20% 30% 40% 50% 60%

Wholesale trade

Transportation and utilities

Social assistance

Retail trade

Public administration

Professional and business services

Other services

Mining

Manufacturing

Information

Hospitals

Health care services, except hospitals

Food services and drinking places

Financial activities

Educational services

Construction

Arts, entertainment, and recreation

Agriculture, forestry, fishing, and hunting

Accommodation

A Comparison of Industry Distributions of Pennsylvania’s Workers Earning

At or Below the Minimum Wage: 2021 vs. 2020 and 2016

1

2016

2020

2021

Minimum Wage Report

24

Occupational Characteristics of Wage & Salary Workers Paid Hourly Rates at or Below the Minimum Wage

Pennsylvania Annual Average 2021 Compared to Annual Average 2020 and 2016

(total numbers of workers in thousands, all others are in percent)

Occupation

2016 2020 2021

Percentage

Point Change

PA

1

PA

1

PA

1

2016 to 2021

2020 to 2021

TOTAL

145.4

74.4

63.8

-

Architecture & Engineering

0%

Arts, Design, Entertainment, Sports & Media

0%

Building and Grounds Cleaning & Maintenance

5%

3%

6%

1%

3%

Business & Financial Operations

0%

2%

Community & Social Service

0%

Computer & Mathematical Science

0%

4%

Construction & Extraction

0%

Education, Training & Library

1%

2%

0%

-1%

-2%

Farming, Fishing & Forestry

1%

0%

-1%

0%

Food Preparation & Serving Related

48%

62%

40%

-8%

-22%

Healthcare Practitioner & Technical

1%

0%

-1%

0%

Healthcare Support

3%

2%

7%

4%

5%

Installation, Maintenance & Repair

0%

Legal

0%

Life, Physical & Social Service

0%

Management

1%

2%

0%

-1%

-2%

Office & Administrative Support

9%

3%

7%

-2%

4%

Personal Care & Service

7%

2%

22%

15%

19%

Production

3%

5%

0%

-3%

-5%

Protective Service

0%

Sales & Related

12%

15%

3%

-9%

-12%

Transportation & Material Moving

9%

5%

9%

0%

4%

1

The PA minimum wage in 2016, 2020, and 2021 was $7.25.

Totals and changes may not add up due to rounding.

Source: U.S. Bureau of the Census, Current Population Survey

In 2016, almost half (48 percent) of Pennsylvanians who earned the minimum wage or less

worked in food preparation & serving related occupations. Another 12 percent of

Pennsylvanians who earned the minimum wage or less were employed in sales & related

occupations. From 2016 to 2021, the proportion of Pennsylvania minimum wage or below

earners who worked in food preparation & serving related occupations decreased by 8

percentage points as it declined by 64 percent on an absolute level. Sales & related occupations

decreased by 9 percentage points, which was the largest relative decrease.

The occupational category whose percentage of minimum wage or below earners increased the

most over the five-year interval was personal care & service occupations which rose by 15

percentage points. This occupational group also had the largest absolute increase of such

workers. On an absolute basis, the business & financial operations occupations, computer &

mathematical science occupations and healthcare support occupations also increased.

The relative changes from 2020 to 2021 were generally larger than the changes over the five-

year period. The large decrease in the number of minimum wage and below workers caused by

the pandemic in 2020 caused dramatic changes in the occupational distribution of such workers

in 2020. Consequently, the changes from 2020 to 2021 as the labor market started to rebound

often retraced some of the changes that occurred from 2019 to 2020. In addition to the

differential impact of the pandemic on various occupational groups, such volatility may also be

due to small sample sizes caused by the large decrease in the total number of workers earning

the minimum wage or below.

Minimum Wage Report 25

Pennsylvania Family Status and Family Income Characteristics of Workers

Paid Hourly Rates At or Below the Minimum Wage

Comparison of 2021, 2020, and 2016

Characteristic

2016 2020 2021

Percentage

Point Change

PA

1

PA

1

PA

1

2016 to 2021

2020 to 2021

TOTAL (in thousands)

145.4

74.4

63.8

-

Family Status

2

(in Percent)

No Children (Single or Married)

85%

84%

75%

-9%

Married Parent

9%

6%

14%

5%

8%

Single Parent

7%

10%

11%

4%

1%

1 child

4%

5%

7%

3%

2%

2 children

3%

2%

-1%

-2%

3 children

0%

2%

1%

4 or more children

0%

Family Annual Income (in Percent)

$9,999 or less

16%

4%

6%

-9%

3%

$10,000 to $19,999

11%

2%

-10%

-9%

$20,000 to $29,999

11%

0%

$30,000 to $39,999

12%

7%

-5%

$40,000 to $49,999

8%

4%

15%

7%

12%

$50,000 to $59,999

7%

5%

9%

2%

3%

$60,000 To $74,999

11%

19%

8%

-3%

-12%

$75,000 To $99,999

7%

12%

5%

0%

$100,000 To $149,999

11%

15%

19%

8%

4%

$150,000 and Over

5%

7%

11%

6%

5%

1

The PA minimum wage in 2016, 2020, and 2021 was $7.25.

2

Classification of an individual as a parent requires having at least one own child under the age of 18. All references to children also refer to own children under the age of 18.

