Well, I guess the notion of raising the minimum wage is going mainstream again. President Obama called it out in the SOTU and, more importantly, the Daily Show did a special report on it the other night.

http://www.thedailyshow.com/watch/tue-january-28-2014/wage-against-the-machine

Honestly, why is this a thing?

I think everyone can agree that raising the minimum wage at least has the potential to increase unemployment. At **best**, this increase in unemployment may be small. But why are we fucking around with a policy to help the poor that results in unemployment AT ALL when there are better options out there?

1/31/2014 10:21:11 AM

You know what's amazing? At this point:

Quote :

"Honestly, why is this a thing? I think everyone can agree..."

No joke, I don't know what side you're on. Maybe I'm worse at remembering user names than other people here. I can agree that it's obvious to people, but that's the problem. It's obvious to red-team that it should be red, and obvious to blue-team that it should be blue.

1/31/2014 10:28:09 AM

There may be better options, but a complex redistributive scheme doesn't have a snowball's chance in hell of passing congress, nor do I see it picking up a lot of populist support. People generally don't like these new sweeping plans and post-obamacare they are even more wary, probably rightfully so. Explaining your new policy to voters isn't going to be easy in a 15 second soundbite. Compare that with the min wage:

Voters know the minimum wage. People are comfortable with it and have dealt with it before - they know it works! The average voter supports an increase. Democrats know this, and its easy to use against republicans.

Hell, most democrats probably don't even REALLY want to increase the min. wage. They know there is a nearly 0% chance of it passing. Its just a convenient and nearly effortless way to paint republicans as poor-haters.

[Edited on January 31, 2014 at 10:46 AM. Reason : also: http://thewolfweb.com/message_topic.aspx?topic=638672]

1/31/2014 10:46:07 AM

Who needs a new, complex redistributive scheme? We have options already that can be expanded. Example...

Raise the Earned Income Tax Credit.
* Simple to explain (like the minimum wage).
* Targeted at working poor that need help the most (unlike the minimum wage).
* And won't crowd workers out of the labor market (also unlike the minimum wage).

1/31/2014 10:49:56 AM

i'm not a fan of minimum wages, i think its an inefficient way to accomplish the goal that it sets out to do, but the better plans have a much smaller (non-existent) chance of passing. the proposed minimum wage increase is pretty minor, its just applying past-due inflation adjustments.

also, its actually not agreed that a small minimum wage increase will increase unemployment

1/31/2014 10:52:35 AM

Quote :

"also, its actually not agreed that a small minimum wage increase will increase unemployment"

Why?

Just because it's not measurable doesn't mean it doesn't have an effect. So what could you possibly mean by such statements? The working principle is obvious, and you seem to not deny it. Heck, you probably believe that a small amount of CO2 raises the average temperature of the Earth even if it can't be measured. And even if you're going into all the chaos-theory mumbo jumbo, you would still recognize that more CO2 raises the average of all possible outcomes. It still puts pressure on the system in that direction, and we know this because we understand how that system works. So why is the minimum wage any different?

1/31/2014 11:04:48 AM

dtown,

A better chance of passing than a hike in the EITC? According to who? Republicans may be obstructionists, but I don't see how they could pass up an opportunity to pass an increase in a tax credit. Lowering taxes is kind of their bag.

Also, I didn't see that everyone agreed that a small increase in the minimum wage would increase unemployment. I said everyone agreed it was theoretically possible. As Paul Krugman noted in his column last month, supporters rely on evidence that the impact of such a policy on employment will be small.
http://www.nytimes.com/2013/12/02/opinion/krugman-better-pay-now.html?hp&rref=opinion&_r=0

Of course, they could be wrong. At best the impact will be small. By contrast, there is no reason to think raising the EITC would increase unemployment in theory or in practice.

[Edited on January 31, 2014 at 11:07 AM. Reason : ``]

1/31/2014 11:05:55 AM

^^i'm saying that plenty will debate that it has any effect, not just that its not measurable

Quote :

"Lowering taxes is kind of their bag."

they only like lowering taxes for the rich



[Edited on January 31, 2014 at 11:07 AM. Reason : .]

