The loss in business income would be mostly borne by families well above the poverty line. All consumers would pay higher prices, but higher-income families, who spend more, would pay more of those costs. And the cost of effects on the overall economy would generally accrue to families in proportion to their income, which means they would largely be absorbed by families with income well above the poverty threshold. Real income would fall by about $16 billion for families above the poverty line; that would reduce their total income by about 0.1 percent.

“Raising the minimum wage would increase family income for many low-wage workers, moving some of them out of poverty… The increased earnings for low-wage workers resulting from the higher minimum wage would total $31 billion, by CBO’s estimate. However, those earnings would not go only to low-income families, because many low-wage workers are not members of low-income families. Just 19 percent of the $31 billion would accrue to families with earnings below the poverty threshold, whereas 29 percent would accrue to families earning more than three times the poverty threshold, CBO estimates… Families whose income would have been between one and three times the poverty threshold would receive, on net, $12 billion in additional real income. About $2 billion, on net, would go to families whose income would have been between three and six times the poverty threshold. Real income would decrease, on net, by $17 billion for families whose income would otherwise have been six times the poverty threshold or more, lowering their average family income by 0.4 percent.”

“Substantively, our results show that a 10 percent minimum wage hike raises aggregate CPI by 0.027 percent in the first month, with the full pass-through effect amounting to 0.11 percent after ten months.” The authors conclude that “these magnitudes are economically small,” though the effect is stronger in sectors intensive in low‑wage labor (such as restaurants and personal services).

“There is robust evidence that higher minimum wages increase family incomes at the bottom of the distribution… The long-run minimum wage elasticity of the non-elderly poverty rate with respect to the minimum wage ranges between −0.220 and −0.459 across alternative specifications… The long-run minimum wage elasticities for the tenth and fifteenth unconditional quantiles of family income range between 0.152 and 0.430 depending on specification. A reduction in public assistance partly offsets these income gains, which are on average 66 percent as large when using an expanded income definition including tax credits and noncash transfers… Overall, the evidence clearly points to at least moderate income gains for low-income families resulting from minimum wage increases.”

Using U.S. and Canadian data on limited‑service restaurants, the authors “demonstrated…that immediately after a minimum wage increase, limited‑service restaurants…pass close to 100% of the higher labor costs on to consumers in the form of higher prices.” They model the minimum wage as “essentially a ‘tax and transfer’ program…Higher prices on goods and services offset the income benefit for minimum wage workers and reduce the real income of nonminimum wage workers who did not get a wage increase.” They predict “this loss for nonminimum wage earners results in a $25 billion decline in real spending in the year following the minimum wage hike.”

Using variation in city‑level minimum wages, the paper finds: “A 10 percent increase in the minimum wage in a city or Metropolitan Statistical Area (MSA) is associated with an overall (all‑items) inflation rate that is cumulatively 25 basis points higher relative to cities that do not change their minimum wage.” It notes that “minimum wage increases result in small but significant increases in prices and consumption, particularly in economic sectors where firms tend to employ a large number of minimum‑wage and low‑wage workers, such as restaurants.” Consumers respond by modestly increasing real spending, especially on food away from home.

“Using administrative data, we find that increases in the minimum wage lead to faster growth at low percentiles of the income distribution, with the magnitude of this effect declining to zero around the 15th percentile… Under both approaches, we find that raising the minimum wage increases earnings growth at the bottom of the distribution, and those effects persist and indeed grow in magnitude over several years… Although the details of the estimates differ, we consistently find that raising the minimum wage increases incomes at the bottom of the distribution and that this increase persists for several years… All three panels show… the elasticity of family income with respect to the minimum wage tops out at about 0.5 near the fifth percentile and then gradually declines in magnitude moving up the distribution.”

