Who Benefits From Minimum Wage Increases?

January 25, 2014 in Daily Bulletin

rich and poor

The poorest workers live on minimum wage, and so a rise in minimum wage helps the poorest the most. Right? Well…

  • Economists Subia and Burkhauser looked at state level variations in minimum wages between 2003 and 2007. They then predicted that if the federal minimum wage was increased to $9.50 an hour then:
  • Of the workers officially defined as ‘poor’, 11.3% would benefit.
  • 63.2% of workers who would gain would be those who live in households with incomes equal to double or more the poverty line.
  • 42.3% of workers to gain would be those in households with three times or more the official poverty threshold.
  • Burkhauser suggests that for those on the poverty line, there are many non-monetary benefits that their employer gives, and can take these away if there is an increase in the minimum wage.

For the original summary, head over here. Or, if you’re interested, we’d highly recommend checking out Tyler Cowen’s thoughts on the original article and its critics over here.

Source: Library of Economics and Liberty

Via: Marginal Revolution