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Minimum Wages and Poverty: Will a $9.50 Federal Minimum Wage Really Help the Working Poor?

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  • Joseph J. Sabia
  • Richard V. Burkhauser

Abstract

Using data drawn from the March Current Population Survey, we find that state and federal minimum wage increases between 2003 and 2007 had no effect on state poverty rates. When we then simulate the effects of a proposed federal minimum wage increase from $7.25 to $9.50 per hour, we find that such an increase will be even more poorly targeted to the working poor than was the last federal increase from $5.15 to $7.25 per hour. Assuming no negative employment effects, only 11.3% of workers who will gain live in poor households, compared to 15.8% from the last increase. When we allow for negative employment effects, we find that the working poor face a disproportionate share of the job losses. Our results suggest that raising the federal minimum wage continues to be an inadequate way to help the working poor.

Suggested Citation

  • Joseph J. Sabia & Richard V. Burkhauser, 2010. "Minimum Wages and Poverty: Will a $9.50 Federal Minimum Wage Really Help the Working Poor?," Southern Economic Journal, John Wiley & Sons, vol. 76(3), pages 592-623, January.
    • Handle: RePEc:wly:soecon:v:76:y:2010:i:3:p:592-623
    DOI: 10.4284/sej.2010.76.3.592
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    Citations

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    Cited by:

    1. Kevin Pineda‐Hernández & François Rycx & Mélanie Volral, 2022. "How collective bargaining shapes poverty: New evidence for developed countries," British Journal of Industrial Relations, London School of Economics, vol. 60(4), pages 895-928, December.
    2. Joseph J. Sabia & Richard V. Burkhauser & Taylor Mackay, 2018. "Minimum Cash Wages, Tipped Restaurant Workers, and Poverty," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 57(4), pages 637-670, October.
    3. David Neumark, 2023. "The Effects of Minimum Wages on (Almost) Everything? A Review of Recent Evidence on Health and Related Behaviors," NBER Working Papers 31191, National Bureau of Economic Research, Inc.
    4. Shane Sanders & Andrew Luccasen & Abhinav Alakshendra, 2023. "Rent control according to Seinfeld," American Journal of Economics and Sociology, Wiley Blackwell, vol. 82(2), pages 151-161, March.
    5. Lennon, Conor & Teltser, Keith F. & Fernandez, Jose & Gohmann, Stephan, 2023. "How morality and efficiency shape public support for minimum wages," Journal of Economic Behavior & Organization, Elsevier, vol. 205(C), pages 618-637.
    6. David Neumark & Maysen Yen, 2023. "The employment and redistributive effects of reducing or eliminating minimum wage tip credits," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 42(4), pages 1092-1116, September.
    7. Richard V. Burkhauser & Drew McNichols & Joseph J. Sabia, 2023. "Minimum Wages and Poverty: New Evidence from Dynamic Difference-in-Differences Estimates," NBER Working Papers 31182, National Bureau of Economic Research, Inc.

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