Who gets the minimum wage?

The Australian Fair Pay Commission is presently tendering for a consultancy to answer three questions:

  1. Who is subject to the federal minimum wage?
  2. What are the individual characteristics of employees covered by the federal minimum wage?
  3. What are the household characteristics of employees covered by the federal minimum wage?

Tenders close 2 June. It’s not on their website, but if anyone’s interested, I’m happy to send you the PDF.

I had a shot at answering these questions last year. Here’s what I found:

Does Raising the Minimum Wage Help the Poor?
What is the impact of raising the minimum wage on family incomes? Analysing the characteristics of low wage workers, I find that those who earn near-minimum wages are disproportionately female, unmarried and young, without post-school qualifications and overseas born. About one-third of near-minimum wage workers are the sole worker in their household. Due to low labour force participation rates in the poorest households, minimum wage workers are most likely to be in middle-income households. Using various plausible parameters for the effect of minimum wages on hourly wages and employment, I estimate the impact of a minimum wage rise on inequality.

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2 Responses to Who gets the minimum wage?

  1. Corin says:

    Andrew,

    I take it then that you could support an increasing level of flexibility in wage cost on business – but (according to another piece you wrote on OLO) best offset by family tax credits at the low end to ensure that the distributional effects are mitigated.

    I assume that would get more of the “poorest” families into the wage earning system and out of a benefits cycle.

    Overly simplistic! I’m sure ………..

    I read your article attached – I think I understood the “ratio” but not all of the “obiter” ……… may be I’m wrong. Numbers – that’s what the finance guys do at work! Lawyers we just move bundles of paper – what one friend said: your just “rent seekers”.

    Corin

  2. Andrew Leigh says:

    Corin, what you’ve described was the essence of the “five economists” proposal in 1998. It’s not perfect, but I think it’s better than the status quo.

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