Picture this: You're a single parent of two, working 40 hours a week plus occasional overtime at a minimum wage job, struggling to put food on the table for feed your family, and then you get a call from the bank telling you that your house is going into foreclosure. This is the situation faced by thousands of Americans every year due to low income and wealth inequality. The federal minimum wage (FMW) as of April 2014 is $7.25, which is not enough to keep a family of two above the poverty line. There are some questions on this topic that should be addressed, such as why is poverty and wealth distribution a problem in the United States today? Should FMW be increased and why? How would increasing FMW affect American families? What are the advantages and disadvantages of increasing FMW? Finally, what is ultimately the best path when it comes to FMW? This paper argues that raising the federal minimum wage would bring mostly positive benefits to lower- and middle-class families by decreasing poverty rates. The increase would help reduce wealth inequality between upper- and lower-class Americans. Before delving into why increasing FMW is important to help poverty, we should first examine how poverty is defined and studied. First, the federal government identifies poverty using “a series of monetary income thresholds that vary based on family size and composition.” Knowing that the 2010 US Census states that the average American household size is 2.58 people per household, we can round to the figure of three people per household. According to the 2014 US guidelines, a family of three meets the standards for being in poverty annual income is less than $19,790 while a full-time FMW worker earns $15,080 per year...... half of document ...... cs/poverty_measure-how.html (accessed 30 April 2014). Neumark, David and William Wascher. “Do minimum wages fight poverty?” Economic Inquiry40, n. 3 (2002): 315-333. “How the Census Bureau Measures.” poverty/about/overview/measure.html (accessed 29 April 2014). “The Effects of a Minimum Wage Increase on Employment and Family Income.” Congressional Budget Office. files/cbofiles/attachments/44995-MinimumWage.pdf (accessed May 4, 2014). “United States Department of Labor – Wage and Hour Division (WHD) – Minimum Wage.” U.S. Department of Labor - Wage and Hour Division (WHD) - Minimum Wage. http://www.dol.gov/whd/minwage/chart.htm (accessed May 3, 2014).Warren, J.R., and C. Hamrock. “The Effect of Minimum Wage Rates on High School Completion.” Social Forces 88, n. 3 (2010): 1379-1392.