Analyzing U.S. food and kindred products sectors, the USDA study reports: “The minimum wage increases we analyzed caused only a small increase in the cost of food purchased away from home and less than 1‑percent increases for most of the 12 food and kindred products sectors.” With full‑cost pass‑through, “increases in the minimum wage raised prices at eating and drinking places by 0.9 percent, the largest percentage increase of the observed industries.” It concludes: “even with a full cost pass‑through, a 50‑cent increase in minimum wage will increase food prices by about 1 percent,” and notes this assumes full pass‑through so estimates are “best considered as upper bounds.”

“There is robust evidence that higher minimum wages increase family incomes at the bottom of the distribution… After accounting for tax credits and noncash transfers, the minimum wage effect on the level of family incomes… is about 66 percent as large for the bottom 30 percent of the distribution. Overall, the evidence clearly points to at least moderate income gains for low-income families resulting from minimum wage increases… I find clear, positive effects of minimum wages on family incomes below the 20th percentile, with the magnitude of the effect declining and becoming indistinguishable from zero above about the 40th percentile.”

The FAQ cites empirical research: “For example, one study found that a 10% minimum wage increase was associated with a 0.14 percentage point increase in the Consumer Price Index. A study focused on the restaurant industry found a 10% increase in the minimum wage was associated with a 0.58% menu price increase. Even some of the most ambitious minimum wage policies…only increased fast‑food prices 2.1%.” It stresses that “economists do find that raising the minimum wage increases prices at affected businesses but only very modestly” and argues that “modest price increases…are redistributive. Higher‑earning consumers pay higher prices, transferring income to low‑wage workers receiving bigger paychecks.”

His findings suggest that there is significant evidence that higher minimum wages increase family incomes at the bottom of the income distribution. He does concede that this may cause families around certain poverty thresholds to lose their subsidized benefits. As many as 1.7% to 5.6% of Florida households may be impacted by the effects of a benefits cliff following the wage increase. Families whose earnings rise above eligibility cutoffs can face large implicit tax rates as they lose means-tested benefits, which can especially affect near-poor and some middle-income households with higher existing financial burdens.

Discussing mechanisms, the review notes: “Third, firms could pass the costs of minimum wage increases to consumers as price increases, which would diminish the benefits of an increase in income by reducing families’ buying power. This is particularly likely for goods and services produced, sold, or provided by low‑paid workers, such as restaurant food and child care.” It highlights that higher child care prices, as centers adjust to increased wage rates, “could push families into lower‑quality informal care settings” and that “the potential consequences of higher child care costs will disproportionately affect lower‑income families, the very families minimum wage laws are supposed to help.”

“We find that in the short run, a large increase in the minimum wage has a small effect on employment and therefore increases the labor income of the workers who are initially paid below $15… In the short run, the minimum wage works as its proponents claim: it increases the wages of the workers at the lowest percentiles of the wage distribution with only small negative effects on their employment. Hence, it considerably boosts their labor income and consumption… In the long run, however, a large minimum wage has perverse distributional consequences in that it lowers the employment, income, and welfare precisely of the low-wage workers it is designed to help… These earnings losses are concentrated among workers in the bottom 20% of the initial wage distribution.”

The weight of economic research shows that raising the minimum wage would reduce poverty and work in tandem with other poverty-reducing programs. Raising the minimum wage will help family breadwinners support their children. The typical minimum wage earner brings in half of their family’s income. On average, these studies find a ten percent increase in the minimum wage reduces the poverty rate by 1.5 percent. These gains accrue mainly to families at the bottom and near the bottom of the income distribution; families higher up generally experience small income reductions via slightly higher prices or lower business profits.

“We use distributional regression analysis to study the impact of a six percent increase in the Irish minimum wage on the distribution of hourly wages and household income… Figure 8 indicates that the 2016 minimum wage increase had little effect on the income distribution, using either measure of income. The price effect oscillates around zero and is not statistically significant at any point of the annual equivalised gross income distribution… Our results show that the increase in the minimum wage had very little effect on the household income distribution, although it reduced wage inequality: the 2016 minimum wage increase was associated with a reduction of approximately eight percent in the P90/P10 ratio and approximately four percent in the P75/P25 ratio.”