Totals in the table are rounded to the nearest percent and may differ from those in the text and may not sum correctly due to rounding.

Source: U.S. Bureau of the Census, Current Population Survey

The biggest change in family composition of minimum wage or below workers from 2016 to

2021 was the decrease (9 percentage points) of those having no children. From 2016 to 2020,

there was virtually no change in the percentage of those without children, while the change

occurred from 2020 to 2021. Most of the change from 2020 was made up by an increase of 8

percentage points in married parents. The year-to-year changes in the last few years have

exhibited greater volatility than in the past. This is most likely due to smaller sample sizes which

was exacerbated by the impact of the pandemic as discussed below.

On a relative basis, the distribution of family income of minimum wage and below workers

shifted from the lower incomes and towards the higher incomes over the last five years. From

2016 to 2021, the percentage of minimum wage or below workers whose family income was

less than $30,000 decreased by 20 percentage points to 19 percent, a 7-percentage point

decrease from 2020. At the same time, the percentage of such workers with family income of at

least $100,000 was 31 percent which was 14 percentage points higher than in 2016 and 9

percentage points higher than in 2020. The lowest family income cohort (with family income

under $10,000) fell by 9 percentage points compared to five years prior but increased by 3

percentage points compared to 2020.

Given the relatively small CPS sample size of total minimum wage or below workers, the smaller

subsamples for some of the characteristics above can lead to volatility in making comparisons

over time. In 2020, the pandemic caused a dramatic decline in the employment of low wage

workers which was concentrated in certain industries, occupations, and demographic groups. In

2021 employment continued to rebound (but not to pre-pandemic levels) as wage rates

increased further due to labor shortages. These increases were more pronounced in low wage

jobs. Therefore, it is difficult to determine whether these results are simply statistical anomalies

due to small sample sizes or caused by the aftermath of pandemic induced changes.

Minimum Wage Report

26

Minimum Wage Report 27

A

HISTORICAL PERSPECTIVE ON

THE

MINIMUM WAGE IN RELATION

TO

INFLATION AND THE POVERTY

THRESHOLD

Minimum Wage Report

28

The Average Wage forecast was based on its ten-year arithmetic average.

The minimum wage in 2020 was $7.25.

The original level of the minimum wage was set in 1938 at 25 cents which was 50 percent of the

national average manufacturing wage. According to Jonathan Grossman, a Department of

Labor historian, “…, The act applied only to interstate commerce and to accommodate various

interests, exemption after exemption was granted. A ‘guesstimate’

1

is that one fifth of the

American labor force,…were covered by the FLSA.”

2

Over time, as the coverage of the

minimum wage expanded and manufacturing employment declined as a percentage of total

employment, the statewide average wage replaced the average manufacturing wage as the

relevant comparison wage, as shown in the above chart. Adjusted for projected wage inflation

using its 10-year average, 50 percent of the average wage was $14.85 in 2020. It is projected to

rise to $15.31 in 2021, $15.80 in 2022, and $16.29 in 2023.

A gradual decline in the minimum wage as a percentage of the Pennsylvania’s average wage

began in 1968. By 2006, Pennsylvania’s minimum wage was 26 percent of the average wage.

This was the all-time low since this information first was documented in 1938 through 2019.

The increase in the minimum wage to $7.25 in July 2009 brought the minimum wage up to 34

percent of the average wage. In 2020, Pennsylvania’s minimum wage was 24 percent of the

average wage, a new all-time low. If the minimum wage stays at its current level and the

average wage grows at its projected 10-year average rate, the minimum wage will continue to

drop to 23 percent of the average Pennsylvania wage by 2022 and to 22 percent by 2023.

1

Data on the estimated number covered was reported in The Twenty-Seventh Annual Report of the Secretary of Labor (1939), as of September

1938 (p.198). The section on coverage of the act begins, “It will not be possible to prepare completely accurate estimates of the number of

employees who are covered by the act …” Later it states that the BLS estimated the coverage six months later and it was 1.45 million (18%),

higher. Furthermore, it was well known that inter census labor force numbers prior to 1940 (when the CPS (predecessor) began), were not

comparable (conceptually and by the fact that they included people 14 years and older) and that data on unemployment may not be accurate.

These facts may have led Grossman to characterize the ratio as a ‘guesstimate.’

2

Grossman, Jonathan, “Fair Labor Standards Act of 1938: maximum struggle for a minimum wage,” Monthly Labor Review, June 1978 p. 29.

Grossman begins that paragraph with, “A major problem with the FLSA was its limited coverage.” This attitude may explain why he compared

coverage with the labor force rather than employment, particularly in a year when the unemployment rate was 19%. That would make the cover

ratio lower. Not all employees in industries engaged in or producing goods for interstate commerce were covered. Among the exemptions were

interstate retailing enterprises, non-railroad transportation workers, and agriculture.

0

10

20

30

40

50

60

1938

1941

1944

1947

1950

1953

1956

1959

1962

1965

1968

1971

1974

1977

1980

1983

1986

1989

1992

1995

1998

2001

2004

2007

2010

2013

2016

2019

2022

Percent

Pennsylvania's Minimum Wage as a Percent of Pennsylvania's Average

Wage: 1938-2023

Forecast

Minimum Wage Report 29

1

Indexed to 2021 dollars

The inflation forecast was based on its 10-year arithmetic average applied to the minimum wage.

