Mar
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Wages of “the working poor” – #8 – Josh Hirth
March 16, 2015 | Leave a Comment
Kevin Short’s article in the Huffington post discusses De Blasio’s plan to raise 18,000 employees wages in what he calls the new living wage policy. Mr. Short however critiques the plan because it still leaves many types of families below living wage. For instance a single parents with 1 child has a living age of approximately $25 per hour and De Blasio’s plan is just over $13 per hour. A single parent with 2 children is even worse with a discrepancy of almost $20 per hour. So although the plan is truly helping families with 2 adults and 2 children it is not really doing much for the one adult households. I would argue that it is a start and that although De Blasio’s plan doesn’t resolve all the issues at hand it begins to fix the issue for some households.
While I am not sold on the $15 an hour wage that many fast food workers and minimum wage earners are demanding, I do see the need to raise minimum wage. I simply don’t have enough perspective on what that much an increase would do to the business owners. The article in the Washington post outlines how De Blasio’s move to increase the minimum wage follows a national campaign that has been taking the country by storm over the past two years. President Obama has been trying to push through a new minimum wage of $10.10 to no avail, but if mayors around the country follow in De Blasio’s footsteps it may be easier for President Obama to gain momentum and get it done. The other thing to consider is Wal-Mart, which is the nations number 1 employer, and which has raised its wages without a government-mandated change. If other employers follow suite we as a country would be better off. Minimum wage will no longer be as necessary…
I found the NY Times article extraordinarily helpful in that it explained both perspectives very well and ultimately concludes with a logical answer. It discusses the fundamental question of why have minimum wage at all? Assuming we are in a normal market, economics would explain, that supply and demand in the labor market would produce a wage that is fair for both parties. So even in small towns where one would suspect select stores could manipulate the market, these days because of competition for skilled workers it should not be a problem. The article then goes on to say that the most accepted reason for minimum wage is the redistribution factor. However one problem with that is that as we raise minimum wage, employers will pass on the added cost to their costumers, which are often the minimum wage earners themselves. Thereby creating a cycle that doesn’t help anyone.
In addition many minimum wage earners are secondary earners who are not living in poverty, and who don’t need the increase as desperately. One program that the article suggests that may work better is the earned income tax credit. This provides a tax credit for those people working but who are still not making enough to provide for themselves. What some call the working poor. This program seems far superior to raising the minimum wage because it increases motivation to work, which helps both the employees and the employers. I think given the two options the earned income tax credit is a much better program and should be expanded before anything is done to minimum wage.
The article from heritage.org goes as far to say that most minimum wage earners and not poor families but rather suburban, young workers, looking for part time work with an average household income of $53,000. They seem to agree in concept with the NYT article but take it one step further in terms of who exactly is earning minimum wage. They claim it is an insignificant 2.9% of the population, most of which are either still in school or just doing it part time. They seem to have pulled a lot of data on this issue and since it is hard to disagree with legitimate statics, I am not sure how to respond to it. I would just say, that I still believe minimum wage is not the best answer for poverty and that we should rather expand the earned income tax credit and if that still doesn’t work, we should slowly raise minimum wage.
