Mind the Gap: Net Incomes of Minimum Wage Workers in the EU and the US
This paper focuses on the role of minimum wages, tax and benefit policies in protecting workers against financial poverty, covering 21 European countries with a national minimum wage and three US States (New Jersey, Nebraska and Texas). It is shown that only for single persons and only in a number of countries, net income packages at minimum wage level reach or exceed the EU's at-risk-of poverty threshold, set at 60 per cent of median equivalent household income in each country. For lone parents and sole breadwinners with a partner and children to support, net income packages at minimum wage are below this threshold almost everywhere, usually by a wide margin. This is the case despite shifts over the past decade towards tax relief and additional income support provisions for low-paid workers. We argue that there appear to be limits to what minimum wage policies alone can achieve in the fight against in-work poverty. The route of raising minimum wages to eliminate poverty among workers solely reliant on it seems to be inherently constrained, especially in countries where the distance between minimum and average wage levels is already comparatively small and where relative poverty thresholds are mostly a function of the dual-earner living standards. In order to fight in-work poverty new policy routes need to be explored. The paper offers a brief discussion of possible alternatives and cautions against 'one size fits all' policy solutions.
|Date of creation:||Apr 2012|
|Date of revision:|
|Publication status:||published in Marx, I. and K. Nelson (eds.), Minimum Income Protection in Flux, Palgrave MacMillan, 2012, pp. 54-80|
|Contact details of provider:|| Postal: |
Phone: +49 228 3894 223
Fax: +49 228 3894 180
Web page: http://www.iza.org
|Order Information:|| Postal: IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany|
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Bargain, Olivier & Orsini, Kristian, 2006.
"Beans for Breakfast? How Exportable Is the British Workfare Model?,"
IZA Discussion Papers
2025, Institute for the Study of Labor (IZA).
- Bargain, Olivier & Orsini, Kristian, 2006. "Beans for breakfast? How exportable is the British workfare model?," EUROMOD Working Papers EM2/06, EUROMOD at the Institute for Social and Economic Research.
- L. Randall Wray & Stephanie Bell, 2004. "Introduction," Chapters, in: Credit and State Theories of Money, chapter 1 Edward Elgar.
- Denis Anne & Yannick L'Horty, 2009. "Les effets du revenu de Solidarité active sur les gains du retour à l'emploi," Revue économique, Presses de Sciences-Po, vol. 60(3), pages 767-776.
- Dolado, Juan J. & Felgueroso, Florentino & Jimeno, Juan F., 2000.
"The Role of the Minimum Wage in the Welfare State: An Appraisal,"
IZA Discussion Papers
152, Institute for the Study of Labor (IZA).
- Juan J. Dolado & Florentino Felgueroso & Juan F. Jimeno, 2000. "The Role of the Minimum Wage in the Welfare State: An Appraisal," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 136(III), pages 223-245, September.
- Dolado, Juan J. & Felgueroso, Florentino & Jimeno, Juan F, 2000. "The Role Of The Minimum Wage In The Welfare State: An Appraisal," CEPR Discussion Papers 2452, C.E.P.R. Discussion Papers.
- Juan J. Dolado & Florentino Felgueroso & Juan F. Jimeno, . "The Role of the Minimum Wage in the Welfare State: An Appraisal," Working Papers 2000-12, FEDEA.
When requesting a correction, please mention this item's handle: RePEc:iza:izadps:dp6510. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mark Fallak)
If references are entirely missing, you can add them using this form.