In his 2014 State of the Union address, President
Barack Obama endorsed a plan to raise the federal
minimum wage from $7.25 to $10.10 per hour. Supporters
of the increase argue that a $10.10 minimum wage is
necessary to ensure that those who work hard and play by
the rules do not live in poverty. While alleviating poverty
is a widely shared goal, raising the minimum wage is a
very inefficient means of achieving this objective and is
likely to hurt many low-skilled workers.
Nobel Prize-winning economist Milton Friedman said,
“one of the great mistakes is to judge policies and
programs by their intentions rather than their results.”1
With regard to the minimum wage, the intentions and the
results are usually different. This bulletin discusses the
latest empirical evidence on the effects of minimum wage
increases on poverty and employment. It also presents
evidence on the likely effects of future minimum wage
increases.
The bulletin concludes that minimum wage increases
almost always fail to meet proponents’ policy objectives
and often hurt precisely the vulnerable populations that
advocates wish to help. The weight of the science suggests
that policymakers should abandon higher minimum wages
as an antiquated anti-poverty tool. Minimum wages deter
employment and are poorly targeted to those in need.