Why Raise Minimum Wage Reduce Poverty?

Poverty is a huge problem in America that has been around forever. There is also the problem of the minimum wage, and how it relates to poverty, that has been studied by many researchers. According to the U.S. Census Bureau in 2015, 13.5% of Americans suffer in poverty, and the average annual salary of minimum wage workers is $15,080, which is right below the poverty line for two or more person families (David Cooper 1). This brings us to the question, will raising minimum wage reduce poverty? Raising the federal minimum wage would fail to reduce poverty because according to research, most benefits of raising it would not go to those in poverty, unemployment would rise, and business would be hurt and forced to raise their prices.
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A minimum wage raise from $7.25 to $9.50 was estimated to benefit only 10.6% of the working poor, and nearly 60% of those with incomes over twice the poverty line (Sabia 18). Carlos Ramirez says in his paper The Effect of Minimum Wage on Poverty, “The CBO estimates that only 19% of the $31 billion increase in real wages in a week would fall into the hands of low-income families which amounts to a reduction of people under the poverty line by 900 thousand. This is an improvement of roughly 2% for poverty while the increase in minimum wage was 30-40%” (4). Similarly, David Neumark says in his article Reducing Poverty via Minimum Wages, Alternatives, If wages were simply raised to $10.10 with no changes to the number of jobs or hours, only 18% of the total increase in income would go to poor families” (3). Workers who would benefit from any minimum wage raise are less likely to be poor. In fact, only 19% of those in poverty work at all (Stevens 1). The general conclusion from this research is that there is no statistically significant relationship between raising the minimum wage and reducing poverty (Neumark

As explained by George Reisman, “The higher wages are, the higher costs of production are, the higher prices are. The higher prices are, the smaller quantity of goods and services demanded and the number of workers employed in reducing them” (Minimum Wage 3). Business owners would be required to raise prices, and even have to go through the hassle of employing new people. 24% of minimum wage workers are teenagers and many businesses said that if wages were raised, they wouldn’t be willing to pay those high wages to unskilled workers (Minimum Wage 5). 60% of small-business owners claimed that raising the minimum wage would hurt most small-businesses (Minimum Wage 4). Jamie Richardson, vice president of fast food chain White castle, said “The company would be forced to close almost half its stores and let go thousands of workers if the federal minimum wage were raised to $15” (4). Raising the minimum wage to even just $15 in fast food restaurants would increase prices by 4.3%, or a reduction in size between 12% and 70% (Minimum Wage 5). Clearly, raising the minimum wage is not the way to reduce poverty, and it would be detrimental to many business owners all over the