Why Minimum Wage Increases Are a Poor Way to Help the Working Poor

Richard Burkhauser

No 86, IZA Policy Papers from Institute of Labor Economics (IZA)

Abstract: Minimum wage increases are not a very effective mechanism for reducing poverty. They are not related to decreases in poverty rates. They can cost some low-income workers their jobs. And most minimum wage earners who gain from a higher minimum wage do not live in poor (or near-poor) families. A better tool for reducing poverty, and at lower cost, is the earned income tax credit. It is a much more targeted way to provide income to workers in poor families. It raises the wages of only workers in low-income families and rises with the number of dependent children in a family.

Keywords: minimum wage; earned income tax credit; working poor (search for similar items in EconPapers)
JEL-codes: J31 J41 J42 (search for similar items in EconPapers)
Pages: 9 pages
Date: 2014-06
New Economics Papers: this item is included in nep-ltv
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Citations: View citations in EconPapers (6)

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