Coyote Blog | Dispatches from District 48
. . . a good smackdown.
Coyote makes a very important point:
(Click on the link above to see the graph.)
"Note the calculations in the last two lines, which look at two approaches to fighting poverty. If we took the poorest 20% and kept their current number of hours worked the same, but magically raised their hourly earnings to that of the second quintile (ie from $14.21 to $17.33), it would increase their annual household income by $2,558, a 22% increase (I say magically because clearly if wages are raised via a minimum wage mandate, employment in this groups would drop even further, likely offsetting most of the gains). However, if instead we did nothing to their wages but encouraged more employment such that their number of workers rose to that of the second quintile, this would increase household income by a whopping $13,357, a 115% percent increase."
It is not the hourly rate that is the problem, it is either the number of workers, or the amount of time worked. What is so tragic about this is most of the progressive policies used to help the poor do the opposite. For example, Obamacare has driven employers to institute a 24-28 hour work week as standard for many businesses, thereby removing workers from the mandatory health insurance calculation. Obamacare does not help these low wage workers it hurts them. And so will the minimum wage increase.
What would help is reducing the regulatory costs, and taxes on employers who employ workers in any form, and especially on full time low wage workers. I do not advocate subsidizing low wage workers, since so few are actually the poor, and so many are young adults simply developing work skills. It would be better to support the poor through an EITC program, or even a guaranteed minimum wage program available for the poor.
Be sure to read all of Coyote's blog posts.