Minimum wages and the economic well‐being of single mothers

Abstract

Abstract

Minimum Wages and Poverty: Will a $9.50 Federal Minimum Wage Really Help the Working Poor?

“…On net, Neumark and Wascher (2002) find that the families of low-skilled workers are no better off and may be made worse off by minimum wage hikes. Sabia (2008) finds a similar result for lesseducated single mothers. A second approach, taken by Card and Krueger (1995) and Burkhauser and Sabia (2007), estimates the effect of state minimum wage increases on state poverty rates.…”

“…But this finding is far from definitive. Other studies that have examined low-skilled workers across sectors have found evidence of adverse employment and welfare take-up effects even after controlling for unmeasured state trends (Page, Spetz, and Millar 2005;Sabia 2008;Sabia and Burkhauser 2008).…”

“…Several recent studies have examined the income and poverty effects of minimum wage increases (see, for example, Card and Krueger 1995;Addison and Blackburn 1999;Neumark and Wascher 2002;Gundersen and Ziliak 2004;Wascher 2004, 2005;Burkhauser and Sabia 2007;Sabia 2008), and all but one have found that past minimum wage hikes had no effect on poverty. 4 These studies have generally taken one of two approaches.…”

“…Much of the literature examining the employment effects of minimum wage increases has focused on low-skilled workers, usually teenagers and high school dropouts, or on workers in low-skilled industries because these populations are more likely to be affected by such increases. Neumark and Wascher (2007) review over 90 studies published since the iconoclastic Card andKrueger (1994, 1995) studies of the mid-1990s and conclude that there is overwhelming evidence that the least-skilled workers experience the strongest disemployment effects from minimum wage increases (see, for example, Neumark and Wascher 1992;Williams 1993;Deere, Murphy, and Welch 1995;Currie and Fallick 1996;Abowd et al 1999;Partridge and Partridge 1999;Burkhauser, Couch, and Wittenburg 2000a, b;Couch and Wittenburg 2001;Neumark 2001;Neumark andWascher 2002, 2004;Campolieti, Fang, and Gunderson 2005;Campolieti, Gunderson, and Riddell 2006;Sabia 2008Sabia , 2009a. Median employment elasticities range from 20.1 to 20.3, though a few studies have found employment elasticities that are larger (between 20.6 and 20.9) for less-educated single mothers (Sabia 2008) and younger high school dropouts (Burkhauser, Couch, and Wittenberg 2000b).…”

“…Moreover, even among affected workers, there is strong evidence that increases in the minimum wage reduce the employment of low-skilled workers (Neumark and Wascher 2008). While an increase in the minimum wage will lift out of poverty the families of some low-skilled workers who remain employed, other low-skilled workers will lose their jobs or have their hours significantly cut, reducing their income and dropping their families into poverty (Neumark and Wascher 2002;Wascher 2004, 2005;Sabia 2008).…”