If your goal is to reduce poverty, Laval University Professor Stephen Gordon says don’t bother:
The problem is that the statistical link between “earning minimum wage” and “being in a low-income household” is almost nil. Most of the people in low income households fall into two categories: those who don’t work, and those who earn above minimum wage but are constrained in the number of hours they can work. Minimum wage increases don’t help them. On the other hand, the majority of the people who do earn minimum wage live in households where there are other earners and are not in poverty. (There is some concentration of minimum wage workers in households with below-median incomes, even if they aren’t in poverty.)
Prof. Gordon notes that the policy question is different in the United States than in Canada, as increases in the minimum wage have a greater impact on unemployment in Canada than they do in the U.S.
Prof. Gordon is a contributor to the great economics blog Worthwhile Canadian Initiative. There are more discussions about the minimum wage there.
