Low incomers are better off now in spite of lower minimum wage
President Obama’s statement concerning the lack of solid evidence supporting that a higher minimum wage costs jobs, has already been fact-checked and the results were everything but favorable. To the President.
Supporters of a higher federal minimum wage often overlook the importance of observing changes to the conditions of those who would be affected by such policy. They simply assume that the results should be favorable considering that everybody’s wage would go up. Like magic, everyone would suddenly become a little richer.
Aside from the obvious disincentive companies will have to factor when looking into hiring once a higher minimum wage law kicks in, supporters of an increased federal minimum wage simply ignore the fact that we, as a nation, have not been relying on the minimum wage as much as Americans did 20 years ago. Policy has already shifted in order to focus on poor families, which has made low incomers earn much more today than they did 40 years ago.
While it’s true that the federal minimum wage is actually lower now than it was in the 1960s, people who are earning minimum wage now are not poorer than those earning minimum wage back in the day, and that’s due to other policies entirely.
A recent op-ed written by David Neumark for The New York Times highlighted the importance of the addition of the earned-income tax credit to the discussion. The tax credit refunds income taxes to low-wage workers, which ends up helping minimum-wage earners more than ever before.
Thanks to this policy, other new tax cuts and the cut to the taxation of low incomes implemented by President Ronald Reagan, federal minimum wage might be lower after being adjusted for inflation, but low-income families are actually better off.
Because of the tax system changes implemented after the 1960s, minimum-wage workers are being able to take home a much more generous pay. Such policies weren’t around in the 1960s, making low incomers then much less capable of taking home as much as low incomers take home today, due to the public-benefit programs that are in effect now. Changes don’t need to be made to the minimum wage law to ensure that low incomers are able to manage on what they make.
What we could focus on, if we really want to help the little guy, is on reforming our tax system, not increasing the federal minimum wage.