Hiking Minimum Wage an Inefficient Tool to Fight Poverty: Fed Research

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Increasing the minimum wage is an inefficient way to reduce poverty, according to a Fed research paper that comes amid a national clamor to hike pay for workers at the low end of the salary scale.

David Neumark, visiting scholar at the San Francisco Fed, contends in the paper that raising the minimum wage has only limited benefits in the war against poverty, due in part because relatively few of those falling below the poverty line actually receive the wage.

Many of the benefits from raising the wage, a move already undertaken by multiple governments around the country as well as some big-name companies, tend to go to higher-income families, said Neumark, who also pointed to research that shows raising wages kills jobs through higher costs to employers. Neumark is a professor of economics and director of the Center for Economics and Public Policy at the University of California, Irvine.

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Demographically, about half of the 3 million or so workers receiving the minimum are 16 to 24 years old, with the highest concentration in the leisure and hospitality industry, according to the Bureau of Labor Statistics.

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there are no workers in 57 percent of families below the poverty line,

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