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November 05, 2009
Minimum Wage Exemption: Some Workers Can Be Paid Less than the Minimum

Last year, 1.9 million hourly workers earned below the minimum wage, according to a report by the Department of Labor's Bureau of Labor Statistics. So, are those 1.9 million hourly workers being paid in violation of the Fair Labor Standard's Act minimum wage provisions? Not necessarily.

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The bureau notes that the sizable number of workers earning below the minimum wage does not necessarily indicate violations of the Fair Labor Standards Act. Of the almost 2 million hourly workers paid below the prevailing minimum wage, many likely fall into one of the categories of workers exempt from the minimum wage. Employees who can be paid below the minimum wage include: certain disabled workers; full-time students employed in retail or service stores, agriculture, or colleges and universities; and those under 20 years of age who qualify for the youth minimum wage.

Data in the bureau's report reflect the average number of workers earning the prevailing federal minimum wage or less for the year, i.e., those who earned $5.85 or less from January 2008 through July 2008 and those who earned $6.55 or less from August 2008 through the end of the year. (On July 24, 2009, the federal minimum wage increased from $6.55 per hour to $7.25 per hour.)

In 2008, 75.3 million Americans were paid on an hourly basis. Fewer than 300,000 workers earned exactly the prevailing minimum wage. The 2.2 million workers who made at or below the minimum wage constitute about 3 percent of all hourly workers.

Minimum wage workers tend to be young. Although workers under the age of 25 represented only about one-fifth of hourly workers, they made up half of those paid the minimum wage or less. Among teenagers paid by the hour, about 11 percent earned at or below the minimum wage, compared with about 2 percent of workers age 25 or older.

More women than men earn the prevailing minimum wage or less, at about 4 percent of hourly workers. About 2 percent of men who are hourly workers earn the minimum wage or less.

Not unexpectedly, the data showed an inverse correlation between education level and hourly wage. For hourly workers age 16 and over, about 5 percent of those without a high school diploma earned the minimum wage or less, compared with about 3 percent of those with a high school diploma (but no college) and about 2 percent of college graduates.

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