Does Increasing the Minimum Wage Alleviate Poverty?

Jan 11, 2023

LSBE student Aidan Kray examines the connection.

When University of Minnesota Duluth (UMD) senior Aidan Kray’s worlds collided, the result was fascinating research. His study of economics and accounting led him to ask an intriguing question: “What are the effects of minimum wage increases on poverty?”

His interest in the topic led him to a required University Honors program capstone project and an Undergraduate Research Opportunities Program grant.

Research, research

Aiden Kray walks down stairs with Economics Professor Neil Wilmot.
Aiden Kray and Economics Professor Neil Wilmot

Kray’s mentor, Neil Wilmot, department head and associate professor of economics in the Labovitz School of Business and Economics, provided Kray with research guidance to begin his work. Kray had found state-by-state data on minimum wages and poverty levels, but none of it seemed to fit together. Wilmot and other faculty members directed Kray to specific databases.

Kray remembers sitting in his living room on a Saturday night and opening his laptop. “I cruised through different databases, trying to figure out what I could use,” he recalls.

He examined gross domestic product, minimum wages, poverty rates, and unemployment rates, for starters—and he found connections. His research findings state that the “primary conclusion is that increases in minimum wages do not reduce poverty, but decreasing real minimum wages increase poverty. This would lead to the conclusion that minimum wages should be indexed for inflation.”

Kray’s work was well-received. A poster he created was reviewed by hundreds of business people at the Regional Economic Indicators Forum in spring 2022.