Must-Read: It seems to me that there are two questions: 1. Should the the aggregate of the minimum wage and the earned income tax credit add up to a living wage? Answer: yes. 2. what is the right mix and balance between raising the minimum wage (which will, if it is raised high enough, diminish the total number of jobs) and increasing the earned income tax credit (which will, once we are away from the zero lower bound in interest rates, require raising taxes somewhere in the system)? The minimum wage should not be considered in isolation.
Of course, minimum-wage advocates are fearful of the following: We say raise the minimum wage, they say increase the earned income tax credit instead. We say increase the earned income tax credit, they say it is more important to reduce the deficit. We say fund the earned income tax credit by raising taxes, they say lower taxes promote entrepreneurship. we say cut defense spending, they say ISIS and Iran. The shift of attention to the earned income tax credit is then seen as–which it often is–part of the game of political Three Card Monte to avoid doing anything while not admitting you are opposed to doing anything.
That is all very true.
So raise the minimum wage, and then bargain back to a lower minimum wage and a higher income tax credit if it turns out that there are significant disemployment affects.
The Fight for 15: “Whenever I hear an argument about the possibility of raising the minimum wage to $15 per hour…:
…it sounds like this. Person A, who is for it, makes the case that it’s too difficult to live on minimum wage earnings, and it doesn’t make sense for someone working full time to struggle so much to feed their kids. Person B, who’s against it, says that 15 is too high, that too many employers will be unwilling to pay for unskilled workers at that rate, and they will replace such people with machines instead of doing so. Essentially, they argue the bad will outweigh the good…. I am often Person A…. I think about what I could theoretically live on, if I had a minimum wage job, and I have extreme sympathy for people who try to.
Let’s get back to Person B’s argument. It’s weird because it sounds like Person B is arguing for the sake of the poor, but they’re ignoring the vital question of what is a living wage…. For the sake of holding on to crappy jobs that pay below living wages, and where the employees need food stamps to survive, we don’t raise the bar so they can actually sustain someone in a basic way…. As long as we live in a country where the model is that a job is supposed to support you, we should make sure it actually does.