Is a minimum wage necessary?

You "ditto" something I haven't said. I said that if the minimum wage has an effect, it is to raise the wage of some workers at the cost of laying off other workers. I also said that, depending on people's social values and their view of the alternatives, they may find the minimum wage worth raising, consistent with basic economics.

I'm just not one of those people, because I think we have a better choice: to expand the Earned Income Tax Credit.

My "City", or cities more accurately, doesn't even qualify... I guess because the population is so low. Our county, Ozaukee County, seems to fair pretty well against the average, though.

Also, Thomas is being generous in not blasting you for the stats you're pretending equate to minimum wage.

PS. Where and when in Spain? Sounds like fun. Did I miss a link?

Thomas, I still think you may have struck brilliance with the EITC alternative and love your use of the word "we". Does this mean you'll be joining us?

Thanks, but the brilliance isn't mine. It belongs to Milton Friedman, who came up with the general concept in his book Capitalism and Freedom. Friedman proposed a "negative tax rate" on any income less than a certain minimum. This would have ensured a minimum income for everyone, including people who may be better off not working, such as single moms. But subsidies, with no strings attached, for people who don't work, weren't politically feasible at the time. So as an alternative, Congress enacted the EITC during the Ford administration. Clinton greatly expanded it, encouraged by some brilliant liberal economists he had hired. Brad deLong was one of them, and he has an interesting article on the EITC here.


I will, but I'm still procrastinating. It's not that I'm having second thoughts, I just procrastinate a lot.

Saved the link, for now, thanks. I'm not a fan of big government but as big as it is I can think of worse things to do than feed people. Taxes may very well strangle out my first restaurant... second only to payroll in expenses... but so it goes. I'm still learning. The second is a better model and is doing much better. Number three will definitely be closer to this one than that.


Exxxxcellent. Were you offered that job you were looking at?

Shorter than I guessed it would be, and very informative. Thanks again.
(A much better explanation for your earlier question, Osso).

Thomas wrote:
Sorry, CI, but I don't understand how you get from "less than $9 an hour" to "around the minimum wage". " Between 1 and 1.75 times X" isn't the same as "around X".


I'm a bit confused too, but the last sentence seems to imply those numbers represented the minimum wage earners of $5.15 to $2.85.

The minimum wage is 5.15. 1.75 times 5.15 is $9.01. Your post had referred to people whose wage is less than $9. (But more than the minimum wage, though you didn't explicitly say that part.)

The confusion:
According to numerous sources, approximately 30 million workers between the ages of 18 and 64 earn less than $9 an hour in their jobs -- a full-time annual income of $18,800, assuming a full-time (40 hour week), 52-week work schedule -- the income that marks the federal poverty line for a family of four. These are folks making somewhere around the minimum wage ($5.15 an hour for nontipped workers, and $2.13 an hour for tipped workers).

Sorry Thomas I think you misunderstood my statement - no impact meaning net. As you see I mentioned immediately after people being laid off.

If you think this is an internally consistent statement, your understanding of the word "around" is very different from mine. But it's not a very deep point, and I won't dwell on it any further.

Thomas, I'm not the one that composed the statement; I just posted it in response to a question by another participant. How you interpret is up to you.

c.i. wrote-



So that's why c.i. is befuddled.

August 4, 2006
Wage Bill Dies; Senate Backs Pension Shift
By CARL HULSE
WASHINGTON, Aug. 3 ?- Senate Democrats on Thursday blocked legislation tying the first minimum wage increase in almost a decade to a decrease in the federal estate tax, denying Republicans a legislative victory as lawmakers head into a crucial month of campaigning before the November elections.

Republican backers of the measure, dubbed the trifecta for its three chief elements, fell 4 votes short of the 60 needed to cut off debate. Democrats had argued that it was a bad bargain to exchange a $2.10 wage increase for struggling workers for a costly tax cut for the country's wealthiest families.

"This trifecta is a high-stakes gamble with America's future," said Senator Richard J. Durbin of Illinois, the Senate's No. 2 Democrat. "This is the worst special-interest bill I have seen in my time in Congress."

Scrambling to complete its business and join the House in an August recess, the Senate also approved and sent to the president a major overhaul of pension law as Republicans sought to record some last-minute accomplishments.

But the failure of the bill linking the wage increase and the tax cut was a significant defeat for Senator Bill Frist, the majority leader entering his last months in the post. Mr. Frist had hoped to steer the measure through the Senate, partly with the help of an accompanying series of tax incentives and federal aid to woo lawmakers.