1/31/2014 11:05:56 AM

dtown,

if they are only concerned about the rich, what makes you think they would support a hike in the min wage? Not many people get rich working for $7 per hour.

[Edited on January 31, 2014 at 11:12 AM. Reason : ``]

1/31/2014 11:11:47 AM

yeah I support EITC expansion, and you're right that it might be as easy to explain/support as the min. wage in front of a camera, but there are still some concerns:

-You have to discuss how you're going to pay for it (prepare for kneejerk tax reactions and tax/democrat associations)
-Among low-information voters, its unlikely they even know what the EITC is. They just know they get an ass ton of money back on their taxes.


My intent in posting was just pointing out that the min. wage rhetoric is partisan populism meant to score points. It has no chance at passing. It doesn't have to be the best policy proposal, it doesn't even have to work in theory. It just needs to get people nodding their heads in agreement.

1/31/2014 11:13:30 AM

Quote :

"if they are only concerned about the rich, what makes you think they would support a hike in the min wage? Not many people get rich working for $7 per hour."

the rich won't support either, more other people will support a minimum wage increase because more people know what that is. its easier to understand than an EITC.

1/31/2014 11:16:48 AM

simple american voters won't understand the eitc so it won't get passed? by that logic, the affordable care act would have never been passed since it was even more complicated.

we live in a representative democracy, so only the representatives have to be convinced.

1/31/2014 11:30:05 AM

Show me polling for EITC and polling for minimum wage

1/31/2014 11:32:47 AM

Really poor people don't pay or file taxes anyway

1/31/2014 11:46:55 AM

dtown,

no need. my argument is that which polls better is not the best indicator of which has the best chances for becoming law.

1/31/2014 11:57:00 AM

Maybe it is just a ruse to get Republicans to support an expanded EITC. Since Republicans can never, under no circumstances, support any policies or ideas that are supported by Obama, maybe they will propose a better EITC as a sensible alternative to raising the min. wage. Not holding my breath though.

1/31/2014 12:01:01 PM

its a huge factor. in regards to your ACA example, people had been screaming for something for years. people have been screaming for a minimum wage increase for years, where as people have just been quietly blogging about an EITC increase for years.

1/31/2014 12:11:26 PM

The other thing to consider is how large you would need to grow the EITC just to have the same effect on the average min wage earner as a $3 increase in their wage.

Here are the maximum EITC benefits:
http://www.irs.gov/Individuals/EITC-Income-Limits,-Maximum-Credit--Amounts-and-Tax-Law-Updates

Quote :

"2013 Tax Year Earned Income and adjusted gross income (AGI) must each be less than: $46,227 ($51,567 married filing jointly) with three or more qualifying children $43,038 ($48,378 married filing jointly) with two qualifying children $37,870 ($43,210 married filing jointly) with one qualifying child $14,340 ($19,680 married filing jointly) with no qualifying children Tax Year 2013 maximum credit: $6,044 with three or more qualifying children $5,372 with two qualifying children $3,250 with one qualifying child $487 with no qualifying children Investment income must be $3,300 or less for the year."

You have to be earning the MAX benefit just to break even with a min wage hike to $10/hour. However, the average EITC benefit for families with children is closer to $2,900:
http://www.cbpp.org/cms/?fa=view&id=2505

So, atleast from a back of the envelope perspective, you are talking about doubling the size of the EITC program if you want it to have a similar effect as a min. wage increase. That's another $50 billion (probably more though if you wanted to expand it more to people without kids) added to the budget, not an outrageous sum but not pocket change either.

That's not to say a better EITC is too difficult, or won't work or whatever. I'm only pointing out that if you want an EITC that will have the same effect as a $3 increase in the min. wage, you are talking about a VERY significant bump in the EITC program, not some minor adjustments and a few hundred more in payouts.

