Minimum Wage

What is a minimum wage?

A minimum wage, in general, is a law that sets the lowest possible amount that work can pay. In the United States, 130 million workers are covered by the Fair Labor Standards Act, the 1938 law that established a national minimum wage.

It has stood at $7.25 an hour since 2009. The District of Columbia and 21 stateshave a minimum wage higher than the federal one.

Minimum wage increases are a politically popular means of helping low-income families that meet with fierce resistance from employers of low-skilled workers. The constant presence of minimum wage hikes on the political agenda has created a very extensive empirical economics literature that lets us say a great deal about the impact of small increases in incomes and employment.

Who earns the minimum wage?

3.6 million Americans earn at or below the federal minimum wage, according to an annual report from the Bureau of Labor Statistics. That's 4.7 percent of all hourly workers.

Demographically speaking, minimum-wage workers tend to be younger than the average American with a job. The median age of a minimum-wage worker in 2012, according to data from the Bureau of Labor Statistics, was 24. Take a look at this chart, which breaks down the 3.6 million into bins from age 16 to 69:

Or look at it in a slightly different way: what percentage of workers in a certain age group are minimum-wage workers? 21.1 percent of workers age 16 to 19 earn the minimum wage or below, whereas just 1.6 percent of workers age 55 to 59 do.

Women are also more likely to be earning the minimum wage than men. 2.3 million out of the 3.6 million Americans earning the minimum are women, or 6.0 percent of all female hourly workers versus 3.4 percent of all male hourly workers.

Minimum-wage workers roughly match the United States in terms of racial composition, though black and Hispanic Americans are slightly overrepresented. 4.7 percent of non-Hispanic white hourly workers earn the minimum wage, as compared to...