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Continued: There's no pot of gold for the working poor

  • Article by: D.J. TICE
  • Last update: February 9, 2014 - 7:59 AM

House Research reports that the average benefit in Minnesota in 2010, from the federal EITC and Minnesota’s Working Family Credit combined, was just under $2,500.

That benefit is tax-free. But the biggest advantage is that the EITC doesn’t run any risk of discouraging or distorting low-wage hiring, because it doesn’t change the cost of hiring a low-skill worker.

The problems with the EITC are that it costs taxpayers a good deal of money (about $60 billion a year for the federal program, and about $200 million for the state add-on) and that it seems to let employers of low-wage workers off the hook.

Frustration with the idea that safety-net programs and a low minimum wage combine to unjustly subsidize low-wage employers is behind a referendum effort in California to enact a $12-an-hour minimum wage, pushed by maverick conservative millionaire Ron Unz. A few other prominent conservatives are now voicing this kind of resentment toward those who fail to pay living wages, which has long added to progressives’ passion for ­minimum-wage hikes.

But we need to get clear in our minds whether we’re seeking to help low-wage workers or to stop helping those who employ them. We may not be able to do both. And there may be worse things to subsidize than the hiring of people who very much need to be hired.

 

D.J. Tice is at Doug.Tice@startribune.com.

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