February 03, 2004 (The Editor’s Desk is updated each business day.)

Low pay and establishment size

Consistent with other research that shows that pay tends to increase with employer size (the number of employees at a single location), the incidence of low pay is highest at small establishments and falls as establishment size rises.

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The difference between the smallest and the largest establishments is quite striking, with almost one-quarter of hours worked in establishments with fewer than 100 employees being low paid, compared with less than 1 in 20 in establishments with 2,500 or more employees.

These statistics come from the National Compensation Survey. All hours of work for which earnings are below $8 per hour is the definition of low-paid hours in this report. While this is just one possible definition, the $8 per hour wage rate is a characteristic wage rate of those in low-wage jobs and is near the average earned by many welfare leavers. To learn more about low wage employment, see "Exploring low-wage labor with the National Compensation Survey," by Jared Bernstein and Maury Gittleman, Monthly Labor Review, November/December 2003.