Cook 1

Kayla Cook

Mr. Gunsher

AP Seminar

5 October 2015

Would Increasing the Minimum Wage Decrease Poverty in America?

Poverty is a significant issue in America. According to the United States Census Bureau,

46.7 million Americans lived in poverty in 2014. Pundits have been debating over ways to

reduce the amount of people in poverty effectively. The idea of increasing minimum wage to

decrease poverty is a common proposal, but some doubt that this would actually decrease

poverty. After looking at this question through a historical point of view, it appears that raising

minimum wage really wouldnt decrease poverty in America. This is because minimum wage

doesnt effectively target those in poverty and therefore does not significantly change the amount

of people in poverty.

According to the Minimum-Wage-History.Org, President Roosevelt signed the The Fair

Labor Standards Act of 1938 in the United States. The FLSA, among other things, created a

Federal Minimum wage set at $0.25 per hour. Since then it has been raised 22 times. It was last

updated in 2009 to $7.25 per hour (Center for Poverty Research UCD, pg. 1). Some states have

their own minimum wage laws. For example, Georgias minimum wage of $5.15 is lower than

the Federal Minimum Wage, while Washington D.C.s minimum wage of $10.50 is higher than

the Federal Minimum Wage (United States Department of Labor, pg. 1).

One reason why an increase in minimum wage wouldnt decrease poverty is because the

majority of people in poverty do not work. The Center for Poverty Research UCD reports that in
 Cook 2

2014, 60% of Americans in poverty aged 18-64 did not work. It also said that only 10% of

Americans in poverty worked full-time. A historical study by economists Lowell Gallaway and

Richard Vedder also confirms that the majority of those in poverty do not work. In addition, the

Washington Policy Center says that of adults in poverty do not work at all. The Washington

Policy Center also said that only about 9% of adults in poverty work full time. This statistic

matches the data from the Center for Poverty Research UCD, which shows that the data is

credible. It follows, therefore, that if 60% of those in poverty do not work at all, then this same

60% cannot benefit from a minimum wage increase.

What is more, the majority of minimum wage earners are not in poverty. According to

Pew Research on Minimum Wage, 48.2% of 3 million hourly workers who were below or at the

Federal Minimum Wage of $7.25 were aged 16-24 (as of 2014). Most people ages 16-19 still live

with their family and have other incomes that could keep them out of poverty. The Washington

Policy Center says, The average family income of a minimum wage earner is $53,000 per year.

The average family income of a family of two in poverty is $15, 930 (Families USA, pg. 1).

Only 1/9 of minimum wage workers live in poverty (Nielsen, pg. 1). There isnt a significantly

large amount of people in poverty earning minimum wage; thus there wont be a huge impact on

poverty.

Many debate that raising the Federal Minimum Wage would decrease poverty. However,

looking at how poverty was affected by previous Federal Minimum Wage changes does not

show any significant correlation between poverty and minimum wage. The Federal Minimum

Wage was last changed in 2009 from $6.55 to $7.25 (Smith-CNN, pg.1). In 2009 the official

poverty rate was 14.3% (US Census Bureau). The following years 2010, 2011, 2012, 2013, and
 Cook 3

2014 did not reflect a decrease in poverty. 2010s poverty rate was 15.1%. 2011 and 2012s

poverty rates were both 15%. 2013s poverty rate was 14.5%, and 2014s poverty rate was

14.8% (US Census Bureau). This data strongly suggests that raising the minimum wage did not

improve poverty in the US. In fact, the data shows that the year directly following the minimum

wage increase had a worse poverty rate. In addition, the US Census Bureau reported that there is

no significant time period where poverty rises or falls. So then, this historical data shows that

raising minimum wage does not decrease poverty.

In conclusion, it is no understatement to say that this is a very controversial subject.

Many feel very strongly that increasing the minimum wage would indeed decrease poverty. Yet

just as passionately, others feel that an increase in minimum wage does not decrease poverty in

our nation. From my brief research, past Federal Minimum Wage changes do not appear to make

a positive impact upon poverty. Thus, I conclude that raising the Federal Minimum Wage will

not have a positive effect on poverty in the United States.

Individual Report - Wealth & Poverty

2 4 6

Understand Context x
Understand Argument x
Analyze Evidence x
1 2 3

Select and use evidence x

Grammar and Style x

Comments:
 Cook 4

Total Grade 38/40

 Cook 5

Works Cited

DeNavas-Walt, Carmen, and Bernadette D. Proctor. "Income, Poverty, and Health Insurance

Coverage in the United States: 2005." PsycEXTRA Dataset (2006): 12. Ncome and

Poverty in the United States: 2013. US Census Bureau, Sept. 2014. Web. 6 Oct. 2015.

Desilver, Drew. "Who Makes Minimum Wage?" Pew Research Center. 2015 Pew Research

Center, 8 Sept. 2014. Web. 6 Oct. 2015.

<http://www.pewresearch.org/fact-tank/2014/09/08/who-makes-minimum-wage/>.

"Federal Poverty Guidelines." Families USA. 2014 Families USA, Feb. 2015. Web.

<http://familiesusa.org/product/federal-poverty-guidelines>.

"History of the United States' Minimum Wage." Minimum-Wage.org. 2009-2015

Minimum-Wage.org, n.d. Web. 6 Oct. 2015.

<http://www.minimum-wage.org/history.asp>.

"Income and Poverty in the United States: 2014 - Highlights." Census.gov. US Census Bureau,

n.d. Web.

<https://www.census.gov/hhes/www/poverty/data/incpovhlth/2014/highlights.html>.

Katie, Nielsen. "Simply Increasing the Minimum Wage Wont Solve Poverty." My Heritage.

2015 The Heritage Foundation, n.d. Web. 6 Oct. 2015.

<https://www.myheritage.org/news/simply-increasing-the-minimum-wage-wont-solve-po

verty>.

"Key Facts About the Minimum Wage." Washington Policy Center. 2013 Washington Policy

Center, Oct. 2013. Web. 6 Oct. 2015.

<https://www.washingtonpolicy.org/publications/facts/key-facts-about-minimum-wage>.
 Cook 6

"Minimum Wage Laws in the States - January 1, 2015." United States Department of Labor.

U.S. Department of Labor, Jan. 2015. Web. 6 Oct. 2015.

<http://www.dol.gov/whd/minwage/america.htm#content>.

"Poverty." Census.gov. US Census Bureau, n.d. Web. 6 Oct. 2015.

<http://www.census.gov/hhes/www/poverty/about/overview/index.html>.

Smith, Aaron. "Minimum Wage Hike: More Money or Fewer Jobs?" CNN Money. CNN.com, 27

July 2009. Web. 6 Oct. 2015.

<http://money.cnn.com/2009/07/24/news/economy/minimum_wage/index.htm>.

Vedder, Richard, and Lowell Gallaway. "Does the Minimum Wage Reduce Poverty?"

Employment Policies Institute. 2015 Employment Policies Institute, June 2001. Web. 6

Oct. 2015. <https://www.epionline.org/studies/r31/>.

"What Are Poverty Rates among Working Adults?" Center for Poverty Research UCD. UC

Davis Center for Poverty Research, n.d. Web. 6 Oct. 2015.

<http://poverty.ucdavis.edu/faq/what-are-poverty-rates-among-working-adults>.

"What Is the History of the Minimum Wage?" Center for Poverty Research UCD. UC Davis

Center for Poverty Research, 10 July 2014. Web.

<http://poverty.ucdavis.edu/faq/what-history-minimum-wage>.
Cook 7