Conclusions

The recent analysis done on the effects of minimum wage policy on employment and poverty levels leads to mixed conclusions. The employment effects appear to be rather small, and the monopsony and efficiency wage models are useful for explaining some of the irregularities that have been found. The minimum wage alone appears to adversely affect the poverty rate. Perhaps some combination of minimum wage policy and the EITC would prove successful in bringing down the level of poverty. Economists must continue to study the effects of minimum wage policy to determine if it is simply a contractionary policy or if it is truly helping to redistribute income from high to low income groups and therefore reduce the poverty level. Considering the analysis done here, it seems unlikely that the minimum wage can be used alone as a tool for creating any significant benefits to those that need them the most.