To: J_F_Shepard who wrote (763402 ) 1/12/2014 3:00:44 PM From: Sdgla 1 RecommendationRecommended By
Read Replies (1) | Respond to But that raises the question: Why do progressives put so much focus on raising the minimum wage when it’s so clearly a second-best solution to helping the working poor? It’s not as if President Obama’s economic advisers don’t understand Mankiw’s points. Yet the president’s policy focus in his recent speech on economic inequality was raising the minimum wage.wrote over at Real Clear Markets, many progressives believe that programs like the EITC programs allow employers like McDonalds to pay lower wages than they otherwise would. In this story, while the EITC is technically paid to low-wage workers, in effect it’s a multi-billion dollar subsidy to their employers. This isn’t implausible on its face. For instance, while half of payroll taxes and a certain share of health-insurance costs are nominally paid by employers, they result in lower wages for employees. But the research I’ve seen concludes that the EITC doesn’t work this way. The EITC draws more low-skilled individuals into the labor force, which through supply-and-demand will slightly lower wages paid to low-skilled workers. But employers aren’t targeting EITC recipients for pay cuts. And in any case, EITC payments more than make up for the fall in wages, so low-paid workers still come out ahead. So while liberal front groups like the National Employment Law Project make these kinds of arguments, you don’t see them very much from more respected liberal analysts.fire the worst 5 percent of public-school teachers and re-allocate their students to other classrooms, the average lifetime earnings of their students would rise by around $250,000. Sad to say, well-intentioned but nevertheless misguided progressive social and educational policies contribute to the low skills of the working poor that, in the labor market, will result in low wages.
