Coupling a Federal Minimum Wage Hike with Public Investments to Make Work Pay and Reduce Poverty
For more than a century, advocates have promoted minimum wage laws to protect workers and their families from poverty. Opponents counter that the policy has, at best, small poverty-reducing effects. We summarize the evidence and describe three factors that might dampen the policy’s effects on povert...
| Main Authors: | , |
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| Format: | Article |
| Language: | English |
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Russell Sage Foundation
2018-02-01
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| Series: | RSF: The Russell Sage Foundation Journal of the Social Sciences |
| Subjects: | |
| Online Access: | https://www.rsfjournal.org/doi/full/10.7758/RSF.2018.4.3.02 |
| Summary: | For more than a century, advocates have promoted minimum wage laws to protect workers and their families from poverty. Opponents counter that the policy has, at best, small poverty-reducing effects. We summarize the evidence and describe three factors that might dampen the policy’s effects on poverty: imperfect targeting, heterogeneous labor market effects, and interactions with income support programs. To boost the poverty-reducing effects of the minimum wage, we propose increasing the federal minimum wage to $12 per hour and temporarily expanding an existing employer tax credit. This is a cost-saving proposal because it relies on regulation and creates no new administrative functions. We recommend using those savings to “make work pay” and improve upward mobility for low-income workers through lower marginal tax rates. |
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| ISSN: | 2377-8253 2377-8261 |