Minimum Wage Effects
If the federal government raised the minimum wage from $7.25 per hour to $15, how much would this increase the average income of families below the poverty line?
Correct Answer
According to data from the Congressional Budget Office, the Census Bureau, and the Department of Commerce's Bureau of Economic Analysis, raising the federal minimum wage from $7.25 per hour to $15 would increase the average income of families below the poverty line by about 1%. This figure is negligible because: (1) less than 27% of adults in poverty work at least part-time for at least half the year; (2) doubling the minimum wage would destroy about 1.4 million jobs with a disparate impact on young, less-educated people; (3) doubling the minimum wage would cause a slight decline in the overall economy, increased inflation, and higher taxes; and (4) the average income of families in poverty is several times greater than commonly reported because the official statistics exclude a vast array of goods and services that poor people receive from governments and charities.
DocumentationMinimum Wage Effects