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Coupling a Federal Minimum Wage Hike with Public Investments to Make Work Pay and Reduce Poverty.


ABSTRACT: For more than a century, advocates have promoted minimum wage laws to protect workers and their families from poverty. Opponents counter that the policy has, at best, small poverty-reducing effects. We summarize the evidence and describe three factors that might dampen the policy's effects on poverty: imperfect targeting, heterogeneous labor market effects, and interactions with income support programs. To boost the poverty-reducing effects of the minimum wage, we propose increasing the federal minimum wage to $12 per hour and temporarily expanding an existing employer tax credit. This is a cost-saving proposal because it relies on regulation and creates no new administrative functions. We recommend using those savings to "make work pay" and improve upward mobility for low-income workers through lower marginal tax rates.

SUBMITTER: Romich J 

PROVIDER: S-EPMC8286698 | biostudies-literature |

REPOSITORIES: biostudies-literature

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