Who are minimum and sub‐minimum wage workers?

Abstract

PurposeThe purpose of this paper is to provide a comprehensive portrait of who earns the minimum wage, in terms of the characteristics of the individual that are most important in determining this outcome.Design/methodology/approachThis study uses individual data from the Annual Income Supplements of the New Zealand (NZ) Household Labour Force Surveys between June 1997 and June 2004. This unit record data allows isolation of workers earning the minimum wage or close to it. A more sophisticated quantitative analysis is also carried out, where the probability of earning at or below the minimum wage is modelled to estimate what individual characteristics are most significant in determining minimum wage status.FindingsOne of the key findings was that individual characteristics (such as age) are much more important than household circumstance or industry affiliations, in terms of the probability of earning minimum wage.Originality/valueNZ has substantially increased minimum wages for teenagers and adults since 2000. For example, since the youth minimum was introduced in March 1994, it had increased by 52 per cent in real terms by 2004. Consequently, recent NZ experience offers a rare opportunity to isolate who earns the minimum wage and which subgroups are more likely to be potentially impacted by a rising minimum.