One quarter of private sector earns less than 10 dollars per hour

Up to 25 percent of all workers make less than 10 dollars per hour. Image from Wikimedia Commons.

There is a supposed lack of jobs to go around, which makes it harder for the unemployed to get back to work. However, it might also be that what jobs there are don’t pay much, as fully one-quarter of private sector workers are estimated to make less than 10 dollars per hour.

10 dollars per hour is not that much

The federal minimum wage is currently $7.25 per hour, according to the Kansas City Star. A full-time minimum-wage worker earns $15,080 per year. In other words, the poverty line. Currently, a group of economists are pitching the idea of raising the federal minimum wage, according to MSNBC. Some legislators are also planning on introducing legislation to raise the federal minimum wage by 85 cents per year for the next three years, according to the Kansas City Star, resulting in a minimum wage of $9.80 in 2014.

Nearly 30 million people, who are estimated to be earning the federal minimum wage, would benefit. Higher pay in the private sector, according to the Huffington Post, isn’t the case for everyone in it. The National Employment Law Project estimates that 25 percent of the private sector makes less than $10 per hour.

Roughly equivalent to minimum wage in 1968

Though $10 per hour is several dollars more than the current federal minimum wage, it doesn’t actually put anyone in the lap of luxury. Before taxes, a full-time worker making that wage earns $20,800 per year, assuming no other pre-tax deductions, using back-of-the-envelope calculations.

It’s also, according to MSNBC, roughly equivalent to what a minimum wage worker earned in 1968, when adjusted for inflation. The purchasing power of the minimum wage has declined by 30 percent since then, according to the Huffington Post. Overall median income, according to Today, has declined 6 percent since 2000, when the median family income was $64,000, adjusted for inflation.

Unfortunately, that’s where most of the job growth in the private sector is. Food service, hospitality and related low-level service fields, where most workers make close to minimum wage has posted above-average job growth in the past few years, achieving 5.1 percent job growth between February 2010 and February 2012. Unemployment grew 2.3 percent in that span. Of those working in minimum wage jobs, according to Bloomberg, an estimated 44 percent had a college education in 2010. Making payments on loans isn’t easy on that amount.

Boosting minimum wage courts controversy

Raising the minimum wage is controversial. It is often asserted that forcing businesses to pay more in minimum wages will mean employers won’t be able to give workers enough hours and fewer jobs will be available to go around. It might not be the case. In January of this year, 8 states raised their minimum wage, according to the Kansas City Star, raising the total to 18 states and Washington, D.C., that have higher than federal minimum wage.

In 1968, when the minimum wage was 30 percent higher than today, according to the Huffington Post, unemployment was just 3.6 percent.