Why Montana's minimum wage statistics are not as good as they look

Jun 25, 2013

A national study from the Federal Bureau of Labor Statistics (BLS) show the percentage of minimum wage workers in Montana shrinking at the fastest rate in the country. That figure may be of particular note today, the 75th anniversary of the Fair Labor Standards Act—a law signed by President Franklin Roosevelt which created the minimum wage.

However, the figures gathered by BLS need to be taken in context.

Boise State Public Radio Reporter Emilie Ritter Saunders (former MTPR Capitol Reporter) put together this story showing Idaho with the largest percentage of minimum wage of any state. Analyzing the BLS data, Emilie shows Montana had a 60 percent reduction in workers making minimum wage in 2011, the year of the study.

Yes, a 60 percent reduction, the fastest rate in the nation. The statistics rank Montana 48th for total percentage of minimum wage workers.

Economist with the Montana Department of Labor and Industry Aaron McNay pointed to several parts of the BLS study which may be misleading. For one, he said a large percentage change can happen a lot easier in a low-population state in Montana, but may be affecting far fewer people than in higher population areas.

“To some extent, it's not as large of a change as at first glance it seems," McNay said.

In Montana’s case, the statistics from 2011 to 2012 show a drop from ten-thousand to four-thousand people making  at or below the prevailing federal minimum wage.  And that brought McNay to his other point—Montana’s minimum wage is higher than the federal minimum wage.

In 2011, the federal minimum wage was $7.25/hour. During the same year, Montana’s minimum wage raised from $7.35/hour to $7.65/hour—higher than the federal wage the whole time. McNay said this may partly explain the large percentage drop shown by the report. But, it still means about four-thousand Montanans in 2012 were making at or less than the federal minimum wage, which is already less than the state minimum wage.

“There are several things to look at that can result in workers making less than the minimum wage,” McNay said, “and that’s perfectly legal.”

For instance, state law says a business making $110-thousand or less and is not doing business between state lines may pay $4.00/hour. This is in line with the fair labor standards act. Dependents working for their parents in their parents business or doing chores around the house also don’t apply. See the full list of exemptions here.

This doesn’t mean that things aren’t going well for Montana’s workforce, though. McNay said the state’s unemployment rate continues to tick downward. It’s at 5.4 percent now, less than the national average of 7.6 percent.

He said Montana’s relatively strong recovery from the Great Recession has likely had the effect of raising wages.