Suggesting that federal policy addressing low-wage move in addition to low-income families has somehow failed because the minimum wage has non kept footstep alongside inflation ignores the fact that nosotros accept moved away from a focus on the minimum wage — a policy alongside many flaws — in addition to toward the earned-income taxation credit. We shouldn’t last bespeak only how much the existent minimum wage has changed, but rather how much the combined income flooring generated past times the 2 policies has changed.
To furnish an example, the blueish draw of piece of job inwards the figure below shows the reward received past times a unmarried adult worker earning the minimum wage in addition to working amount fourth dimension throughout the year. This tin last interpreted equally the income flooring established past times the minimum wage. The ruby-red draw of piece of job shows the degree of menage unit of measurement income when the earned-income taxation credit for a menage unit of measurement alongside 2 children is added (all inwards 2012 dollars). The lower draw of piece of job illustrates the income consequences of the existent spend upwards inwards the minimum wage. But the upper draw of piece of job shows that, because of the precipitous growth inwards the generosity of the earned-income taxation credit, the combined effect of the 2 policies is that the existent income of this menage unit of measurement is equally high or higher than it was inwards past times decades — when the existent minimum wage was relatively high — in addition to much higher than it was inwards nearly of the intervening years.
Nonetheless, at that topographic point are of import differences betwixt the earned-income taxation credit in addition to the minimum wage. The telephone commutation divergence is that the earned-income taxation credit aims benefits at low-income families alongside children, rather than only low-wage workers. This is inwards large purpose its virtue, in addition to 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 menage unit of measurement makes an extra dollar an hour? Economists of all persuasions inwards the minimum-wage fence concur that mandated wage floors practise a bad chore of directing benefits to low-income families. This is confirmed inwards recent interrogation past times my graduate pupil Sam Lundstrom, calculating who would last affected past times increasing the electrical flow federal minimum to $8.25 from $7.25. He finds that exclusively 21.3 per centum of the affected workers would last inwards pitiable families, spell 30.9 per centum would last inwards families alongside incomes to a greater extent than than 3 times the poverty line.
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