The federal minimum wage has significantly fallen behind inflation, productivity growth, and increased living costs. When the minimum wage does not keep pace with productivity growth, workers earning low wages find it difficult to purchase essential goods and services. These low minimum wages exacerbate financial difficulties and other challenges for workers, leading to job insecurity, family instability (e.g., divorce), unaffordable childcare, and unhealthy living conditions, all of which perpetuate poverty. Raising the minimum wage would significantly alleviate poverty, improve family well-being, help reverse income inequality, and reduce social welfare expenses. Increasing the federal minimum wage to $15.00 would directly affect 32.2 million workers, lifting many out of poverty, including many working parents whose families currently face high financial burdens.

Multiple studies conclude that total annual incomes of families at the bottom of the income distribution rise significantly after a minimum wage increase. Workers in low-wage jobs and their families benefit the most from these income increases, reducing poverty and income inequality. In states without laws to raise the minimum wage to $15, nearly half (47%, or 10.5 million) of families of workers who would benefit from the Act rely on public supports programs in part because they do not earn enough at work. The report notes that many of the workers who would get raises are second or third earners in households with incomes twice the poverty line, indicating that impacts extend into lower-middle-income families but generally through gains in earnings rather than net financial penalties.

“Relative to other workers, individuals whose earnings are affected by a rise in the minimum wage are three times more likely to live in poverty. In the second part of the paper we use family income rather than poverty status and find that less than one-third of the benefits from a minimum wage increase go to families in the bottom decile of the family income distribution, and about half go to families in the bottom two deciles… A sizable share of the benefits go to families with incomes well above the poverty line.”

Summarizing recent evidence on price pass‑through, the Upjohn Institute notes: “Recent Upjohn Institute research shows that the pass‑through effect of minimum wage increases on prices is smaller than previously thought.” It adds that “small raises in the minimum wage lead to slower wage growth for low‑wage workers” and “the minimum wage reduces job growth over a period of several years with the effects being strongest for younger workers and for those in industries with a higher proportion of low‑wage workers,” emphasizing that while some prices rise, the magnitude of pass‑through is limited in aggregate.

When wage floors rise, workers save more, move to better jobs more frequently, experience improved job quality and greater financial well-being, and enjoy better prospects for economic mobility. Minimum wage increases are also associated with reduced debt and increased access to credit for households with low credit scores. Most studies say no: increases in minimum wages have been shown to raise household spending and bolster local economies, and, in general, have not been shown to negatively affect overall employment. These findings suggest that for many low- and some middle-income households, higher minimum wages can ease, rather than worsen, financial burdens.

An issue brief from the Washington Center for Equitable Growth surveys economic research on "ripple effects" of minimum wage increases and finds that such increases "do raise the wages of those earning above the minimum wage" and that these ripple effects help reduce wage inequality between low- and middle-class workers. Synthesizing multiple studies, the brief reports that a ten percent minimum wage increase raises wages at the 10th percentile by about 1.6 percent and at the 20th percentile by 0.7 percent, but that after the 25th percentile, wage effects are "very small and statistically indistinguishable from zero." It concludes that in the short run, minimum wages "do not appear to have ripple effects for those workers earning middle-class wages or higher," suggesting limited direct benefit but not documenting a specific financial penalty driven by higher burdens.[6]

“Overall, I find robust evidence that higher minimum wages lead to increases in incomes among families at the bottom of the income distribution and that these wages reduce the poverty rate. A 10 percent increase in the minimum wage reduces the nonelderly poverty rate by about 5 percent… I find that the largest increases occur between the bottom 10th and 15th percentiles… On average, those in the bottom quartile of the income distribution can expect an approximately $525 increase in annual income from the minimum-wage policy… For the bottom quartile, the income gains are approximately $370 after accounting for these offsets due to reduced tax credits and noncash transfers.”