The minimum wage in 2021 was $7.25.

Inflation adversely affects the purchasing power of an unchanging minimum wage. The inflation

adjusted or real minimum wage increases when the percentage increase in the nominal

minimum wage exceeds the (price) inflation rate and decreases when the reverse is true. All the

peaks in the graph above correspond to years in which the nominal minimum wage was

increased. In the remaining years the minimum wage was unchanged, but the real minimum

wage fell as prices rose. Similarly, if the nominal minimum wage remains at $7.25, the value of

the minimum wage as adjusted for projected inflation is estimated to fall to $7.12 in 2022 and

$6.98 in 2023.

The 1938 minimum wage of $0.25 would have been equivalent in purchasing power to $4.80 in

2021 dollars. The minimum wage was raised to $0.30 in 1939 and to $0.40 in 1945 causing its

purchasing power to increase. However, the post-war inflation that followed caused the

purchasing power of the minimum wage (still $0.40) to fall to its all-time low of $4.50 in 1948.

In 1968, the year in which the purchasing power of the minimum wage peaked, the then-current

nominal minimum wage of $1.60 was equivalent to $12.46 in 2021 dollars. Pennsylvania’s

minimum wage remained unchanged from September of 1997 to the end of 2006, while prices

rose considerably. As the above graph indicates, in 2006 the purchasing power of the minimum

wage was less than at any time since the 1950s. In 2009, the last year in which the minimum

wage increased, the purchasing power of the minimum wage was $9.16 (in 2021 dollars) and

has been steadily declining since then.

0.00

2.00

4.00

6.00

8.00

10.00

12.00

14.00

1938

1941

1944

1947

1950

1953

1956

1959

1962

1965

1968

1971

1974

1977

1980

1983

1986

1989

1992

1995

1998

2001

2004

2007

2010

2013

2016

2019

2022

Dollars

Pennsylvania

Real (Inflation Adjusted) and Nominal Minimum Wage Rates

1

1938-2023

Real Minimum Wage Nominal Minimum Wage

Forecast

Minimum Wage Report

30

1

Weighted average threshold (there are slight variations based on the breakdown between adults and children in the household)

The inflation forecast was based on its 10-year average applied to the poverty threshold.

Source: U.S. Bureau of the Census

The Census annually sets poverty thresholds for families that vary by family size and the ages

of its members. Each threshold is a monetary sum that is compared to the family’s income to

determine the poverty status of all the members of that family

3

. Family income is pre-tax and

includes earnings, unemployment compensation, public assistance, and a variety of other

unearned income and transfer payments, but excludes capital gains, noncash benefits (e.g.,

food stamps), and tax credits (e.g., Earned Income Tax Credit or EITC). To provide perspective

on the relation between the minimum wage and poverty, hypothetical examples are constructed

and illustrated below and on the following page.

The 2006 Federal Poverty Threshold (see glossary) for a two-person household was $13,167

and the annual income for an individual working full time

4

at the minimum wage (then $5.15)

was $10,712 or 81 percent of the poverty threshold. The two 2007 increases in the minimum

wage (cumulatively to $7.15) raised the corresponding annual income at year end to $14,872

which was almost 110% of the poverty threshold.

In 2020, the annual income for an individual in Pennsylvania making the minimum wage ($7.25)

was $15,080 or 90.1 percent of the 2020 Federal Poverty Threshold for a two-person household

($16,733).

3

Poverty thresholds are used mainly for statistical purposes. Poverty guidelines, which are a simplification of poverty thresholds, are issued by

the U.S. Department of Health and Human Services for use for administrative purposes, e.g., determining eligibility for federal programs. Go to

this link for more information: https://aspe.hhs.gov/topics/poverty-economic-mobility/poverty-guidelines/further-resources-poverty-measurement-

poverty-lines-their-history.

4

Full time in this context means working 52 weeks per year and 40 hours per week.

60%

70%

80%

90%

100%

110%

120%

130%

140%

150%

160%

1959

1961

1963

1965

1967

1969

1971

1973

1975

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

2011

2013

2015

2017

2019

2021

2023

Pennsylvania

Minimum Wage as Percent of Federal Poverty Threshold, 2 Persons

1

1959-2023

Forecast

Minimum Wage Report 31

1

Weighted average threshold (there are slight variations based on the breakdown between adults and children in the household)

Source: U.S. Bureau of the Census

A person working full time at the minimum wage of $7.25 per hour earned $15,080

(represented by the bold line on the graph) during 2020. This income exceeded the 2020

Federal Poverty Threshold for a one-person household ($13,171). However, it fell short of the

poverty threshold for two-person ($16,733) and three-person households ($20,591).

A single, two-children parent working full time at $7.25 per hour would earn wages below the

applicable poverty threshold. However, a two-parent, two-child family with both parents working

full time at the minimum wage would earn $30,160 and would exceed the poverty threshold for

a four-person household ($26,496).

5

Families of minimum wage or below workers who are below the poverty threshold may be

eligible to participate in state and federal government programs designed to assist the poor. A

description of some of these major programs is found in the Appendix on page 42.