1/31/2014 12:52:17 PM

But that will increase the 53% (or whatever it is) who don't pay any federal income tax.

Fox News told me that we need more people to have "skin in the game".

1/31/2014 1:26:15 PM

dtown,

"people"

TerdFerguson,

I'm not sure I understand where you're getting that figure on how much you have to increase EITC to get a similar "bang for your buck" with a min wage increase. could you walk me through it a little more?

1/31/2014 1:39:31 PM

Interesting old post from Greg Mankiw on the subject.

Quote :

"Suggesting that federal policy addressing low-wage work and low-income families has somehow failed because the minimum wage has not kept pace with inflation ignores the fact that we have moved away from a focus on the minimum wage — a policy with many flaws — and toward the earned-income tax credit. We shouldn’t be asking simply how much the real minimum wage has changed, but rather how much the combined income floor generated by the two policies has changed. To provide an example, the blue line in the figure below shows the wages received by a single adult worker earning the minimum wage and working full time throughout the year. This can be interpreted as the income floor established by the minimum wage. The red line shows the level of family income when the earned-income tax credit for a family with two children is added (all in 2012 dollars). The lower line illustrates the income consequences of the real decline in the minimum wage. But the upper line shows that, because of the sharp increase in the generosity of the earned-income tax credit, the combined effect of the two policies is that the real income of this family is as high or higher than it was in past decades — when the real minimum wage was relatively high — and much higher than it was in most of the intervening years. "

http://gregmankiw.blogspot.com/2013/12/the-eitc-is-better-than-minimum-wage.html

[Edited on January 31, 2014 at 1:45 PM. Reason : ``]

1/31/2014 1:44:41 PM

^ So he is comparing a single full time minimum wage worker to a family with 2 kids with the EITC? How is that any kind of comparison?

nm i get it.




[Edited on January 31, 2014 at 2:24 PM. Reason : V True]

1/31/2014 2:19:49 PM

the lines are too close together when you add $487

1/31/2014 2:22:13 PM

Scuba,

The level of income doesn't differ between the single worker and the family with the 2 kids. The only difference is that the single worker isn't eligible for a EITC and the family is. The point is to show that "income floor" for a single person established by the minimum wage has behaved differently than the "income floor" for families that is established by the minimum wage plus the EITC.

Specifically, the real value of the minimum wage has eroded with inflation so that the real income you earn working at a full-time minimum wage job is less than what it was in the 1970s. This sucks if you're a single guy working at McDs. By contrast, if you're working the SAME JOB *and* have a family, the actual income you take home after the EITC is not much different than it what it was 40 years ago.

1/31/2014 2:35:29 PM

dtown,

Actually, you would not want to use $487 (the max EITC for childless families) if you take Obama's priorities seriously. Take a look at one of his policy papers on why we need to raise the minimum wage.

http://www.whitehouse.gov/sites/default/files/uploads/sotu_minimum_wage.pdf

I see a lot of mentions of helping "working families" and "parents", not many mentions of helping single adults with no children or childless couples.

[Edited on January 31, 2014 at 2:48 PM. Reason : ``]

1/31/2014 2:45:31 PM

i'm not sure why you have me confused for a member of the Obama administration

[Edited on January 31, 2014 at 2:52 PM. Reason : also not sure why single childless poor people shouldn't matter, or why you think they are excluded ]

1/31/2014 2:50:35 PM

``

[Edited on January 31, 2014 at 2:54 PM. Reason : ``]

1/31/2014 2:53:38 PM

Here is my calc, emphasis on it being back of the envelope:

min wage is $7.25/hour, the proposal is to increase it to $10 so that is a $2.75 increase per hour in wages.

If you assume someone works 2,000 hours per year, and they get the average EITC benefit of $2,900 per year then

$2,900/2,000 hours = $1.45/hour net increase in pay.

in order for the EITC to match the increase in min wage, the average EITC payout would need to be about $5500 ($5500/2,000 hours = $2.75 or what we would expect from a min. wage increase).

