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Politics : The Trump Presidency
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rxbond
To: TimF who wrote (4035)12/31/2016 12:22:52 PM
From: TimF1 Recommendation   of 363008
 
if you get $500 a month in welfare payments whether you work or not then that isn’t going to be a subsidy to whoever employs you. Far from it: it means they’ve got to offer at least $501 to get you to come to work. Thus welfare, paid simply because one is poor, increases the reservation wage and that just ain’t a subsidy, it’s the opposite of it, it’s an increase in wage costs.

In the US welfare system almost all benefits are paid whether one is in work or not. It is income levels that determine eligibility, not whether one is working. The exception to this is the EITC which you can only get if you are working. That therefore really is a subsidy to the wage bills of employers.

The net effect of the whole system, given that the other welfare payments are very much larger than the EITC, is that the welfare system pushes up employers’ wage bills, not subsidises them.

Welfare does not subsidise employers’ wage bills, it increases them.

forbes.com
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