5

These examples are for illustration purposes only and are not representative of the majority of minimum wage earners, although they may

reflect the situation of some families. As pointed out earlier, most minimum wage earners work fewer than 35 hours a week and would earn less

than $15,080 per year.

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000

1 2 3 4 5 6

Annual Income

People in Family

2020 Federal Poverty Threshold by Family Size

1

Compared with

Pennsylvania Minimum Wage Level

Annual income of 1 full-time worker

earning $7.25 Minimum Wage

Annual income of 2 full-time workers

earning $7.25 Minimum Wage

Minimum Wage Report

32

Minimum Wage Report 33

O

THER STATES

Minimum Wage Report

34

Minimum Wage Rates by State

Area 2020 2021 2022

Change

2020-

2021

Change

2021-

2022

Area 2020 2021 2022

Change

2020-

2021

Change

2021-

2022

Federal

$7.25

-

Federal

$7.25

-

Alabama

$7.25

-

Montana

1

$8.65

$8.75

$9.20

$0.10

$0.45

Alaska

1

$10.19

$10.34

$0.15

-

Nebraska

$9.00

-

Arizona

1

$12.00

$12.15

$12.80

$0.15

$0.65

Nevada

$9.00

$9.75

$10.50

$0.75

Arkansas

$10.00

$11.00

$1.00

-

New Hampshire

$7.25

-

California

$13.00

$14.00

$15.00

$1.00

New Jersey

1

$11.00

$12.00

$13.00

$1.00

Colorado

1

$12.00

$12.32

$12.56

$0.32

$0.24

New Mexico

$9.00

$10.50

$11.50

$1.50

$1.00

Connecticut

$12.00

$13.00

$14.00

$1.00

New York

1

$12.50

$13.20

TBD

$0.70

TBD

Delaware

$9.25

$10.50

-

$1.25

North Carolina

$7.25

-

Florida

1

$8.56

$10.00

$11.00

$1.44

$1.00

North Dakota

$7.25

-

Georgia

$7.25

-

Ohio

1

$8.70

$8.80

$9.30

$0.10

$0.50

Hawaii

$10.10

-

Oklahoma

$7.25

-

Idaho

$7.25

-

Oregon

1

$12.00

$12.75

$13.50

$0.75

Illinois

$10.00

$11.00

$12.00

$1.00

Pennsylvania

$7.25

-

Indiana

$7.25

-

Rhode Island

$11.50

$12.25

-

$0.75

Iowa

$7.25

-

South Carolina

$7.25

-

Kansas

$7.25

-

South Dakota

1

$9.30

$9.45

$9.95

$0.15

$0.50

Kentucky

$7.25

-

Tennessee

$7.25

-

Louisiana

$7.25

-

Texas

$7.25

-

Maine

1

$12.00

$12.15

$12.75

$0.15

$0.60

Utah

$7.25

-

Maryland

$11.00

$11.75

$12.50

$0.75

Vermont

1

$10.96

$11.75

$12.55

$0.79

$0.80

Massachusetts

$12.75

$13.50

$14.25

$0.75

Virginia

$7.25

$9.50

$11.00

$2.25

$1.50

Michigan

$9.65

$9.87

-

$0.22

Washington

1

$13.50

$13.69

$14.49

$0.19

$0.80

Minnesota

1

$10.00

$10.08

$10.33

$0.08

$0.25

West Virginia

$8.75

-

Mississippi

$7.25

-

Wisconsin

$7.25

-

Missouri

1

$9.45

$10.30

$11.15

$0.85

Wyoming

$7.25

-

1

Minimum wage tied to inflation rate – Consumer Price Index (CPI) or similar.

The data for 2022 (which includes enacted, but not yet effective statutory increases) was accurate as of January 10, 2022. Some states have multiple minimum wage

rates due to type of work or number of employees, while others are based on geography. The highest rate is used above for non-geographic rates, while for

geographic ones those applicable to most of the state are used. All data are as of year-end.

Data for the Federal government and states that abut Pennsylvania are shaded in gray.

Source: U.S. Department of Labor and state websites

On May 1, 2021, Virginia increased its minimum wage rate by $2.25 to $9.50 and became the

thirtieth state with a higher minimum wage than Pennsylvania. Prior to that increase, the number

and composition of the states that had minimum wages in excess of Pennsylvania’s had remained

unchanged since 2015. During 2021, the minimum wage rates that exceeded Pennsylvania’s

ranged from $8.75 to $14.00. All of Pennsylvania’s neighboring states have had minimum wages

that exceeded Pennsylvania’s since the beginning of 2015. In 2021 they ranged from $8.75 to

$13.20 and for 2022 they are projected to range from $8.75 to $13.00 plus a TBD inflation

adjustment by New York, which is already at $13.20.

