To listen to a radio interview I did on this topic, please click on this link: http://tinyurl.com/jckgauq.
Recently, I joined Kathy Hoekstra during the Frank Beckmann Show to discuss how we can help lift people out of poverty. During the segment entitled, Minimum wage vs. earned income tax credit, we discussed how raising the minimum wage is an ineffective way to lift people out of poverty. Taking those who are most vulnerable and artificially pricing them out of the jobs market is not a good long term solution. As I explained during the show, if you raise the minimum wage to the point where it kills jobs, the people who benefit are those who are able to keep the jobs they have. As for new jobs, there will be fewer of them as employers automate entry level positions, run their businesses more efficiently and rely increasingly on more experienced workers. Perhaps most disturbingly, minimum wage increases often do not benefit people who are receiving government benefits because of what’s called the “welfare cliff.” If these individuals make more money, they’re cut off from their benefits. As such, when the minimum wage increases, they need to work fewer hours so they don’t lose their benefits. People who are willing to work more should be able to make more. That’s the American Dream. The wage subsidy known as the Earned Income Tax Credit (something supported by President Obama, Paul Ryan and Warren Buffet) can address this issue. It has already lifted millions of people out of poverty and an expanded and improved EITC could do even more good. We discussed this and more during the interview. I hope that going into the 2016 election, all candidates will embrace proposals to permanently help those who want a way out of the cycle of poverty. Those who struggle economically deserve better than the status quo. We can fix this.