Quantcast
Get breaking news alerts via email

Click here to manage your alerts
The Washington Post: To fight poverty

The Washington Post

The Washington Post

First Published Jan 28 2014 01:01 am • Last Updated Jan 28 2014 01:01 am

A higher federal minimum wage is a key plank of President Obama’s anti-inequality platform, and he is likely to repeat that popular proposal in his State of the Union address. Phasing in a raise from $7.25 per hour, the current level, to $10.10, as Mr. Obama suggests, would help many hard-pressed low-income Americans.

But it’s easy to overstate the impact. First, there’s the risk a higher minimum would reduce employment in some low-wage industries, albeit marginally. Second, a federal increase would be partially redundant in the 21 states and the District of Columbia where the minimum is already higher than $7.25; these jurisdictions account for more than half of the nation’s population. The largest state, California, will have a $10 minimum by Jan. 1, 2016. Third, 80 percent of the beneficiaries would not be poor, according to a recent report by the Brookings Institution. Indeed, 30 percent of them live in households earning above $60,000.

Join the Discussion
Post a Comment

If Mr. Obama and Congress want to maximize the benefits to struggling working people, they’ll pair action on the minimum wage with reforms to the government’s largest benefit program targeting the working poor: the Earned Income Tax Credit. The EITC provides an annual wage supplement to workers based on their earnings, their marital status and how many children they have.

Over the years, it has proven highly successful at boosting work effort and reducing poverty. But it remains incomplete; the most salient defect is the EITC’s treatment of single, childless workers, who remain eligible for at most $487 per year. By contrast, the maximum benefit for a family with three children is just over $6,000 per year.

It won’t be cheap to boost the EITC, whose total cost at present is over $60 billion per year. But a higher minimum wage would save the government money because of recipients’ reduced need for federal benefits, and some of those savings could be applied to the EITC. Better targeting of the EITC would nearly quadruple the maximum benefit to single, childless workers and shift resources to workers with younger families as opposed to those with more, older children.

The boost to young singles would come at the slight expense of those over 39. They would also eliminate marriage penalties in the current law. Overall, the Sawhill-Karpilow proposal would reduce the poverty rate by 1.1 percentage points without any additional cost to government.

The plan has trade-offs — it shifts resources within EITC recipient groups as opposed to just boosting the overall program’s cost and finding offsetting tax increases or spending cuts elsewhere. Still, it’s a politically realistic attempt to tackle several big issues — incomes, work effort and family formation — at once. And the plan reminds voters that fighting poverty is a burden government must share.




Copyright 2014 The Salt Lake Tribune. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Top Reader Comments Read All Comments Post a Comment
Click here to read all comments   Click here to post a comment


About Reader Comments


Reader comments on sltrib.com are the opinions of the writer, not The Salt Lake Tribune. We will delete comments containing obscenities, personal attacks and inappropriate or offensive remarks. Flagrant or repeat violators will be banned. If you see an objectionable comment, please alert us by clicking the arrow on the upper right side of the comment and selecting "Flag comment as inappropriate". If you've recently registered with Disqus or aren't seeing your comments immediately, you may need to verify your email address. To do so, visit disqus.com/account.
See more about comments here.
Staying Connected
Videos
Jobs
Contests and Promotions
  • Search Obituaries
  • Place an Obituary

  • Search Cars
  • Search Homes
  • Search Jobs
  • Search Marketplace
  • Search Legal Notices

  • Other Services
  • Advertise With Us
  • Subscribe to the Newspaper
  • Access your e-Edition
  • Frequently Asked Questions
  • Contact a newsroom staff member
  • Access the Trib Archives
  • Privacy Policy
  • Missing your paper? Need to place your paper on vacation hold? For this and any other subscription related needs, click here or call 801.204.6100.