Michigan, Missouri, Nevada, and New Mexico have scheduled annual increases in their minimum

wages until they reach $12.00. California, Connecticut, Delaware, Florida, Illinois, Maryland,

Massachusetts, New Jersey, New York, Rhode Island, Vermont, and Virginia have scheduled

increases in the coming years to reach a minimum wage of $15.00. Fifteen states currently have

(or will after their scheduled increases) their minimum wages tied to the Consumer Price Index or

other similar measures to provide automatic increases that keep pace with inflation. Some states

have provisions that forgo increases if the unemployment rate is high (e.g., Michigan in 2021) or

when the CPI falls (e.g., Alaska for 2022). New York’s inflation adjustment will be determined

later this year. Twenty-four states raised minimum wages in 2021 and with significant overlap 25

states (including New York) have already done so or are projected to do so in 2022.

Minimum Wage Report 35

Tipped Minimum Wage Rates by State

Area 2020 2021 2022

Change

2020-

2021

Change

2021-

2022

Area 2020 2021 2022

Change

2020-

2021

Change

2021-

2022

Federal

$2.13

-

Federal

$2.13

-

Alabama

$2.13

-

Montana

1

$8.65

$8.75

$9.20

$0.10

$0.45

Alaska

1

$10.19

$10.34

$0.15

-

Nebraska

$2.13

-

Arizona

$9.00

$9.15

$9.80

$0.15

$0.65

Nevada

1

$9.00

$9.75

$10.50

$0.75

Arkansas

$2.63

-

New Hampshire

$3.26

-

California

1

$13.00

$14.00

$15.00

$1.00

New Jersey

$3.13

$4.13

$5.13

$1.00

Colorado

$8.98

$9.30

$9.54

$0.32

$0.24

New Mexico

$2.35

$2.55

$2.80

$0.20

$0.25

Connecticut

$6.38

-

New York

$8.35

$8.80

$0.45

-

Delaware

$2.23

-

North Carolina

$2.13

-

Florida

$5.54

$6.98

$7.98

$1.44

$1.00

North Dakota

$4.86

-

Georgia

$2.13

-

Ohio

$4.35

$4.40

$4.65

$0.05

$0.25

Hawaii

1

$10.10

-

Oklahoma

2

$2.13

-

Idaho

$3.35

-

Oregon

1

$12.00

$12.75

$13.50

$0.75

Illinois

$6.00

$6.60

$7.20

$0.60

Pennsylvania

$2.83

-

Indiana

$2.13

-

Rhode Island

$3.89

-

Iowa

$4.35

-

South Carolina

$2.13

-

Kansas

$2.13

-

South Dakota

$4.65

$4.73

$4.98

$0.08

-

$0.25

Kentucky

$2.13

-

Tennessee

$2.13

-

Louisiana

$2.13

-

Texas

$2.13

-

Maine

$6.00

$6.08

$6.38

$0.08

$0.30

Utah

$2.13

-

Maryland

$3.63

-

Vermont

$5.48

$5.88

$6.28

$0.40

Massachusetts

$4.95

$5.55

$6.15

$0.60

Virginia

$2.13

-

Michigan

$3.67

$3.75

-

$0.08

Washington

1

$13.50

$13.69

$14.49

$0.19

$0.80

Minnesota

1

$10.00

$10.08

$10.33

$0.08

$0.25

West Virginia

$2.62

-

Mississippi

$2.13

-

Wisconsin

$2.33

-

Missouri

$4.73

$5.15

$5.58

$0.42

$0.43

Wyoming

$2.13

-

1

Tipped minimum wage equals the state’s minimum wage.

2

Oklahoma’s tipped minimum wage equals 50% of the state’s minimum wage, but is shown as $2.13 because all FLSA covered employees are excluded.

The data for 2022 (which includes enacted, but not yet effective statutory increases) was accurate as of January 10, 2022. All data are as of year-end.

Data for the Federal government and states that abut Pennsylvania are shaded in gray.

Sources: U.S. Department of Labor and state websites.

Many states and the federal government allow employers to pay a cash wage lower than the

minimum wage for tipped employees. These laws require that the sum of the direct cash payment

and the tipped amount must at least equal the full minimum wage. States vary regarding which

employees are covered and many differentiate their rates based on the number of employees in

the firm and/or by geography.

The tipped minimum wage in Pennsylvania has been $2.83 since 1997. Twenty-eight states had

higher tipped minimum wage rates than Pennsylvania ranging from $3.26 to $14.00 during 2021.

Seven of those states do not have a tip credit making their tipped minimum wages equal to their

full minimum wage. Hawaii has a tip credit only when tips exceed $7.00 per hour; otherwise, the

tipped worker must receive the full minimum wage.

The federal tipped minimum wage has been at $2.13 since 1991. Sixteen states had their tipped

minimum wage rates equal to the federal level during 2021 while another five states had a tipped

minimum wage above the federal level, yet below Pennsylvania’s $2.83. The tipped minimum

wages in all of Pennsylvania’s six neighboring states exceeds the federal level. In 2021, four of

those states had higher rates than Pennsylvania and two were below.

The tipped minimum wage was raised in 20 states during 2021 and in 2022 has already been

increased or is projected to do so by year’s end in 19 states. New York had a schedule of

increases through December 31, 2021 and will decide later this year whether to increase its

tipped minimum wage. Alaska’s tipped minimum wage is adjusted for inflation but did not raise it

for 2022 because the relevant CPI fell in 2020.

