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> At least with minimum wage you could say the risk of losing their job is justified by higher wages. Slightly increasing minimum wage mostly just saves the go
by Retric 2y ago
> At least with minimum wage you could say the risk of losing their job is justified by higher wages.
Slightly increasing minimum wage mostly just saves the government money. After taxes it’s close to 1:1 with reducing benefits until well past current minimum wages. Larger jumps are seen as risky.
Theoretically there’s a number large enough for significant impact that’s still safe, but nobody wants to risk trying to find what it is. So how do you find a good number that does more than just save the government money?
- gruez 2y agoIt's an impossible problem to solve. If you want welfare programs to have means-testing, then almost by definition you'd have the welfare trap. Getting rid of means testing (ie. UBI) theoretically fixes the issue, but practically is a non-starter because that would increase the size of the program by several times.
- Retric 2y agoPossibly, but I feel the welfare trap is more a coordination problem. It’s easy enough mathematically to say for every dollar earned someone is entitled to keeps at least 40% of it or whatever arbitrary number is chosen. However when you have multiple means testing programs overlapping it’s easy for the combination to go so low as to become meaningless or worse negative. Especially with things like rent control or tuition. Similarly, the welfare trap people makes lower annual pay jobs more appealing, which effectively subsidizes companies. I was looking at this as a means of patching over that issue, but yea fixing subsidies is a more direct solution.