December 03, 2003
The share of hourly workers reporting earnings at or below the Federal minimum wage of $5.15 per hour ranged from less than 1 percent among managers and professionals and precision production, craft, and repair workers to more than 10 percent among service workers in 2002.
Within the service occupations, 1 out of every 5 food service workers earned $5.15 or less per hour. Three out of every 5 workers paid less than the minimum wage were, in fact, employed in food service occupations.
Such a large proportion may reflect the tip credit provisions of the Federal minimum wage statutes. Under these provisions, a worker who receives tips generally may be paid a wage below $5.15, provided that the employee’s tips, combined with a minimum cash wage of $2.13, equal at least $5.15.
These data are derived from the Current Population Survey. It should be noted that the presence of a sizable number of workers with reported wages below the minimum does not necessarily indicate violations of the Fair Labor Standards Act, as there are exemptions, such as tip credits, to the minimum wage provision of the law. Also, among those with reported wages below the minimum in 2002, almost 500,000 reported earning exactly $5.00 per hour; to some extent, this may reflect rounding in the responses of survey participants. Find out more in "Characteristics of minimum wage workers in 2002," by Steven E. Haugen, Monthly Labor Review, September 2003.