Two Ways to Help Poor and Low Wage Workers

Last updated on: August 1, 2008 at 8:42 am by Edward Blackadder

Two Ways to Help Poor and Low Wage Workers 2008-08-01T08:42:34-05:00 Edward Blackadder

LOGO Patheos Explore the world's faith through different perspectives on religion and spirituality! Patheos has the views of the prevalent religions and spiritualities of the world.

Suppose that an employer pays some or all of his workers the minimum wage. If the minimum wage is raised, he might respond by raising the wages of his workers to this new minimum. But this is hardly his only option. Instead of raising wages, he might decide to move the jobs in question to a place where the minimum wage law in question does not apply. He might decide to automate the jobs, so that they are done by machines instead of workers. He might decide to lay off workers (or to hire fewer new workers than he otherwise would have done), and indeed he may be forced to do this if the higher labor costs imposed by the new minimum wage law render his business unprofitable.

To deny that an increased minimum wage law decreases employment is to claim that no employer would respond to an increase in the minimum wage in any of these ways, or that any employer who did respond in one of these ways would be canceled out by other employers who responded to the minimum wage hike by hiring more workers than they otherwise would have. This, needless to say, does not strike me as being very plausible.

This negative employment effect is one argument against minimum wage laws, but it isn’t the only one. Another common argument involves demographics. Minimum wage laws aim to help poor workers, yet they apply to low wage workers, and these are not always the same people. Around half of minimum wage workers, for example, are teenagers, many of whom, presumably, do not rely on the wages from these jobs for their daily bread. This is a particularly vexing problem for those who want to use minimum wage laws as a proxy for a just wage, defined as a wage sufficient to support oneself and one’s family, since a just wage will be higher for those with families than for those without.

One might think that the negative effects of a minimum wage law are great enough that, if given a choice between a minimum wage law and nothing as a means of helping the poor, one would prefer doing nothing. As in medicine, so with anti-poverty measures, the Hippocratic principle “first do no harm” seems rather apt. On the other hand, one might concede these downsides to minimum wage laws while claiming that the benefits to those poor low wage workers who aren’t disemployed outweigh the harm that comes to those poor low wage workers whose jobs the law destroys. One would then favor minimum wage laws according to the maxim: “if the shoe fits, wear it; if it doesn’t fit, well, it’s still better than nothing.” Such support, however, would be conditional on their not being any alternative means of achieving the same end (helping poor workers) without the accompanying negative consequences.

As it happens, though, there is such an alternative: the negative income tax. Normally a person pays a certain percentage of his income in taxes, so that, for example, if he is taxed at a uniform 20% rate, then for every dollar he makes in income he will pay twenty cents to the government in taxes. The negative income tax operates according to the same principle, except that for every dollar one makes (up to a set amount), it is the government who pays the percentage to the worker, rather than the other way around. So, for example, if a worker made $10,000 a year, and the applicable rate for that level of income was 20%, he would receive an additional $2,000 from the government. The percentage received depends both on the level of income (the less you make overall, the higher the negative tax rate) and on the number of dependents a worker has (i.e. you get a better rate if you have two kids than if you have one or none). And since it is tied to work, there are none of the disemployment concerns typically associated with government welfare payments.

Did I mention that this system is already in place, and that it’s currently the largest poverty reduction program* in America?

A negative income tax like the EITC does what minimum wage laws are supposed to do, only more efficiently and without the negative effect on employment. It isn’t costless, of course. Tax money has to come from somewhere (just as any increased wages as a result of a minimum wage law have to come from somewhere). There’s no such thing as a free lunch. But the cost of the meal is much cheaper than with minimum wage laws, and the quality of the food is better too.

Given the existence of the EITC, I find the vehemence with which many people support minimum wage laws to be somewhat strange. Is it simply that people aren’t aware of the program, or is there some other objection to the idea that has thus far escaped me?

*Okay, so technically this isn’t true, as money received though the EITC isn’t counted as income when calculating the poverty rate, and thus doesn’t reduce poverty in the official statistics. In terms of real life, however, it does have such an effect.

Previous Post

August 1, 2008

American Society for Tradition, Family and Property (TFP)?

