NCPA - National Center for Policy Analysis

New Evidence Increasing The Minimum Wage Increases Poverty

February 17, 1998

The number of families with incomes below the poverty level -- and even the number earning slightly above that level -- jumps when the minimum wage is raised, according to a new study by economists David Neumark, Mark Schweitzer and William Wascher.

The poverty level varied over the period of the study -- from 1986 to 1995. Near-poor families of three had incomes between $12,516 and $18,774 -- which was the poverty line to 1.5 times the poverty level in 1996.

  • The bulk of the new-poor fell from the low and middle parts of the income spectrum, say the researchers.
  • The number of families with incomes between $18,774 to $37,548 -- 1.5 times to 3 times the poverty level for a family of three in 1996 -- dropped after minimum-wage hikes.
  • Although some families do experience an increase in income, that comes at the expense of others who are ratcheted downward.

Neumark, a Michigan State University economics professor, cautions that the study is still a work in progress since it must go through peer review.

Source: Perspective, "More Pay or More Poor?" Investor's Business Daily, February 17, 1998.


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