3 ms·
I'm going to say the surveyed opinion is wrong and is furthermore asking the wrong question. 1) There is a welfare trap, and it is real. The more needy you are
by cynicalkane 13y ago
I'm going to say the surveyed opinion is wrong and is furthermore asking the wrong question.
1) There is a welfare trap, and it is real. The more needy you are, the more your welfare programs are robbed with each wage increase. The marginal rate is very high and in some situations can exceed 100%.
Here's what the welfare trap looks like for low-wage families, in one graph: https://lh3.ggpht.com/-_-6Fsycanmw/ULO_5kk3fxI/AAAAAAAAAU4/y1PbUElDS34/s1600/marginal-tax_6.PNG https://lh3.ggpht.com/-_-6Fsycanmw/ULO_5kk3fxI/AAAAAAAAAU4/y...
taken from: http://johnhcochrane.blogspot.com/2012/11/taxes-and-cliffs.html http://johnhcochrane.blogspot.com/2012/11/taxes-and-cliffs.h...
If you follow economics there is an astonishing difference in the quality of discourse between the two sides--the pro minimum-wage crowd does not seem aware of the data working against them.
2) There is furthermore research suggesting employers respond to minimum wage by scaling back future employment plans and by causing workers to work harder. Part of the reason minimum wage jobs are so awful is if they weren't, they would not be worth the money.
3) People think of minimum wage as a redistribution of wealth from evil corporate employers and rich consumers to the poor and needy. Notwithstanding who is evil and who is good, that is basically the effect. You can accomplish the same thing in a much simpler, market-friendly fashion: pay the poor for working. A minor version of this program exists--the earned income tax credit. It does the same thing as minimum wage--redistribution of wealth--without the overhead, without reducing workers' negotiating power, and without pricing new low-skill workers out. It can be done in a fashion that greatly reduces the welfare trap. For a while, this idea had broad bipartisan support, from Milton Friedman and Paul Krugman among others.
But now economists argue about minimum wage because it's an attractive political issue. Famously, Paul Krugman's opinion on minimum wage changes depending on who is president.
Bleh. Imagine if climate scientists or evolutionary biologists made political compromises. Worse yet, imagine if they started believing their own compromises.
4) Surveys are not of particularly high interest when it comes to discussing economics. Talking about theory, data, and consequences is a better use of time. Surveys are only social proof--backup evidence--when there is not a confident consensus.
- cortesoft 13y agoEarned income tax credit is amazing. It is one of the few government initiatives that is an unquestionable success. It is such a good way to redistribute wealth without creating the negative incentives of welfare and the like.
- dragonwriter 13y ago> Earned income tax credit is amazing. It is one of the few government initiatives that is an unquestionable success. It is such a good way to redistribute wealth without creating the negative incentives of welfare and the like. EITC, because of the phase out, has the same negative incentives as any other means-tested social benefit program which has a benefit reduction at less than a 1:1 level for additional income. (Its true that there are some other social benefit programs that have worse negative incentives at some or all points because either they are flat benefit with a sharp cutoff or because they have some range in which the benefit decline is greater per additional dollar of other income than EITC has, but its simply not the case that EITC doesn't have "the negative incentives of welfare and the like".)
- deleted 13y ago[deleted]
- cortesoft 13y agoMaybe I was mislead, but I thought that the EITC amount actually INCREASED (up to a point) as you made more money. This makes it seem like there isn't a negative incentive: http://en.wikipedia.org/wiki/Earned_income_tax_credit http://en.wikipedia.org/wiki/Earned_income_tax_credit