> say teenagers working at the supermarket
This flawed assumption is where the theory went wrong, IMHO. The EITC is designed around (say) 5 years of a young worker's life, but our labor market requires people in those roles through 5 decades of their lives. Low-wage employers have grown dependent on people of all ages to work for "teenager" wages through to retirement.
> The EITC
It's not just the EITC. Full-time low-wage employees don't really have any money, so they are subsidized by an array of federal and state programs. EBT/food stamps, Section 8/rental assistance, etc. Low-wage employees receive a lot of direct payments from taxpayers. (This is good!)
In any case, it's worth discussing whether it is appropriate for companies like Walmart (profit per employee: $13k) to be allowed to pay their staff at such a rate that the taxpayer then has to pick up the tab for their employee's food stamps.
Either case -- yes, it is totally accurate to say that employers are being subsidized by
I'd be open to a UBI-type subsidy that is NOT means tested (everyone get it) to replace all the programs you've mentioned above, which are means tested.
This is an important argument! The counterargument is that we Americans tried it that way, and to summarize: it did not work out very well. By which I mean the outcome was broadly considered, across decades, not congruent with American values and preferences, which tilted toward electing representation to correct the situation. Which is not to say this wouldn't work elsewhere, just that America is not "elsewhere."
> I'd be open to a UBI-type subsidy that is NOT means tested (everyone get it) to replace all the programs you've mentioned above, which are means tested.
This would be an interesting experiment and IMHO is more intriguing that rehashing experiences that have already been repeatedly rebuffed by Americans.
Actually no, it did work really well. The first century in the US saw leaps and bounds of economic growth, and for the common person most of all.
Of course, generally things are better off today, after having benefited from all that early growth. Still, the pace of advancement has slowed, and most of that slowdown has come from people thinking they can redesign society.
Well that's what I think. Do you have any proof backing up your statement that I'm wrong and "the cycle would repeat" or are you just repeating talking points from someone else?
What I'll say though is that there is a real lack of thinking about "second order effects" of policy from people that are quick to subsidize things.
It is interesting right now to see Britain stuck in a place where it seems to have gotten stuck several times since 1900 in which (1) the economy is screwed up, (2) prices are rising, (3) workers in critical industries are on strike, (4) the effects approximate a general strike, (5) strikes screw up the economy more... And politicians are screaming "can't you just take one for the society as a whole" and "if we give you a raise this year prices will go up and you'll ask for a raise next year..."
In Britain it is worse than the US because they are so dependent on trade and have a non-dominant currency. It is not unusual at all for them to have violent swings in prices of fuel, food, and other imports, and when you consider the "wage-price" spiral inside the country you also have to consider the effect of Britons having more nominal money in their pocket to spend on imports, how that effects exchange rates, etc.
No, it's a misunderstanding of supply and demand. When you raise the price of something, doesn't matter if it's labor or oranges, demand goes down. "Minimum" wage laws result in unemployment for lower-skilled workers, preventing them from getting valuable experience. Everyone who works decides what their minimum is; but somehow "minimum" wage proponents don't trust low-wage earner to decide for themselves so they prefer them to be unemployed instead because they don't understand that this is the result of those policies.
Low wage jobs with no career prospects are just preying on people for whom the alternative is homelessness.
people have the option of taking those jobs or not so I'm not sure how this is "preying"
1. Get lucky enough to land a good low paying job where advancement is likely 2. Take the shit job while you hope to find #1 (assuming you have the time and energy to keep job hunting while dealing with life/taking care of a kid/going to school part time/etc) 3. Get evicted for not paying rent and become homeless. You aren't even allowed the option of homesteading/living off the land, because it's all private property and some rich jerk who never uses it will eventually end up calling the sheriff on you. 4. Say fuck the system and become a criminal.
People are tired of spending their entire life on option #2, burning half their monthly paycheck on substandard, overcrowded living accommodations. These jobs are a trap, and companies that have roles of this sort should be forced to either build progression into them, or compensate workers better. If a business can't turn a profit without exploiting its workers it shouldn't be a business.
You always have the option of not taking the job and look for a higher-paying one.
If those 1.7m employees were all on $10 an hour for 2000 hours a year, that's 34b.
If you doubled that wage to $20 an hour that would result in an extra $34b in costs at most. Revenue would have to go from $437b to $471b, a 7.8% increase.
that's not how the world works
if they were paying them a "living wage" then they wouldn't hire low-skilled teenagers at all; if you raise the price of salmon roe to the same by weight as caviar, few people will buy salmon roe instead of caviar
and this is exactly what happens irl: "minimum" wage laws increase teenage unemployment, preventing them from getting experience, which no one (other than economists) factors into "wages"
"minimum" wage laws drive salaries down from low to zero (i.e. unemployment) for low-skilled workers, preventing them from getting more skilled
https://en.wikipedia.org/wiki/Earned_income_tax_credit
there are going to be headlines like "Walmart is subsidized". The EITC is one reason why the minimum wage wasn't raised for so long in the US.
The idea is that there are some workers (say teenagers working at the supermarket) who don't have to earn a "living wage" to support a family (if they did get a living wage then prices would go up and the living wage would be more and the cycle would repeat...) so rather than setting wages for them to be high enough to support a family we don't have, the government subsidizes people who are raising families on low incomes directly.