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The Minimum-Wage and Poverty

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Here’s a letter of mine [2] published in the August 7 edition of the Baltimore Sun:

The Sun should rethink its editorial “Rethinking minimum wage [3]” (Aug. 4).

The editorial’s account of history is flawed; the federal minimum wage began in 1938, not in the 1950s.

More important, it’s untrue that the data¬† are “compelling” that “a minimum wage is helpful in the fight against poverty.”

Economists Joseph Sabia and Richard Burkhauser, in research published last year [4] in the respected journal Contemporary Economic Policy, found that “minimum-wage increases (1988-2003) did not affect poverty rates overall, or among the working poor or among single mothers.”

This finding is consistent not only with the fact that just a tiny fraction of workers (less than 5 percent) are paid wages as low as the minimum wage and the fact that 80 percent of minimum-wage workers live in non-poor households but also with the findings of other rigorous studies [5].

Donald J. Boudreaux