President Obama said, “America needs a raise.” People on the left and right agree that the minimum wage is not enough to support a family. That is where the agreement ends.
Some city governments are raising wages on their own. Both Los Angeles and New York are raising the minimum hourly wage to $15 over the next few years. But it is not as simple as that.
In New York City, the wage raise is only for workers in fast-food restaurants that are part of chains with more than 30 outlets. What about the rest of the workers? About 50,000 fast-food workers will be covered. About 1.25 million workers will not be covered.
In Los Angeles, unions that fought for a higher wage do not want union workers to be covered by the city’s raise. They want the unions to do the job of bargaining for increased wages and benefits for workers. Or why have unions?
Experts are joining the debate. Not every worker is equal. Some support families. Some are teenagers living at home. Some are in households with higher incomes. Some are in households with lower incomes. Some are in two-earner households.
Higher wages may mean employers will hire fewer workers. Higher wages may mean that prices will go up. Higher wages may mean more competition for jobs. Workers with lesser skills might lose out.
Economists say fast-food chains will try to avoid paying higher wages. They might have customers order on iPads to reduce the number of workers. They might turn chain stores into independent stores. Economists call this “distortion.”
In other words, raising the minimum wage is not a simple solution. Politicians do not pay a high price to order higher wages. They are not running a business.
Many experts would like to reform the tax code. They want lower-income workers with families to have more money at the end of the year.
The earned income credit is said to be a good way to do this. Workers with incomes that are said to be too low would get money from the government. The credit is in the form of cash paid to low earning families. In this way, more money would go to those who need it the most.
Source: The New York Times July 27, 2015