The Effects of Minimum Wages on Low-Skilled Immigrants’ Wages, Employment, and Poverty†

Raising the minimum wage has been advanced as complementary policy to comprehensive immigration reform to improve low-skilled immigrants’ economic well-being. While adverse labor demand effects could undermine this goal, existing studies do not detect evidence of negative employment effects. We re-investigate this question using data from the 1994 to 2016 Current Population Survey and conclude that minimum wage increases reduced employment of less-educated Hispanic immigrants, with estimated elasticities of around –0.1. However, we also find that the wage and employment effects of minimum wages on low-skilled immigrants diminished over the last decade. This finding is consistent with more restrictive state immigration policies and the Great Recession inducing outmigration of low-skilled immigrants, as well as immigrants moving into the informal sector. Finally, our results show that raising the minimum wage is an ineffective policy tool for reducing poverty among immigrants.