We provide the first direct estimates of the effects of minimum wages on low-wage workers in families at different points of the distribution of income-to-needs, using data from the Survey of Income and Program Participation, which oversamples low-income families. We find adverse — rather than beneficial — effects of minimum wages on the employment, hours, and earnings of initially employed low-wage workers in poor and low-income families. Although we do not find a gradient indicating more adverse effects on the poorest low-wage workers, the adverse effects for poor and low-income low-wage workers help explain why minimum wages do not reduce poverty.

That is from a recent paper by David Neumark and Emma Wohl.

Neumark is a labor economist who has studied the minimum wage for decades; with William Wascher, he co-authored a widely cited survey of the evidence concluding that, on balance, minimum wages reduce employment among the least-skilled. That view sits on one side of a long-running dispute. The modern debate took shape after David Card and Alan Krueger's 1994 study of fast-food restaurants in New Jersey and Pennsylvania found no job losses following New Jersey's minimum wage increase, and later studies using different data and methods have reached conflicting verdicts — some find little or no employment effect alongside wage gains at the bottom of the pay scale, while others find job and hours losses concentrated among the least experienced workers.

The stakes go beyond the number of jobs. The federal minimum wage has stood at $7.25 an hour since 2009, while dozens of states and many cities have adopted higher floors, and Congress has repeatedly debated proposals to raise the federal level, most prominently to $15 an hour. Because the stated purpose of the policy is to lift working families at the bottom, the paper's central question — what happens to workers who start out in poor and low-income households, rather than to average employment — goes to the heart of the case for it.

Earlier research had already questioned minimum wages as an anti-poverty tool on targeting grounds, noting that many minimum wage workers are secondary earners in households above the poverty line. The new paper's advance is to follow the intended beneficiaries directly, using the Census Bureau's Survey of Income and Program Participation, which interviews the same households across multi-year panels, making it possible to track changes in employment, hours, and earnings among workers who begin in poor or near-poor families.

The findings also feed a recurring comparison in policy debates: wage floors versus targeted wage subsidies. The Earned Income Tax Credit, which rises with family earnings and phases out at higher incomes, is often cited by economists as better aimed at low-income working families. The open question for the wider debate is how distributional evidence of this kind squares with studies that find little or no average employment effect from minimum wage increases.