Minimum Wages and Poverty: Will the Obama Proposal Help the
Working Poor? Attempts to raise the minimum wage often focus on
the purported poverty-alleviating results of these policies.
Economic research, however, has found little connection between
changes in poverty and increases in the minimum wage. This is
likely a result of the fact that the majority of individuals who
are earning the minimum wage no longer live in poor households.
In addition, the job-killing effects attributed to increases in
the minimum wage rate force vulnerable individuals out of the
labor force and into poverty, thereby limiting the societal
benefit. This study evaluates the effect of state-level minimum
wage increases between 2003 and 2007 and finds no effect on
poverty rates. It also estimates the expected reductions in
poverty from Senator Barack Obama’s proposed increase in the
minimum wage to $9.50 an hour. Economists have long studied the
effect of increases in the minimum wage on poverty. These
studies are nearly unanimous in