Home
/
RELIGION & LIBERTY ONLINE
/
Why Minimum Wages Increases Don’t Target Poverty
Why Minimum Wages Increases Don’t Target Poverty
Mar 12, 2026 3:16 PM

If you ask most people why they support raising the minimum wage they’ll says it’s because it helps the poor. But as David Neumark, a scholar at the Federal Reserve Bank of San Francisco notes, numerous studies have shown that there is no statistically significant relationship between raising the minimum wage and reducing poverty.

That finding may appear to be counterintuitive. After all, if poor people have low wages then increasing their wages should help reduce their poverty. To some extent, this is true. However, what is overlookedis that minimum wages target individual workers with low wages, rather than families with low es. The reason that distinction is important is because most workers who earn the minimum wage are in e families.

That es more obvious when you think about position of the American workforce. If you are from a middle-class family, your first job is likely to have paid minimum wage. The same goes for all your friends who are from families higher on the economic ladder. And it’s the same for young workers today. Go down to the mall and you’ll find that the young men and women working in Forever 21 and Abercrombie & Fitch are not from families that are in poverty. Increasing the minimum wage merely ensures that these young people who are (mostly) from wealthier families get a pay raise.

The relationship between being a low-wage worker and being in a e family is fairly weak, as Neumark explains, for three reasons:

First, 57% of poor families with heads of household ages 18–64 have no workers, based on 2014 data from the Current Population Survey (CPS). Second, some workers are poor not because of low wages but because of low hours; for example, CPS data show 46% of poor workers have hourly wages above $10.10, and 36% have hourly wages above $12. And third, many low-wage workers, such as teens, are not in poor families (Lundstrom ing).

Considering these factors, simple calculations suggest that a sizable share of the benefits from raising the minimum wage would not go to poor families. In fact, if wages were simply raised to $10.10 with no changes to the number of jobs or hours, only 18% of the total increase in es would go to poor families, based on 2010–2014 data (Lundstrom ing). The distributional effects look somewhat better at a higher threshold for low e, with 49% of the benefits going to families that have es below twice the poverty line. However, 32% would go to families with es at least three times the poverty line. By this calculation, about a third of the benefits would go to families in the top half of the e distribution.

Moreover, if we consider raising the minimum wage higher, for example to $12, only 15% of the benefits go to poor families, because other higher-wage workers who would benefit are less likely to be poor. Likewise, 35% would go to families with es at least three times the poverty line. With a $15 minimum wage the corresponding figures would be 12% and 38%. This evidence—coupled with the fact that employers who would pay the higher minimum wage are not necessarily those with the highest es, but instead may be owners of small businesses with low profit margins—indicates that minimum wages are a very imprecise way to raise the relative es of the e families.

Some people might claim that even if the minimum wage mostly benefits wealthier families we should still do it since there is some benefit to the poor. But this is another case of failing to consider the difference between what is seen and what is not seen. What is seen is that some poor workers get a pay raise; what is unseen is that many more will simply be unable to find work.

From 2006 to 2012, the average effective minimum wage rose by $1.72 across the United States. Economist Jeffrey Clemens released a paper last month that examines the effect of that wage increase on low-skilled workers:

My baseline estimate is that this period’s minimum wage increases reduced employment among individuals ages 16 to 30 with less than a high school degree by 5.6 percentage points. This amounts to 43 percent of the decline in this group’s employment between 2006 and 2012. Further, it accounts for a 0.49 percentage point decline in the employment to population ratio across all individuals ages 16 to 64.

Not only did the effect of the minimum wage account for nearly half of the unemployment effect on young workers without a high school degree, it lead to nearly a half a percentage point effect on all unemployment.

Keep in mind that this effect was because of a $1.72 increase over a six-year period. Several cities and states plan to raise the minimum wage to $15 an hour—nearly 70 percent more than the current federal minimum wage—over the next two years.

While the change may be a boon to the middle-class kids working at the mall, the effect on low-skilled workers will be devastating. But politicians get elected by doing what is popular (and minimum wage increases are popular) not for doing what is best for the most vulnerable members of our society. Until more people understand how minimum wage laws harm the poor, the kids at the Gap will continue to get more spending money while the poorestworkersstay unemployed.