I realize this is overly simplified, the system is tiered and the average benefit may not be the best way to gauge what a majority of people are receiving from the program (the median would have been much better). But I still think its a conservative estimate that you are talking about doubling the EITC if you want it to have the same effect to people's wallets.

Again, that's not to say the EITC is a bad idea. I'm only exploring why Obama may have proposed min. wage increases instead of making a proposal built around the EITC.

[Edited on January 31, 2014 at 2:57 PM. Reason : ...]

1/31/2014 2:55:24 PM

dtown,

....

you realize that I was responding to YOUR comment about why the creator of the graph didn't use $487, yes? The answer is that in the current political debate (that has been going on for a few months now really), raising the wages of working singles is not on the priority list. It is NOT about the author's inherent political bias, which you implied when you said he didn't use the $487 figure because the difference wouldn't be big enough.

[Edited on January 31, 2014 at 3:05 PM. Reason : ``]

1/31/2014 2:57:58 PM

just because they aren't used in soundbites as often doesn't mean they aren't part of the movement

1/31/2014 2:58:47 PM

dtown,

I'll e-mail Greg Mankiw and let him know about your movement.

TerdFerguson,

Ahhh I see now. Thanks for explaining. That is certainly one way to do the back-of-the-envelope calculation. However, I'm not sure it is the best way. First, the EITC is based on fraction of income. Second, the $2,900 average figure is based off of a family earning $25,000, which is well above the minimum wage of one worker. The less they make the higher credit they would get.

That being said, I would need to sit down and think about if there is a better way to do it. I think your idea to compare the min wage and EITC in this way is on the right track tho. I will think on it.

1/31/2014 3:11:51 PM

Raising the minimum wage is actually a nod to the unions.

So many union wages are tied to the minimum wage, that when it is increased, union wages are also recalculated.

So not only does it shrink the pool of available jobs, it increases the costs in manufacturing, shipping, et al.

1/31/2014 6:16:51 PM

This is a well researched video on the minimum wage:



[Edited on February 2, 2014 at 11:29 AM. Reason : ]

2/2/2014 11:28:51 AM

I'm opposed to the government violating an individual's freedom of association by setting arbitrary price floors on what they can charge for their labor.

Also, a one stop shop for all things Minimum Wage from the Cato Institute:

http://www.cato.org/joining-the-minimum-wage-debate?utm_source=Cato+Institute+Emails&utm_campaign=62fb8e0792-Cato_Weekly_Dispatch&utm_medium=email&utm_term=0_395878584c-62fb8e0792-141590290&mc_cid=62fb8e0792&mc_eid=b2a6d065ca

2/2/2014 12:14:54 PM

He claims a move to the $10 min wage would only put $40 billion into our $15 trillion economy, but ignores the multiplying effect that money could have as it exchanges hands (large increase in money velocity).

He's also leaving out that the min. Wage will affect many more people than just those currently earning the min wage. It's effect will cascade upward. If I'm someone making $11/hour before the increase you can be sure I'm going to renegotiate a higher wage after the increase.

He tells us that the min wage effect on the labor market is controversial, but then picks the studies that he likes and gives us the same economic theories we've all heard before. "If we hold the demand for labor constant......." Umm, what about the studies that show a modest increase in labor demand after a min wage increase?

I'm sure there is more but mostly I'd wish he'd take his own advice. He may have "good intentions" but we can already see the outcome of his policies -stagnating wages for lower and semiskilled workers.

2/2/2014 12:29:00 PM

Quote :

"He claims a move to the $10 min wage would only put $40 billion into our $15 trillion economy, but ignores the multiplying effect that money could have as it exchanges hands (large increase in money velocity)."

He briefly touches on that claim. The rest of the money in the economy also has a multiplying effect, so it's still a tiny boost.

Quote :

"He's also leaving out that the min. Wage will affect many more people than just those currently earning the min wage. It's effect will cascade upward. If I'm someone making $11/hour before the increase you can be sure I'm going to renegotiate a higher wage after the increase."