Mr. Frist and his allies in business viewed the wage increase ?- stretched over three years ?- as an acceptable trade-off for a permanent reduction in the estate tax and the other tax breaks. But they could not overcome intense opposition from Democrats and organized labor.

Republicans said Democrats were choosing partisanship over policy and were stalling the measure to allow them to attack the record of the Republican-led Congress.

"It is an excuse to make it a do-nothing Congress," Senator Kay Bailey Hutchison, Republican of Texas, said. "And we are turning our back on the middle-class and poor people in this country who depend on the minimum wage and death-tax relief."

Republicans said the legislation represented the best opportunity to advance an increase in the minimum wage that Democrats have been advocating for years, and some predicted the Democratic opposition could boomerang. Republicans said the proposal balanced the interests of both workers and employers.

"I have never understood the belief of some that you can love employees and hate employers, but that seems to be what's driving this," said Senator Gordon H. Smith, Republican of Oregon.

Democrats said voters would see through the Republican tactic and be turned off by the Republican effort to win a major tax break for some of America's richest families in exchange for raising the minimum wage to $7.25.

"The public has a pretty good nose for tricks and games," said Senator Charles E. Schumer of New York, chairman of the Democratic Senatorial Campaign Committee. "And they're smelling it."

The opposition was aided by a dispute over a provision that would allow employers in a handful of states to begin counting employee tips against minimum wage increases, an approach Democrats said could end up cutting the pay of some workers. Republicans disputed that claim, but the prospect was enough to deter some Democrats Republicans had hoped would vote for the bill.

"Cutting the salaries of Washington tip workers by more than $5 an hour is horrible," said Senator Maria Cantwell, Democrat of Washington, who called the legislation "a cynical ploy on the part of the Republican leadership in an election year."

Under the estate tax proposal, the amount of an individual's estate that would be exempt from taxes would rise to $5 million by 2015, with $10 million exempt for a couple.

After the vote, Mr. Frist noted that the major provisions of the measure ?- the wage rise, the estate tax reduction and the package of tax extenders ?- all enjoyed majority Senate support yet could not clear the procedural hurdles.

Mr. Frist again declared that the minimum wage rise could only be considered in tandem with the others. "As I've said before, these issues must be addressed as a package all or nothing," he said.

Despite Mr. Frist's vow to let the wage increase die, Senator Harry Reid of Nevada, the Democratic leader, said Democrats would hold the Senate in session this fall if there were not a second vote. "If he is serious about that threat, I hope he knows he has a fight on his hands," Mr. Reid said.

Four Democrats voted with 52 Republicans; 38 Democrats, one independent and three Republicans opposed the bill, including Mr. Frist, who voted with the opponents for procedural reasons.

Democrats voting to move ahead with the measure were Senators Robert C. Byrd of West Virginia, Blanche Lincoln of Arkansas, Ben Nelson of Nebraska and Bill Nelson of Florida. In addition to Mr. Frist, Republicans who joined Democrats were Lincoln Chafee of Rhode Island and George V. Voinovich of Ohio.

The estate tax change would cost the government an estimated $268 billion in revenue over the next 10 years. Democrats say the future costs are much larger.

Congressional Republicans have for years refused to consider an increase in the current minimum wage, $5.15 per hour. But the House leadership relented last week in the face of appeals from moderate Republicans who said they needed to act on the minimum wage to defuse intensifying attacks from Democrats and labor organizations.

The measure combining the wage increase, estate tax cut and tax incentives was approved by the House early Saturday morning.

Mr. Schumer and his House counterpart, Rahm Emanuel of Illinois, predicted Thursday that the minimum wage would remain a top issue in the fall campaigns. Republicans were trying to turn the vote to their advantage as well.

The pension legislation, approved on a 93-to-5 vote, is intended to shore up the federal insurance system and better secure the retirement benefits of millions of American workers by requiring some companies to increase their contributions to shaky plans. The complex bill has been years in the making.

The pension and tax votes concluded a complicated legislative chess match that began last week when Republican leaders decided to remove the package of tax breaks from the pension legislation and add them to the bill with the wage hike and estate tax change. That moved rankled some Republicans, who warned that the strategy was a long shot.

"The bottom line is, we bet on the wrong horses," said Senator Charles E. Grassley, Republican of Iowa and chairman of the Finance Committee.

If Wal-Mart if forced to pay their Chicago workers $10/hour plus
$3/hr in benefits, they'll leave the Chicago area.