Comments
Welcome to mreligion comments! Please keep conversations courteous and on-topic. To fosterproductive and respectful conversations, you may see comments from our Community Managers.
Sign up to post
Sort by
Show More Comments
RELIGION & LIBERTY ONLINE
U.S. State Department Releases 2013 Human Trafficking Report
The U.S. State Department has released its annual “Trafficking in Persons” (Tip) report, used to not only further educate people about global human trafficking, but to identify countries where trafficking is most problematic. The report gives each nation a “tiered” rating. Tier 1 countries are those that ply with international laws and standards of the the Trafficking Victims Protection Act. Tier 2 nations are on a watch list as they are making efforts ply with the Act, but are still...
Video: Marina Nemat’s Keynote Address at Acton University 2013
Marina Nemat gave her keynote address last night at AU entitled, “Finding Christ in an Iranian Prison.” Watch below. ...
How the Quality of Marriages Affects a Country’s Economy
The quality of children and our future society, depends directly on the quality of the marriage of their parents, says Pat Fagan of the Family Research Council speaking at the recent World Congress of Families: Fagan notes that society is made up of five facets: the family, church, school, the marketplace and government. The first three mentioned are the places that “grow the people” so to speak, and are closely interrelated. The last two areas of society are those into...
Fr. Michael Butler: Orthodoxy and Natural Law
Today at Acton University, Fr. Michael Butler gave an engaging lecture on the subject of Orthodoxy and natural law. Despite the contemporary ambivalence among many Orthodox (if not hostility) toward natural law, Fr. Michael argues that it is present in the Eastern Tradition from the ancient to the medieval and modern periods, focusing especially on the thought of the seventh century Byzantine Saint Maximus the Confessor. A few months ago, I observed, While it may be that there are important...
Fr. Gregory Jensen: East Meets West: Asceticism and Consumerism
Last Friday at Acton University, Fr. Gregory Jensen gave an engaging lecture on the dual subject of asceticism and consumerism. The “East Meets West” part might not be what many would expect. Rather than contrast a consumerist West with an ascetic East, Fr. Gregory insists that both consumerism and asceticism transcend cultures and traditions. Inasmuch as all people take part in consumption, an ascetic answer to the challenge of consumerism is (or ought to be) where East meets West. The...
What Can Save Chicago?
Chicago is in serious trouble. There has been a rash of crime over the past few weeks that has brought attention, yet again, to a city that cannot seem to make much progress. The Chicago Tribune reported the following about how out of control the city was this past Father’s Day: At least 34 people were shot — nine of them fatally — Saturday afternoon through Father’s Day Sunday, stretching from 94th Street and Loomis Avenue on the South Side...
Fr. Michael Butler: Orthodoxy, Church, and State
The double-headed eagle is a historical symbol of symphonia. Today at Acton University, Fr. Michael Butler examined the history of Church-State relations in the Orthodox Tradition with special reference to the modern, Russian context in his lecture “Orthodoxy, Church, and State.” The audio of his lecture will be available via Ancient Faith Radio sometime in ing weeks. As a teaser, I would like to briefly examine two concepts of Orthodox political theory to which Fr. Butler devoted specific attention: symphonia...
Are Socially Responsible Businesses Bad for Society?
In Foreign Policy, Daniel Altman argues that over the long-term panies are often better for society than so-called socially responsible business initiatives: As Jonathan Berman and I have written in the past, panies that take a long time horizon in their decision-making are likely to make more social and environmental investments. Things like training workers, munities, and protecting ecosystems can take a long time to pay off for panies. When they do, the return — including a stronger labor pool,...
Scott Rae on How Business Serves the Common Good
In a lecture at Acton University titled “Business and the Common Good,” Dr. Scott Rae of Biola University examined the role of business in serving mon good. Rae began by examining some of mon criticisms lobbed against business, namely, that it promotes greed, inequality, and consumerism. As Michael Miller often notes, these are human vices, not economic ones, and thus business, properly understood, is not immoral in and of itself. On the contrary, business has great potential for serving and...
Sponsor a Child, Change the World
There are over 8 million internationally sponsored children in the world. With the average monthly sponsorship level set at about $30 (not including other gifts sent to sponsored children), the flow of resources from wealthy countries to poor countries from international child sponsorships is about $3.2 billion per year. Despite the substantial amounts of money being funneled through these child-sponsorship charities, few empirical studies have been conducted to gauge their effectiveness. Earlier this yearpeer-reviewed, independent studyon the viability of international...
Related Classification
Copyright 2023-2026 - www.mreligion.com All Rights Reserved