There may be some renegotiation, but what's more likely is that food service employers will hire more reliable workers with better customer service skills.

Minors or young adults that are the 2nd or 3rd household earners will be unemployed at higher rates.

Quote :

"He tells us that the min wage effect on the labor market is controversial, but then picks the studies that he likes and gives us the same economic theories we've all heard before. "If we hold the demand for labor constant......." Umm, what about the studies that show a modest increase in labor demand after a min wage increase?"

He cites studies that showed a neutral/positive effect of the minimum wage, and goes on to address them.

[Edited on February 2, 2014 at 3:44 PM. Reason : ]

2/2/2014 3:44:17 PM

Quote :

" If I'm someone making $11/hour before the increase you can be sure I'm going to renegotiate a higher wage after the increase."

If you're making $11/hr, you're probably not going to be much in the way of renegotiating anything, because you're making $11/hr. I'm just sayin...

2/2/2014 7:09:27 PM

Quote :

"He claims a move to the $10 min wage would only put $40 billion into our $15 trillion economy, but ignores the multiplying effect that money could have as it exchanges hands (large increase in money velocity)."

I think this is the wrong way to judge the impact of the min wage. There is nothing about the minimum wage that suggests it will increase the economy's productive capacity.
This is a question of income **distribution**. Therefore, in the long-run, an extra-dollar being spent by low wage workers means one less dollar being spent by someone else.

Quote :

"If I'm someone making $11/hour before the increase you can be sure I'm going to renegotiate a higher wage after the increase."

I dunno.

2/3/2014 12:38:00 PM

Quote :

"This is a question of income **distribution**. Therefore, in the long-run, an extra-dollar being spent by low wage workers means one less dollar being spent by someone else."

As per the embedded video above...

In terms of total earnings, including the unemployed population, increasing the minimum wage probably decreases the total earnings of the lowest income people and increases the income of higher income people.

To whatever extent it is about distribution, it's likely in the opposite direction than what you've suggested. There is a way to transfer more wealth to the poor. That's welfare. I am in favor of that. I am not in favor of pulling the poor up with one hand, while pushing them down with the other.

[Edited on February 3, 2014 at 12:43 PM. Reason : ]

2/3/2014 12:42:35 PM

Quote :

""In terms of total earnings, including the unemployed population, increasing the minimum wage probably decreases the total earnings of the lowest income people and increases the income of higher income people.""

mrfrog,

Well, that's assuming that the min wage actually leads to a decrease in employment. Proponents of the min wage say that it won't. If that is the case, then we're really just talking about a change in the distribution of income and that means it makes no sense to talk about the multiplier effects of new spending. Min wage workers spend more, someone else spends less.

But I agree with you that there likely will be negative employment impacts (like I stated earlier) and I agree with you that there are better ways to redistribute income (like I stated earlier).

[Edited on February 3, 2014 at 1:29 PM. Reason : ``]

2/3/2014 1:25:45 PM

Quote :

"Well, that's assuming that the min wage actually leads to a decrease in employment. Proponents of the min wage say that it won't. "

$6000/year isn't enough to replace a human with a machine/computer in most circumstances, and small/medium businesses already run lean enough on staff that they can't really afford to fire people. They'll just have to take the hit elsewhere (capitals expenditures, executive pay, R&D etc.).

That's the irony in raising min wages. It mostly affects poor people, and it's not a lot of money per person. Keep in mind we live in a world where 85 individuals have as much wealth as 3,500,000,000 other individuals.

Henry Ford was a pioneer because he paid his manual laborers a middle-class wage, this drove other companies to do the same, and more people ended up able to buy his cars.

Minimum wage hasn't kept pace with the rest of the economy, it's sour grapes that capital-owners are against it. They just need to get with the early 20th-centry times and realize their workers are actual people. It's sad it's requiring a massive public debate, and possible government intervention to make this happen.