Minimum Wage Report

36

Minimum Wage Report 37

A

PPENDIXES

Minimum Wage Report

38

Terms, Definitions and Sources

• Bureau of the Census – The U.S. Bureau of the Census, in the U.S. Department of

Commerce, collects general information from individuals and establishments in order to

compile statistics.

• Bureau of Labor Statistics (BLS) – The federal Bureau of Labor Statistics, in the U.S.

Department of Labor, is the principal fact-finding agency for the Federal Government in

the broad field of labor economics and statistics.

• Census – A census is an enumeration of the population of a nation or a registration

region; a systematic and complete count of all who are living in specified places, usually

on a specific date. Like many modern democracies, the United States conducts a

complete enumeration every 10 years, under the auspices of the U.S. Bureau of the

Census, which publishes detailed reports.

• Consumer Price Index (CPI) – Monthly data on changes in the prices paid by urban

consumers for a representative basket of goods and services. BLS produces the CPI.

• Cost of Living Adjustment (COLA) – Adjustment of wages designed to offset changes in

the cost of living, usually as measured by the Consumer Price Index.

• Current Population Survey (CPS) – The CPS is a statistical survey conducted by the U.S.

Bureau of the Census on behalf of the federal Bureau of Labor Statistics (BLS). BLS uses

the data to provide a monthly report on the national employment situation including

employment, unemployment, labor force and the unemployment rate.

• Employed – A count of persons (not jobs) who, during the week that includes the 12th

day of the month: (a) did any work as paid employees; worked in their own business or

profession or on their own farm, or worked 15 hours or more as unpaid workers in

enterprises operated by members of their families; or (b) were not working, but who had

jobs from which they were temporarily absent. Current Population Survey estimates of

the employed (as in this report), can differ from the official statistics of Pennsylvania’s

employed persons, which come from the Local Area Unemployment Statistics.

• Fair Minimum Wage Act of 2007 – The act amended the Fair Labor Standards Act of

1938 to increase the federal minimum wage by $2.10 over two years – from $5.15 to

$7.25 an hour. On July 24, 2007, the minimum wage increased from $5.15 to $5.85. On

July 24, 2008, the minimum wage increased from $5.85 to $6.55. On July 24, 2009, the

final increase occurred from $6.55 to $7.25.

• Federal Poverty Threshold – The set minimum amount of annual income that a family

needs for food, clothing, transportation, shelter, and other necessities as determined by

the U.S. Bureau of the Census. The U.S. Bureau of the Census uses a set of annual

money income thresholds that vary by family size and composition to determine who is in

poverty. Every member of a family is deemed to be in poverty if the family’s total income

is less than the applicable threshold. The calculation of family income includes before tax

income from earnings, unearned income (interest, dividends, rents, etc.), and cash

transfer payments (unemployment compensation, Social Security, SSI, public assistance,

etc.), but excludes capital gains and losses, tax credits (e.g., EITC), and noncash

benefits (e.g., food stamps). The number is adjusted for inflation and reported annually.

Minimum Wage Report 39

• Fair Labor Standards Act (FLSA) – Passed by the U.S. Congress in 1938 to establish

minimum wage rates for workers engaged directly or indirectly in interstate commerce,

including those involved in production of goods bound for such commerce. In addition to

establishing a minimum wage, it also established a maximum workweek, overtime pay,

record keeping requirements, and child labor standards affecting full-time and part-time

workers in the private sector and in federal, state, and local governments.

• Inflation – Inflation is a sustained increase in the general price level of goods and

services in an economy over some period of time. Equivalently, it also represents a

decreasing value of the country’s money. The inflation rate is the annualized percentage

change in some price index. The Consumer Price Index (CPI) is a commonly used

standard to measure inflation, since it measures

the average change over time of the

prices paid by urban consumers for a market basket of consumer goods and services.

• Minimum Wage – Minimum wage is the lowest lawful hourly level at which workers may

be compensated by their employers; it is established by the FLSA at the federal level and

by the Minimum Wage Act in Pennsylvania.

• National Bureau of Economic Research (NBER) – The NBER is the nation's leading

nonprofit economic research organization. Due to its work on national accounts and

business cycles, the NBER is well-known for providing start and end dates for recessions

in the United States.

• Near Minimum Wage – A range of wage rates somewhat in excess of the legal minimum

wage, but close to it. In addition to those earning at or below the minimum wage, the

group most likely to be affected by an increase in the minimum wage are those earning

the near minimum wage. For purposes of this report, wage rates between $7.26 and

$12.00 per hour are referred to as the near minimum wage.

• Tipped Minimum Wage – Labor law in many states (including Pennsylvania) as well as

federal law allows employers of tipped workers (variously defined) to take a “tip credit”

that lowers the mandated cash minimum wage below that of the actual mandated

minimum wage, if the combined cash and tip income is at least equal to the full minimum

wage. The mandated hourly direct cash payment for these workers is usually referred to

as the tipped minimum wage.

• Wage and Salary Workers –

These are workers age 16 and older who receive wages,

salaries, commissions, tips, payments in kind, or piece rates on their sole or principal job.

This group includes employees in both the private and public sectors, as well as both

hourly and non-hourly workers. All self-employed workers are excluded whether or not

their businesses are incorporated.