Next Post

August 1, 2008 Vote For Obama Is A Vote Against Wal-Mart

Browse Our Archives

Select a Category 2019 A Consistent Ethic of Life Aaron Weldon Abortion absurdity Abuse Scandal Academics Adoption Advent Africa agreement/disagreement with Church teaching Alexander Schmemann Alexham Alterity America Amnesty International Anarchism angels Anglicanism Animals Annual Statistics Anthony Anxietas Apocalyptic Apophatic Appalachia Aquinas Art Atheism Atonement Augustine Authority Baptism Beauty Bible biblical criticism biblical scholarship Bioethics Bishops Black Catholics Black Theology Blackadder Blogs Books Breastfeeding Brett Salkeld Buddhism Bush administration Byzantine Catholic Calvinism Canada Canon Law Capital Punishment Capitalism Caryll Houselander Catholic Blog Awards Catholic Blogging Catholic League Catholic Social Teaching Catholic Worker Movement Catholicity CFL Charity Children Chris West Christ and Culture Christian Democracy Christian Unity Christmas Christology Church Church Doctrine Church History Climate Change Cohabitation Colbert Collegiality Communion Communism Comparative Theology Competition Conferences conscience conscience rights Consequentialism Consistent Life Ethics Consumerism Contraception Contrition Conversion Converts Coptic COVID-19 Creation Critical Thinking Cross Cuba Culture Culture of Death Culture of Life Darfur David Cruz-Uribe David Wheeler-Reed Death Death Penalty Democracy Demons Desert Fathers Devil Dialogue dignity Disability Disarmament discernment Discipleship discrimination Dissent Distributism Division Doctrine Domestic Church Dorothy Day Double Effect Doubt Down syndrome Driving Early Church Easter Eastern Churches Ecclesiology Economics Economy Ecumenism Education El Salvador Election Election 2020 Ellul Embryonic Stem Cell Research Empire Energy Enlighenment Environmentalism Ephraim Radner Episcopal Church epistemology Equality Eschatology Ethics Eucharist Europe Euthanasia Evangelization Evil Evolution Excommunication F.X. Durrwell Facism Facts Fair Trade Faith Family Fashion Feddie Feminism Feminist theology Fertility Fetal Rights Fiction Film Finances First Things flags Folk Religion Food Foreign Affairs Forgiveness Frank Sheed Free Speech Freedom gay & lesbian persons Genocide George W. Bush George Weigel Gerald L. Campbell Girard/Mimetic Theory Global Warming Globalization Gnosticism Good Friday Grace Gratitude Greed Grey Cup 2009 Guadalupe Guest Post Guest Posts Gun Control Gustave Martelet Habitat for Humanity Hans Urs von Balthasar Harry Potter Hate Speech Health Health Care Healthcare Heather King Hebrew Bible Henri de Lubac Henry Karlson Herbert McCabe Heresy HHS Mandate Controversy History Holidays Holiness Holy Spirit Homiletics Homily Homosexuality Hope Hospitality How Far Can We Go? How Far Can We Go? Human Person Human Rights Humanae Vitae Humility Humor Hunger Hunting Identity Idolatry Ignacio Ellacuría Imagination Immigration In Memoriam Income Inequality Inculturation Indigenous People Individualism Inklings Intellect Interdependence Internet Interpretation Interviews Introduction Iraq War Islam Israel Jain James Alison James Martin Jazz Jesus Christ Jews Joe Biden Joe Hargrave Johann Baptist Metz John Allen John Henry Newman John Paul II John the Baptist John XXIII Jonathan Josef Pieper Joseph (the husband of Mary) Joseph Bernardin Joseph Ratzinger Josh Brumfield Journals Joy Judgment Just War Justice Kari Lundgren Karl Rahner Katerina Ivanovna Kenya Keynes Kingdom of God Kyle R. Cupp Labor Language Latin America Law Leanne Ogasawara Legion of Christ Leisure Lent Liberalism Liberation Theology Libertarianism Libya Lies Life life & dignity & responsibility of the human person Literature Little Way Liturgical music Liturgical Year Liturgy Living Simply Living Wage Local Church Lombard Lord of the Rings Louis Dupre Love M.Z. Magic Magisterium Mark DeFrancisis Mark Gordon Marriage Martin Luther Martin Luther King Jr. Martyrdom Marxism Mary Masculinity Matt Talbot Matthew Fish Matthew Levering McCain Media Memorial Day Mennonites Mental Illness mercy Michael Iafrate Middle East militarism Miroslav Volf Mitt Romney Modesty Moral Theology Morality Mormonism Morning's Minion Mother Teresa Music Muslims Natalie Nate Wildermuth Nationalism Native Americans Nature Nazis Neuhaus New Evangelization New York City News NFP nihilism Nonviolence Not Abortion Nova's Ordo Nuclear weapons Nuns Obama Occult Old Age Opus Dei Ordination ordination of women original sin Orthodoxy Oscar Romero Other Voices Pacifism Palestine Palin Papacy Papal Peace Messages Papal Social Encyclicals Particular Affections Partisanship Patriotism Paul Paul Ryan Paul VI Peace Pentimento persecution Personalism Phantastes Philosophy PKD Planned Parenthood Pluralism Poetry Policraticus Politcal Apathy Politics Poll Pope Benedict XVI Pope Francis Pope John Paul II Pope Leo XIV Population Postcolonialsim Poverty Power Prayer Preaching Predictions Predictions for 2012 President Barack Obama priestly formation & discernment Pro-Life Progress Prophetic Witness Proportionalism Public Diplomacy Public Policy Question Quotes Rachel Maddow Racism Radical Catholic Mom Radical Catholicism Raymund Schwager Real Catholic TV Real Presence Reconciliation Reginald Garrigou-Lagrange Religion religious freedom Responsibility Ressourcement Resurrection Rick Garnett Ridiculous Crap You Never Thought You'd See Robert Barron Roe v. Wade Roman Curia Rome Russia Sacraments Saints Salvation History Sam Harris Sam Rocha Same-sex Marriage Saskatchewan Roughriders Satire School of the Americas Science Scripture Seamless Garment Second Vatican Council Seeing Sex sexual violence Sexuality Sia Sin social justice Social Security Socialism Society of Jesus Sofia Loves Wisdom Solidarity Sophia soteriology Soutenus Spirituality Sports St. Dismas St. Joseph Stanley Hauerwas Statistics Stimulus Suffering Sunday Reflections Supernatural Supreme Court Symbolism Syria Taxing Technology Terrorism The State The Tea Party The Trump Administration Theological Anthropology Theology Theotokos Thomas Merton Throwaway Culture Tim Muldoon Tim Riley Tim Tebow Time Titian Tolkien Torture Toys Trade Traditionalism Transgender Transportation Transubstantiation Trinity Truth TV U.S. Affairs Uncategorized Unions unity among people who disagree US Catholicism USCCB Usury Utilitarianism Utopia Valentine's Day Vatican Vatican II Veterans Vicarious Suffering Video Violence Virgin Mary Vocations Voluntary Associations Voluntary Poverty Voting Vox Nova vox nova blog war War and Peace War Strategy Wealth Weirdness Welfare state Women Women Priests Work Woundedness Youth