2/3/2014 2:46:38 PM

it's difficult to pay an individual an increased salary when you have plenty of folks willing to fill the positions at lower salaries, just in order to get a job (referring mostly to manual/unskilled labor).

perhaps we're just starting to see the effects of overpopulation, and the lack of motivation to be innovative and create from scratch. But then again with too many government subsidies and socialist programs, the motivation will be gone and the idea of "rags to riches" will become ancient history.

[Edited on February 3, 2014 at 3:22 PM. Reason : .]

2/3/2014 3:09:59 PM

^^ Ford paid his workers what he did because they weren't staying around. He had 300% turnover: (http://seattletimes.com/html/opinion/2022500199_lanefillercolumnminimumwage21xml.html, http://en.wikipedia.org/wiki/Henry_Ford#The_five-dollar_workday), until then he was paying the prevailing wage for the area he was in, just like every other company did and does today. He also mandated his workers live an "approved" lifestyle to get that wage.

[Edited on February 3, 2014 at 3:19 PM. Reason : wqgh]

2/3/2014 3:18:57 PM

Quote :

"$6000/year isn't enough to replace a human with a machine/computer in most circumstances, and small/medium businesses already run lean enough on staff that they can't really afford to fire people. They'll just have to take the hit elsewhere (capitals expenditures, executive pay, R&D etc.). That's the irony in raising min wages. It mostly affects poor people, and it's not a lot of money per person. Keep in mind we live in a world where 85 individuals have as much wealth as 3,500,000,000 other individuals. Henry Ford was a pioneer because he paid his manual laborers a middle-class wage, this drove other companies to do the same, and more people ended up able to buy his cars."

Those are three line break... and at least one statement in each that can be directly refuted. I'll even give them numbers. #3 was handled by someone else.

1. low-wage labor can be substituted with stuff that is not low-wage labor
2. minimum wage does not only affect poor people

Now, on point #1, you can use anecdotal evidence to present a counter-point (McDonalds can't further reduce the ratio of workers to fries easily). But that makes a empirical error. For your position, anecdotal evidence is insufficient, but for my position, anecdotal evidence is sufficient. That's because I am arguing that low-wage labor is substitutable on the margins. Now think about what this debate is about. Does raising the minimum wage cause higher unemployment? If there is a cohort of low-wage workers who can be replaced by (higher efficiency) high-wage labor or capital investment, they will lose their jobs. Some sectors will tolerate the higher wages... but now those people have to compete with the newly unemployed people from the sectors where low-wage labor is fungible. On top of this, their industry has weaker demand due to price inflation!

For #2, the embedded video above does great justice to the topic. Raising the minimum wage raises the wages of people above the minimum wage. This is because economic efficiency is a real thing, not just some made up crap. Fewer higher wage people can do a job that replaces what a larger number of low-wage people were doing. It's not the exact same, but people don't care as long as they still get the goods and services they want in roughly the same format. This is automation.

2/3/2014 3:54:20 PM

Quote :

"Minimum wage hasn't kept pace with the rest of the economy, it's sour grapes that capital-owners are against it. They just need to get with the early 20th-centry times and realize their workers are actual people. It's sad it's requiring a massive public debate, and possible government intervention to make this happen."

Moron,

You make it sound like firms just decide how much they will pay their workers. Apparently, the only thing holding back firms from paying their workers more is "greed"?

In reality, wages are set by market forces. Workers competing against other for jobs and firms competing against each other for workers. Wages reflect this competitive process, not what workers are inherently "worth" in any objective sense.

But I'm glad you brought this up, because I think this is really what the minimum wage debate is all about. Progressives inherently distrust decentralized decision making in the market place. They want the government to constrain it. Like I said before, if this was REALLY about helping working families, there are better ways to do it (EITC). Instead, this is about comforting progressive that are afraid of the market.