• Workers Paid by the Hour (Hourly Workers) – These are employed wage and salary

workers who report that they are paid at an hourly rate on their job. Historically, workers

paid an hourly wage have made up approximately three-fifths of all wage and salary

workers nationally. Estimates of workers paid by the hour include both full- and part-time

workers unless otherwise specified.

Minimum Wage Report

40

Table of Industry Distributions

A Comparison of Industry Distributions of Various Populations

Pennsylvania and U.S.: 2021 Averages

(total numbers of workers in thousands, breakdown by industry in percent)

Industry Characteristics of Hourly Wage & Salary

Workers at the Minimum Wage or Below

Minimum Wage or Below

Above Minimum Wage

Near Total

PA

1

U.S.

1

PA PA

TOTAL 63.8 1,099 586.0 3,157.5

Industry

Accommodation 0% 1% 0% 0%

Agriculture, forestry, fishing, and hunting 2% 0% 2% 1%

Arts, entertainment, and recreation 11% 3% 4% 2%

Construction 0% 1% 2% 8%

Educational services 9% 4% 5% 5%

Financial activities 4% 1% 3% 4%

Food services and drinking places 50% 62% 22% 8%

Health care services, except hospitals 2% 3% 7% 10%

Hospitals 7% 2% 2% 7%

Information 0% 0% 1% 1%

Manufacturing 0% 3% 4% 12%

Mining 0% 0% 0% 0%

Other services 12% 6% 4% 4%

Professional and business services 3% 2% 6% 8%

Public administration 0% 3% 1% 4%

Retail trade 0% 6% 25% 15%

Social assistance 0% 1% 5% 3%

Transportation and utilities 0% 3% 4% 7%

Wholesale trade 0% 0% 2% 2%

Work Status

Full-time 46% 49% 42% 76%

Part-time 54% 51% 58% 24%

1

Both the U.S. minimum wage and the PA minimum wage were $7.25 during 2021

Totals may not sum due to rounding

Source: U.S. Bureau of the Census, Current Population Survey

Minimum Wage Report 41

Table of Occupational Distributions

A Comparison of Occupational Distributions of Various Populations

Pennsylvania and U.S.: 2021 Averages

(total numbers of workers in thousands, breakdown by occupation in percent)

Occupation

Minimum Wage or Below

Above Minimum Wage

Near Total

PA

1

U.S.

1

PA PA

TOTAL 63.8 1,099 586.0 3,157.5

Occupation

Architecture & Engineering 0% 0% 0% 1%

Arts, Design, Entertainment, Sports & Media 0% 1% 1% 1%

Building, Grounds Cleaning & Maintenance 6% 4% 5% 4%

Business & Financial Operations 2% 0% 1% 3%

Community & Social Service 0% 0% 1% 2%

Computer & Mathematical Science 4% 0% 0% 1%

Construction & Extraction 0% 1% 2% 7%

Education, Training & Library 0% 2% 4% 3%

Farming, Fishing & Forestry 0% 0% 1% 1%

Food Preparation & Serving Related 40% 59% 21% 7%

Healthcare Practitioner & Technical 0% 1% 2% 8%

Healthcare Support 7% 2% 7% 6%

Installation, Maintenance & Repair 0% 1% 0% 4%

Legal 0% 0% 0% 0%

Life, Physical & Social Service 0% 0% 0% 1%

Management 0% 2% 3% 4%

Office & Administrative Support 7% 3% 11% 14%

Personal Care & Service 22% 6% 6% 2%

Production 0% 3% 4% 9%

Protective Service 0% 2% 2% 2%

Sales & Related 3% 5% 15% 8%

Transportation & Material Moving 9.4% 7% 14% 13%

1

Both the U.S. minimum wage and the PA minimum wage were $7.25 during 2021

Totals may not sum due to rounding

Source: U.S. Bureau of the Census, Current Population Survey

Minimum Wage Report

42

Programs that May Assist Low Income Workers

There are a multitude

6

of state and federal programs including cash aid, education, energy, food

aid, health care, etc., that provide assistance to low income families. Below is a brief description

of some of the major programs for which some minimum wage or below workers may be

eligible. While the requirements of each program differ, they generally have a work requirement

and are based on family characteristics and income.

Earned income Tax Credit (EITC): is a refundable federal tax credit that offsets some payroll

and income taxes of low-income working families. To qualify, one needs to file a tax return

(cannot file married, filing separately), have earned income (i.e., work), have less than $53,505

of both earned and adjusted gross income (limits are lower for less than three qualifying children

and if not filing “married filing jointly”), and no more than $3,400 in investment income. The

maximum benefit ranges from $506 (no qualifying children) to $6,269 (three or more qualifying

children).

Child Tax Credit (CTC): helps working families offset the cost of raising children. Eligibility

requires one to file taxes, have at least one qualified child, and have earned income (work). The

maximum modified adjusted gross income is as high as $110,000, for married couples filing

jointly. The maximum tax credit is $1,000 for each qualified child and equals 15 percent of

earnings over $3,000. The Additional Child Tax Credit (ACTC) is a refundable component of the

CTC.

Pennsylvania - Temporary Assistance for Needy Families (TANF): is a federal program

administered through the state via a block grant and is designed to help needy families achieve

self-sufficiency. It is also referred to as Cash Assistance. There are both resource and income

constraints as well as a maximum time limit (60 months) that one can access these benefits.

