How much should the US minimum wage be to reduce poverty?

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Recent poverty guidelines provided by the United States Department of Health and Human Services suggest that a single person in the United States is living in poverty if his or her total income is under $12,140 a year (2018 figure). The Department adds $4,320 for each person in the family unit, so a family of four would need an annual income of $25,100 to escape poverty.

An employee earning $7.25 an hour would, according to these figures, be above the poverty level, if we assume he or she works 40 hours a week and 50 weeks a year. This person's total annual income would be $14,500. However, the assumption that a minimum-wage employee would have a stable enough work environment to be sure of a regular forty-hour week is not justified. Moreover, this person would certainly sink below the poverty line if he or she had a spouse and family to support. This is why many Democrats, notably Senator Bernie Sanders, have called for a minimum wage of $15 an hour, and the party's official platform, adopted at the 2016 National Convention, is that the minimum wage should be raised to $15 an hour over time.

Those who oppose a $15 an hour minimum wage (or, in some cases, any minimum wage at all) often argue that it would increase poverty, since businesses which could not pay their employees this much would be forced to close. There is actually very little evidence from the European economies which have implemented minimum wages that this is the case. Still more effective than an hourly minimum would be to adopt the system used in the Netherlands of guaranteeing a minimum monthly income. This solves problems of zero-hours contracts, which a simple hourly minimum cannot address. Given that this is not a practical solution in the United States economy and political climate, a minimum wage of $15 an hour, giving an annual income of $30,000 at 40 hours and 50 weeks a year, would allow a considerable amount of leeway for the fact that actual hours might well be much less than this, and is probably the best viable option for lifting the maximum number of Americans out of poverty.

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