From David Neumark:
Suggesting that federal policy addressing low-wage move as well as low-income families has somehow failed because the minimum wage has non kept measuring amongst inflation ignores the fact that nosotros bring moved away from a focus on the minimum wage — a policy amongst many flaws — as well as toward the earned-income taxation credit. We shouldn’t survive bespeak exactly how much the existent minimum wage has changed, but rather how much the combined income flooring generated past times the ii policies has changed.
To furnish an example, the bluish draw of piece of job inwards the figure below shows the payoff received past times a unmarried adult worker earning the minimum wage as well as working amount fourth dimension throughout the year. This tin orbit notice survive interpreted every bit the income flooring established past times the minimum wage. The blood-red draw of piece of job shows the grade of theatre unit of measurement income when the earned-income taxation credit for a theatre unit of measurement amongst ii children is added (all inwards 2012 dollars). The lower draw of piece of job illustrates the income consequences of the existent refuse inwards the minimum wage. But the upper draw of piece of job shows that, because of the sudden increase inwards the generosity of the earned-income taxation credit, the combined effect of the ii policies is that the existent income of this theatre unit of measurement is every bit high or higher than it was inwards past times decades — when the existent minimum wage was relatively high — as well as much higher than it was inwards almost of the intervening years.
Suggesting that federal policy addressing low-wage move as well as low-income families has somehow failed because the minimum wage has non kept measuring amongst inflation ignores the fact that nosotros bring moved away from a focus on the minimum wage — a policy amongst many flaws — as well as toward the earned-income taxation credit. We shouldn’t survive bespeak exactly how much the existent minimum wage has changed, but rather how much the combined income flooring generated past times the ii policies has changed.
To furnish an example, the bluish draw of piece of job inwards the figure below shows the payoff received past times a unmarried adult worker earning the minimum wage as well as working amount fourth dimension throughout the year. This tin orbit notice survive interpreted every bit the income flooring established past times the minimum wage. The blood-red draw of piece of job shows the grade of theatre unit of measurement income when the earned-income taxation credit for a theatre unit of measurement amongst ii children is added (all inwards 2012 dollars). The lower draw of piece of job illustrates the income consequences of the existent refuse inwards the minimum wage. But the upper draw of piece of job shows that, because of the sudden increase inwards the generosity of the earned-income taxation credit, the combined effect of the ii policies is that the existent income of this theatre unit of measurement is every bit high or higher than it was inwards past times decades — when the existent minimum wage was relatively high — as well as much higher than it was inwards almost of the intervening years.
Nonetheless, in that place are of import differences betwixt the earned-income taxation credit as well as the minimum wage. The substitution divergence is that the earned-income taxation credit aims benefits at low-income families amongst children, rather than exactly low-wage workers. This is inwards large business office its virtue, as well as it makes a lot to a greater extent than feel than the minimum wage’s focus on low-wage workers. Do nosotros actually attention if a low-wage teenager inwards a middle-class theatre unit of measurement makes an extra dollar an hour? Economists of all persuasions inwards the minimum-wage fence concord that mandated wage floors practice a bad undertaking of directing benefits to low-income families. This is confirmed inwards recent inquiry past times my graduate pupil Sam Lundstrom, calculating who would survive affected past times increasing the electrical flow federal minimum to $8.25 from $7.25. He finds that solely 21.3 per centum of the affected workers would survive inwards pitiful families, piece 30.9 per centum would survive inwards families amongst incomes to a greater extent than than iii times the poverty line.
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