Minimum Wages and Poverty.

• Author: Van Doren, Peter

* "Minimum Wages and Poverty: New Evidence from Dynamic Difference-in-Differences Estimates," by Richard V. Burkhauser, Drew McNichols, and Joseph J. Sabia. NBER Working Paper no. 31182, April 2023.

The consensus of economists has long been that minimum wage increases did little to reduce poverty because most minimum wage labor is not supplied by individuals living in poor families and many people in poor families do not work. A 2019 paper by Arindrajit Dube, "Minimum Wages and the Distribution of Family Incomes" (American Economic Journal: Applied Economics 11(4): 268-304), challenged that consensus, finding that increases in the minimum wage decreased poverty. The Congressional Budget Office cited Dube to conclude that 900,000 individuals would be lifted out of poverty from an increase in the federal minimum wage from $7.25 per hour to $15 per hour.

Subsequent papers have challenged Dube's work.

Most disputes regarding empirical work in economics are about the failure to include variables in regressions that are statistically related to the outcome (in this case, aggregate poverty rates) as well as the causal variable of interest (the minimum wage). The addition of those variables reduces the apparent effect of the variable of interest (in this case, the minimum wage).

This paper criticizes Dube for the opposite problem: including...