Why the minimum wage shouldn’t be lifted

Labour has as one of its core policies that they will lift the minimum wage. The green taliban support that as well and if they have their way would lift it even higher.

Perennially the politicians of the left clamour for the lifting of the minimum wage claiming that it will lift workers out of poverty…of course they ignore the fact that the minimum wage is far higher now than it used to be and yet the workers at that level are still poor relatively. They are allowed to get away with it because right thinking politicians have poorly thought out rebuttals for the [il]logic of the left.

Worse still National had Kate Wilkinson as labour minister for a time, and she was overly sympathetic to union demands.

The same call is being made in the US to lift the minimum wage and Evan Soltas at Bloomberg says that must be resisted…and goes further and proposes an alternative to the minium wage…an extension of the modification of our Working for Families, but with much more aggressive abatement regime.

Liberal arguments for increasing the minimum wage have a fundamental flaw: They restrict the set of policy choices to either a minimum wage increase or doing nothing. That means they overlook the single most important federal policy for the poor: the Earned Income Tax Credit.

The¬†EITC¬†is a measure in the federal¬†tax code¬†to support the living standards of the poor without creating a “welfare trap” by diminishing the incentive to work. Economists¬†widely¬†consider¬†the credit a success for reducing poverty while increasing employment.¬†

Created in 1975, the credit has been successively expanded in five times since. It is now the nation’s¬†largest anti-poverty transfer program.

In its latest iteration, for families with two or more children, the credit is 40 percent of the first $10,750 of earned income. After earned income exceeds $15,040, the credit is phased out at a rate of 21.06 cents per marginal dollar, and it goes away fully at the point when earned income reaches $35,458. (The EITC code is similar for smaller families, childless married couples and singles.)

I’m not sure I agree with him…because Working for Families as it stands now in New Zealand has a massive trap in it, that weds people to what is essentially middle class welfare and traps them in the band of earning that ensures they remain suckling from the welfare tit.

It certainly appears that the EITC in the US is much stricter than WFF.

  • Hugewon

    It pisses me off, because why do people on $14 get a pay rise yet people on $20 an hour or higher get less then inflation?

    It sucks, if someone works hard and gets a dollar an hour pay rise and they raise the minimum wage, does he get a pay rise too? No. it basically means he worked hard for nothing, when he could have done the worst job he could of without being fired and reaped the rewards when they raise it.

  • http://www.facebook.com/brian.p.drury Brian Peter Drury

    raising wages doesn’t work reducing prices does work

  • GeorgeRomero

    Exactly , wage increases are earned , not forced upon employers by interferring politicians who should just get the hell out of our lives.The future of young peoples employment will be controlled by labour hire companies because no one will want to employ overpaid , unskilled yoof full time.It really is a slippery slope to massive waste of potential.If anything ,a decrease in minimum wage and winz benifits will get more yoof into employmenthttp://www.realclearpolitics.com/Commentary/com-11_15_05_TS.html

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