In the present economic environment, “lifting 5 million out of poverty” will bloat what Newman and Chen call the “missing class,” those who are “decidedly not middle-class Americans” and yet “beyond the reach of most policies that speak to the conditions of life among the poor.”


The Huffington Post today reported on a study from University of Massachusetts-Amherst economist Arindrajit Dube.

Together they claim that a proposed Federal minimum wage increase from $7.25 per hour to $10.10 “could help lift nearly 5 million people out of poverty.”

If Congress were to go through with a plan backed by President Barack Obama to raise the minimum wage from $7.25 an hour to $10.10 an hour, it would reduce the poverty rate among Americans between the ages of 18 and 64 by as much as 1.7 percentage points… That would bring about 4.6 million people out of poverty directly and reduce the ranks of the nation’s poor by 6.8 million, accounting for longer-term effects.

A $10.10 minimum wage would help to reverse some of the damage done by the Great Recession. The economic downturn, which technically ended in 2009, and recovery have been marked by high unemployment and stagnant or falling wages. After the recession, many jobs that did return were low-paying — with many offering just minimum wage or close to it.

Three-fifths of the new jobs created during the economic recovery paid low-wages, according to an August 2012 analysis from the National Employment Law Project, a left-leaning advocacy group focused on low-wage workers.

The combination of many Americans not working at all or working for not that much money contributed to a 3.4 percent increase in the poverty rate during the recession that has not abated. A $10.10 minimum wage could go a long way in reversing some of that economic damage, according to Dube.


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