Proponents of minimum wage increases have long touted their poverty-reducing potential. This study evaluates this claim. Using data spanning nearly four decades from the March Current Population Survey and a dynamic difference-in-differences approach, we find that a 10% increase in the minimum wage is associated with an increase (statistically insignificant) of 0.17% of the probability of being poor among all people. With 95% confidence, we can rule out long-term minimum wage poverty elasticities below -0.129, which includes the central poverty elasticities reported by Dube (2019). Previous evidence suggesting that the strong effects of the minimum wage on poverty reduction are (i) highly sensitive to researchers’ choice of macroeconomic controls, and (ii) driven by specifications that limit counterfactuals to geographically close states ( “tight controls”), which correspond poorly to the treatment. poverty trends before state treatment. Moreover, an examination of the post-Great Recession era—which saw frequent and large increases in state minimum wages—failed to uncover the poverty-reducing effects of the minimum wage across the board. range of specifications. Finally, we find that less than 10% of workers who would be affected by a newly proposed $15 federal minimum wage live in poor families.
It’s from a new working paper from the NBER by Richard V. Burkhauser, Drew McNichols and Joseph J. Sabia. Should we believe these new results rather than the old results, or just be skeptical of the whole line of research?