Minimum stay: Understanding how long people remain on the minimum wage

Published on Jobs, Skills and Pay

Britain’s growing minimum wage workforce includes 320,000 people who have been trapped on the lowest rung of the pay ladder for five years or more. Minimum Stay shows that 17 per cent of all those currently earning the minimum wage or up to 25p an hour above it, have only ever held jobs at this pay level when they have been employed in the last five years. Over the last 10 years, 140,000 workers (7 per cent of all minimum wage workers) have not earned more than 25 pence above the minimum wage. 90,000 workers have never earned more than 25 pence above the minimum wage in the 13 years since it was introduced in 1999.

The report also investigates the profile of those workers. It finds that the overwhelming majority of those who have stayed in minimum wage work are women. Around 62 per cent of all minimum wage workers are women – yet women make up almost three-quarters (73 per cent – 230,000 workers) of those trapped in minimum wage work for the last five years. Among those who have only had minimum wage jobs in the last ten years, almost four in five (79 per cent – 110,000 workers) are women.

  • A growing trend for minimum wage earners to split into two groups – (A) new entrants to the labour market (including the young), many of whom move quickly on to higher pay, and (B) workers who do not escape minimum wage work for an extended period of time. In 2004 the proportion of minimum wage workers who had not escaped minimum wage work in the previous five years was 12 per cent – increasing to 17 per cent by 2012.
  • The crucial fork in the road for employees may occur in their mid-30s –the chances of remaining trapped in minimum wage work rises for workers after this point. While workers aged between 46 and 55 make up 17 per cent of all workers on the minimum wage, almost a third (30 per cent) of those trapped there for five years are in this age group.
  • Part-time workers are more likely to have remained in minimum wage work. They make up 62 per cent of all minimum wage workers but 77 per cent of those that have remained at the minimum wage for 10 years.
  • Remaining in the same job or occupation is associated with remaining on the minimum wage. Those who have stayed in the same occupation for a decade account for 79 per cent of those who are stuck, but just 51 per cent of all minimum wage workers
  • London’s low wage labour markets appear to be more dynamic or transient. The region contains 9 per cent of all minimum wage workers but only 4 per cent of those who have been trapped on the minimum wage for 5 years.
  • The wholesale and retail sector has relatively high levels of employees trapped at minimum wage. 37 per cent of all those trapped work in this sector, though it accounts for only 28 per cent of all minimum wage workers.