Supplemental Nutrition Assistance Program (SNAP): is the new name for the Food Stamp

program. These benefits are used to buy food and help eligible low-income households in

Pennsylvania obtain more nutritious diets by increasing their food purchasing power at grocery

stores and supermarkets. There are gross monthly income limits based on family size and

presence of disabled persons.

Medicaid/ Medical Assistance (MA): pays for health care services for eligible individuals.

Income limits are based on a multiple of the Federal Poverty Guidelines, which depends on

family size and composition.

More detailed information on these programs can be found at:

https://www.irs.gov/credits-deductions/individuals/earned-income-tax-credit/do-i-qualify-for-

earned-income-tax-credit-eitc

https://www.irs.gov/pub/irs-pdf/p972.pdf

https://www.dhs.pa.gov/Services/Assistance/Pages/TANF.aspx

https://www.dhs.pa.gov/Services/Assistance/Pages/SNAP.aspx

https://www.dhs.pa.gov/Services/Assistance/Pages/Medical-Assistance.aspx

6

In FY 2012, there were at least 92 federal programs that were designed to help lower-income Americans,

according to, The War on Poverty: 50 Years Later, March 3, 2014, by the House Budget Committee Majority Staff.

Minimum Wage Report 43

Minimum Wage Changes: Pennsylvania

7

and the U.S.

8

Effective

Date of Rate

Change

Federal Minimum Wage

Rates Under FLSA of

1938 (as amended)

Pennsylvania Minimum Wage

Rates Under Minimum Wage

Act of 1968 (as amended)

Effective

Pennsylvania

Minimum Wage

Rate

Oct 24,1938 $0.25

$0.25

Oct 24,1939 $0.30

$0.30

Oct 24,1945

$0.40

Jan 25,1950

$0.75

Mar 1,1956

$1.00

Sep 3,1961 $1.15

$1.15

Sep 3,1963

$1.25

Feb 1,1967

$1.40

Feb 1,1968

$1.60

May 1,1974

$2.00

Jan 1,1975

$2.10

Jan 1,1976

$2.30

Jan 1,1978

$2.65

Jan 1,1979

$2.90

Jan 1,1980

$3.10

Jan 1,1981

$3.35

Feb 1,1989

$3.70

Apr 1,1990

$3.80

Apr 1,1991

$4.25

Oct 1,1996

$4.75

Sep 1,1997

$5.15

Jan 1,2007

$6.25

Jul 1,2007

$7.15

Jul 24,2007

$5.85

$7.15

Jul 24,2008

$6.55

$7.15

Jul 24,2009

$7.25

7

Source: Minimum Wage Act of 1968 (as amended, see Section 4a),

(https://www.legis.state.pa.us/CFDOCS/LEGIS/LI/uconsCheck.cfm?txtType=HTM&yr=1968&sessInd=0&smthLwIn

d=0&act=0005.&CFID=341787833&CFTOKEN=29282704).

8

Sources: DOL Wage and Hour Division, “FEDERAL MINIMUM WAGE RATES UNDER THE FAIR LABOR

STANDARDS ACT” (https://www.dol.gov/sites/dolgov/files/WHD/legacy/files/chart.pdf) in tabular form and a more

verbal exposition in “History of Changes to the Minimum Wage Law”

(https://www.dol.gov/whd/minwage/coverage.htm).

Minimum Wage Report

44

Both the Fair Labor Standards Act (henceforth FSLA, which governs the federal minimum wage)

and Pennsylvania’s Minimum Wage Act of 1968 (henceforth MWA) have been amended

multiple times since their initial enactments. The thrust of these amendments has not only been

to increase the minimum wage, but also to expand the coverage of workers governed by the

minimum wage. Some workers may have been exempted from these laws, while others may

have been allowed by these amendments to be paid less the “standard” minimum wage (which

is the rate listed on the adjoining table). Section 4 (a.1) of the MWA mandates that if the

minimum wage set by the FSLA is increased above the rate required in Section 4 of the MWA,

then the minimum wage required under Section 4 would be increased by the same amount and

with the same effective date mandated by the FSLA. Consequently, some of the rates listed as

changes in the MWA are reflecting changes mandated by the FSLA. However, since they were

listed in the current version of the statute (last amended on July 5, 2012), they are listed in the

table on the opposite page. For workers covered by the FSLA, whenever the FSLA mandates a

higher minimum wage than state law, federal law (e.g., FSLA) supersedes state law.

Consequently, the effective minimum wage rate in the accompanying table is the higher of the

rate mandated by the FSLA or the MWA.

C

ENTER FOR

W

ORKFORCE

I

NFORMATION

&

A

NALYSIS

DEPARTMENT OF LABOR & INDUSTRY

651

BOAS STREET, ROOM 220

H

ARRISBURG, PA 17121

WWW.WORKSTATS.DLI.PA.GOV

(877) 493-3282

ANALYSIS OF THE

PENNSYLVANIA

MINIMUM WAGE

MINIMUM

WAGE

ADVISORY

BOARD

MARCH 2022

CWIA-15 REV 02-22