Do Minimum Wages Reduce Poverty Rates?
The primary goal of a national minimum wage floor is to raise the incomes of poor or near-poor families with members in the work force. Most research suggests that moderate minimum wages increases do not reduce poverty rates. In an in-depth study of the minimum wage effect on poverty, Neumark and Wascher (1996a) used matched CPS surveys to examine both the probability that poor families escape poverty and the probability that previously non-poor families fall into poverty. They found that minimum wage hikes increased poverty exits but also increased the probability that previously non-poor families entered poverty. The estimated increase in the number of non-poor families that fall into poverty is larger than the estimated increase in the number of poor families that escape poverty, although this difference is not statistically significant. Overall the tradeoffs created by minimum wage increases, more closely resemble income redistribution among low-income families than income redistri
The primary goal of a national minimum wage floor is to raise the incomes of poor or near-poor families with members in the work force. Most research suggests that moderate minimum wages increases do not reduce poverty rates. In an in-depth study of the minimum wage effect on poverty, Neumark and Wascher (1996a) used matched CPS surveys to examine both the probability that poor families escape poverty and the probability that previously non-poor families fall into poverty. They found that minimum wage hikes increased poverty exits but also increased the probability that previously non-poor families entered poverty. The estimated increase in the number of non-poor families that fall into poverty is larger than the estimated increase in the number of poor families that escape poverty, although this difference is not statistically significant. Overall the tradeoffs created by minimum wage increases, more closely resemble income redistribution among low-income families than income redistri
