... A second option is to relate wages to some measure of worker productivity. ... Poverty Eradic... more ... A second option is to relate wages to some measure of worker productivity. ... Poverty Eradication Action Plan (PEAP), aims to sustain the country's rapid economic growth of the ... 1). Ultimately, the resolution of this debate should be based on empirical analysis, not ideological bias. ...
Based on 70 years of American experience since the passage of the Fair Labor Standards Act 1938 (... more Based on 70 years of American experience since the passage of the Fair Labor Standards Act 1938 (FLSA) (and the creation of the first federal minimum wage in the United States), we conclude that past minimum wage increases have not diminished poverty and current proposals to increase the federal minimum wage to $9.50 per hour will be even less targeted to the working poor. The majority of those who gain from a minimum wage increase do not live in poor or even near poor households. Furthermore, a large share of the working poor are not affected by such increases since they already earn wages above the proposed minimum. Finally, the negative employment effects of these minimum wage increases are sufficient to offset the movement out of poverty by those working poor who are helped by the policy. Preliminary evidence suggests that Australian minimum wage increases are no more effective at reducing poverty for the same reasons. A far more effective method of achieving the goal of assuring that those who work hard and play by the rules are not poor is via an increase in the Earned Income Tax Credit (EITC). This work-based program targets benefits based on family income rather than on a single person's hourly wage rate. And, unlike the minimum wage, the EITC has a positive effect on employment.
... A second option is to relate wages to some measure of worker productivity. ... Poverty Eradic... more ... A second option is to relate wages to some measure of worker productivity. ... Poverty Eradication Action Plan (PEAP), aims to sustain the country's rapid economic growth of the ... 1). Ultimately, the resolution of this debate should be based on empirical analysis, not ideological bias. ...
Based on 70 years of American experience since the passage of the Fair Labor Standards Act 1938 (... more Based on 70 years of American experience since the passage of the Fair Labor Standards Act 1938 (FLSA) (and the creation of the first federal minimum wage in the United States), we conclude that past minimum wage increases have not diminished poverty and current proposals to increase the federal minimum wage to $9.50 per hour will be even less targeted to the working poor. The majority of those who gain from a minimum wage increase do not live in poor or even near poor households. Furthermore, a large share of the working poor are not affected by such increases since they already earn wages above the proposed minimum. Finally, the negative employment effects of these minimum wage increases are sufficient to offset the movement out of poverty by those working poor who are helped by the policy. Preliminary evidence suggests that Australian minimum wage increases are no more effective at reducing poverty for the same reasons. A far more effective method of achieving the goal of assuring that those who work hard and play by the rules are not poor is via an increase in the Earned Income Tax Credit (EITC). This work-based program targets benefits based on family income rather than on a single person's hourly wage rate. And, unlike the minimum wage, the EITC has a positive effect on employment.
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