[Edited on February 3, 2014 at 4:08 PM. Reason : ``]

2/3/2014 4:05:36 PM

Henry Ford raised his wages because wages were increasing at other places, so Ford had high turnover rates which increased training costs and decreased efficiency. It had nothing to do with good will or wanting his employees to by cars, that's just a well-repeated myth.

[Edited on February 3, 2014 at 4:12 PM. Reason : ^ or comforting pragmatic progressives]

2/3/2014 4:11:36 PM

This Shows Exactly How Much McDonald’s Costs

Read more http://www.trueactivist.com/this-sheet-shows-exactly-how-much-mcdonalds-menu-costs/

2/3/2014 4:20:43 PM

Quote :

"it's difficult to pay an individual an increased salary when you have plenty of folks willing to fill the positions at lower salaries, just in order to get a job (referring mostly to manual/unskilled labor). "

Quote :

"In reality, wages are set by market forces. Workers competing against other for jobs and firms competing against each other for workers. Wages reflect this competitive process, not what workers are inherently "worth" in any objective sense. "

hmm... I think there are some other fallacies just beginning to crop up from the other side of the debate.

I see a lot of arguments start, pivoting around an assumption that a worker is filling a certain role. Then there is competition for that role. But it's no so simple, because a worker can just adopt a different role.

If the low-wage workforce simply bid on the jobs with higher prevailing compensation, then the problem is far from intractable. So we have to consider the reasons that doesn't happen. Employers could obviously cut costs, because we all agree there is a glut of low-wage labor. If you could tap into that, then you have a competitive advantage from a huge labor price differential.

Mental contortions offer several strategies for rationalizing this. You could take the higher wages to be evidence that it's more quality-sensitive. Then our "problem" is that our nation's employers are too sensitive to quality of labor, and this creates social problems.

However, this ignores a more simple explanation - that "employers" (the people making decisions about hiring) are the same people as the high-wage labor pool. Asking them to evaluate the relative worth of high vs. low wage labor is circular. They'll be more than happy to give their own cohort a rosy evaluation.

2/3/2014 4:26:06 PM

Quote :

"You make it sound like firms just decide how much they will pay their workers. Apparently, the only thing holding back firms from paying their workers more is "greed"?"

Not greed, but misplaced priorities combined with effective conservative propaganda that uneducated workers don't deserve the American dream.

Quote :

"In reality, wages are set by market forces. Workers competing against other for jobs and firms competing against each other for workers. Wages reflect this competitive process, not what workers are inherently "worth" in any objective sense. "

Market forces is a blanket term. The components of market forces innately are tilted to favor overly-powerful corporations or companies. Society/governments exist in part to counter this tilt. It used to be unions were good enough at countering this, but this isn't the case anymore (partially due to over-protection of unions by the government).

[Edited on February 3, 2014 at 4:47 PM. Reason : ]

2/3/2014 4:45:23 PM

Quote :

"Here is my calc, emphasis on it being back of the envelope: min wage is $7.25/hour, the proposal is to increase it to $10 so that is a $2.75 increase per hour in wages. If you assume someone works 2,000 hours per year, and they get the average EITC benefit of $2,900 per year then $2,900/2,000 hours = $1.45/hour net increase in pay. in order for the EITC to match the increase in min wage, the average EITC payout would need to be about $5500 ($5500/2,000 hours = $2.75 or what we would expect from a min. wage increase). I realize this is overly simplified, the system is tiered and the average benefit may not be the best way to gauge what a majority of people are receiving from the program (the median would have been much better). But I still think its a conservative estimate that you are talking about doubling the EITC if you want it to have the same effect to people's wallets. Again, that's not to say the EITC is a bad idea. I'm only exploring why Obama may have proposed min. wage increases instead of making a proposal built around the EITC. [Edited on January 31, 2014 at 2:57 PM. Reason : ...]"

Flaw in your calculations I believe... $2900 eitc being 1.45 sounds good and all... But that 1.45 isn't taxable income... So, the 2.75/hr wage increase will be equivalent to a lower than $5500 eitc

2/3/2014 7:34:21 PM