Low pay and establishment size

Consistent with other research that shows that pay tends to increase with employer size (the number of employees at a single location), the incidence of low pay is highest at small establishments and falls as establishment size rises.

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The difference between the smallest and the largest establishments is quite striking, with almost one-quarter of hours worked in establishments with fewer than 100 employees being low paid, compared with less than 1 in 20 in establishments with 2,500 or more employees.

These statistics come from the National Compensation Survey. All hours of work for which earnings are below $8 per hour is the definition of low-paid hours in this report. While this is just one possible definition, the $8 per hour wage rate is a characteristic wage rate of those in low-wage jobs and is near the average earned by many welfare leavers. To learn more about low wage employment, see "Exploring low-wage labor with the National Compensation Survey," by Jared Bernstein and Maury Gittleman, Monthly Labor Review, November/December 2003.