Where a Higher Minimum Wage Hurts the Poor
In the developing world, the poorest workers rarely benefit from minimum wage increases, and they may even pay a price
A worker weeds tobacco plants in a farm in Esteli, Nicaragua.
Photographer: Inti Ocon/AFP/Getty ImagesThis article is for subscribers only.
The City of Los Angeles has just passed legislation to raise the minimum wage to $15 by 2020, following in the footsteps of other West Coast cities, including Seattle and San Francisco. It's an early success for a national movement dedicated to pushing for a federal minimum wage of $15. Past minimum wage hikes have, on the whole, made poorer workers in the U.S. better off and marginally reduced inequality.
The same can't be said for many of the world’s poorest countries and people. In low-income economies, high official minimum wages reduce formal employment opportunities, push people into informal jobs, reward the privileged, and hurt the poor.