Estimates based on data from the Survey of Income and Program Participation examine the effects of minimum wages on low-wage workers in poor and low-income families across different income-to-needs distributions. The findings indicate adverse effects regarding employment, hours, and earnings for initially employed low-wage workers in these families. Although a gradient suggesting more adverse effects on the poorest workers was not found, these negative effects help explain why minimum wage increases do not result in poverty reduction.

The analysis presents an outcome where an intended policy intervention—raising the wage floor—yields negative distributional consequences for the target group, even when that change is intended to alleviate hardship. The core tension lies in the discrepancy between the mechanism of policy intent (poverty reduction) and the observed effect on individual outcomes (employment, hours, earnings). The fact that minimum wages do not reduce poverty suggests that the impact is either insufficient to overcome structural barriers or that other systemic factors are dominant determinants of poverty. The finding that adverse effects help explain the lack of poverty reduction points toward a critical need to examine the downstream context: whether increased wages translate into sustained economic security, or if they are absorbed by precarious employment structures. What determines whether wage increases reduce poverty requires a deeper dive into income-to-needs distributions and labor market rigidity beyond the initial point of employment.