There is a somewhat twisted consensus around the fact that minimum wages do little about poverty, and also have no effect on employment. Why then would we raise them?
Poverty, for many, is a household concept. The loss of income by any family member will pull all family members into poverty. This is of course true and the impact of minimum wages on career interruptions is difficult to establish causally.
However, another line of reasoning would be to wonder what wage structure would exist if the labour market was entirely unregulated. It is obvious that just about any job might exist, if there would be no drawback position such as social security, and low reservation wages. In the current globalized economies, this is very likely. In more remote, nordic economies, this used to be less so. Combining high schooling and high bargaining coverage and unionization, in-work poverty has not been a challenge.
Besides migration and the downgrading of the workforce, the pressure on benefits, and hence the lowering of the reservation wage, technological change and in particular job polarization is also fuelling the growth of the low wage segment.
If we look at the role of wages in reducing poverty in the past, this is perhaps not as important as it will be in the future.