An analysis by the Center for American Progress argues that raising the minimum wage to $15 would be "an investment in growing the middle class" by increasing earnings for roughly 40 million workers—about 1 in 4 workers—and reducing income inequality. It estimates that typical workers would see annual wage gains of about $800, while the lowest-paid quarter of workers would see gains of around $6,000. The report frames minimum wage increases as supporting the economic security of both low-wage and many middle-class workers, highlighting that wage gains can help cover expenses such as rent and food. It does not claim that middle-income families are financially penalized; instead, it portrays middle-class households as among those who benefit from higher wage floors.[4]

“Overall, the affected workers would be concentrated among households in the lowest one-fifth of the income distribution, and the higher wage would raise their incomes… Indeed, empirical studies suggest that the effects of minimum wage increases on employment have historically been slightly negative, negligible, or sometimes even positive. The Congressional Budget Office (CBO) estimates that low-wage workers as a group gain more income from the higher wage than they lose from reduced employment… Some of the benefits of higher minimum wages go to families with incomes well above the poverty line because many low-wage workers are in nonpoor families.”

The Drexel brief reviews price impacts: “Over a ten‑plus year period, research found that a 10 percent increase in the minimum wage resulted in just a 0.36 percent increase in prices passed on to the consumer at grocery stores. A similar Seattle‑based study showed that supermarket food prices were not impacted by their minimum wage increase.” It also notes that “because lower‑income households spend a larger portion of their income on commodities that saw the largest price increases, they face a higher inflation rate,” indicating that modest price pass‑through can be relatively burdensome for low‑income rather than middle‑income households.

In 2004 a comprehensive review of more than 20 minimum wage studies looking at price effects found that a 10 percent increase in the U.S. minimum wage raises food prices by up to 4 percent and overall prices by up to 0.4 percent. A 2007 study from the Federal Reserve Bank of Chicago found that restaurant prices unambiguously increase in response to minimum wage increases. While an increase in the minimum wage will lift some families out of poverty, other low-skilled workers may lose their jobs, which reduces their income and drops their families into poverty. If a minimum wage is partly or fully passed through to consumers in the form of higher prices, it will hurt the poor because they disproportionately suffer from price inflation. Of those who would gain, 63 percent are second or third earners living in households with incomes twice the poverty line, meaning a large share of beneficiaries live in lower-middle-income families that may face higher living costs but also receive additional earnings.

Their work demonstrates that we can increase the minimum wage without a negative effect on families receiving means-tested benefits through a $12/hour minimum wage. Cooper’s report also found that “the Raise the Wage Act would disproportionately help workers in poverty or near the poverty line” because “nearly half (46.7 percent) of all workers who would be affected by raising the minimum wage to $15 by 2024 have total family incomes within 200 percent of the poverty line,” demonstrating that raising the minimum wage would directly affect the working poor. However, income interacts with means-tested benefits, meaning that raising wages alone may cause many poor families to actually end up with less money in their pockets as they lose eligibility for some benefits, a dynamic that can affect near-poor and some middle-income families with substantial financial obligations.

An article available via JSTOR under the title "The Minimum Wage Is a Middle-Class Issue" discusses political and economic arguments about minimum wage policy and its implications for the middle class. It notes that opponents claim that for low-wage workers in small businesses, a minimum-wage increase may mean "layoffs or benefit cuts" and that critics warn of employment risks. The article frames the minimum wage debate as relevant to middle-class concerns but does not present empirical evidence that raising the minimum wage systematically penalizes middle-income families because of their existing financial burdens; rather, it highlights that minimum wage levels affect broader economic conditions that matter to the middle class.[9]

A commentary from the American Institute for Economic Research (AIER) outlines a critical perspective on minimum wage laws, arguing that mandated wage hikes "do not create new wealth—they simply redistribute it, often inefficiently" and can lead to reduced employment opportunities, increased automation, and higher consumer prices. Drawing on a meta-analysis by Neumark and Shirley (2021), it notes that 79.3 percent of studies report negative employment effects following minimum wage hikes, especially among teens, young adults, and less-educated workers. While emphasizing redistribution and potential distortions, the article does not provide specific empirical evidence that middle-income families are financially penalized because they have higher preexisting financial burdens; its focus is on aggregate efficiency and labor market impacts.[7]