Policy Documents

Raising the Minimum Wage Hurts Vulnerable Workers' Job Prospects Without Reducing Poverty

James Sherk –
July 23, 2006

When the government changes the law, individuals respond to those changes. Because of this, the true effects of a law often differ radically from its authors' intentions. For example, Congress created welfare to help the poor in times of need, but instead it created a cycle of dependence trapping low-income Americans in poverty.

Similarly, raising the minimum wage brings with it unintended consequences that run counter to lawmakers' aim of helping the working poor. Like anything else, when the price of labor rises, businesses buy less of it. The role of the minimum wage in raising unemployment is well known and well documented. But even worse, recent research has shown that higher minimum wages reduce teenage education levels and decrease workers' long-term earnings. Studies also show that the minimum wage does not reduce poverty. As always, Members of Congress should look beyond their good intentions and consider the full effects of proposed policies. If they do, they will reject raising the minimum wage.