Select a Month June 2026 May 2025 February 2025 January 2025 July 2024 May 2024 April 2024 March 2024 February 2024 January 2024 December 2023 July 2023 March 2023 January 2023 December 2022 November 2022 October 2022 September 2022 August 2022 July 2022 June 2022 November 2021 September 2021 July 2021 June 2021 May 2021 April 2021 February 2021 January 2021 December 2020 November 2020 October 2020 September 2020 August 2020 July 2020 June 2020 May 2020 April 2020 March 2020 February 2020 January 2020 December 2019 November 2019 September 2019 August 2019 July 2019 June 2019 April 2019 March 2019 February 2019 January 2019 December 2018 November 2018 October 2018 September 2018 August 2018 July 2018 June 2018 May 2018 April 2018 March 2018 February 2018 January 2018 December 2017 November 2017 October 2017 September 2017 August 2017 July 2017 June 2017 May 2017 April 2017 March 2017 February 2017 January 2017 December 2016 November 2016 October 2016 September 2016 August 2016 July 2016 June 2016 May 2016 April 2016 March 2016 February 2016 January 2016 December 2015 November 2015 October 2015 September 2015 August 2015 July 2015 June 2015 May 2015 April 2015 March 2015 February 2015 January 2015 December 2014 November 2014 October 2014 September 2014 August 2014 July 2014 June 2014 May 2014 April 2014 March 2014 February 2014 January 2014 December 2013 November 2013 October 2013 September 2013 August 2013 July 2013 June 2013 May 2013 April 2013 March 2013 February 2013 January 2013 December 2012 November 2012 October 2012 September 2012 August 2012 July 2012 June 2012 May 2012 April 2012 March 2012 February 2012 January 2012 December 2011 November 2011 October 2011 September 2011 August 2011 July 2011 June 2011 May 2011 April 2011 March 2011 February 2011 January 2011 December 2010 November 2010 October 2010 September 2010 August 2010 July 2010 June 2010 May 2010 April 2010 March 2010 February 2010 January 2010 December 2009 November 2009 October 2009 September 2009 August 2009 July 2009 June 2009 May 2009 April 2009 March 2009 February 2009 January 2009 December 2008 November 2008 October 2008 September 2008 August 2008 July 2008 June 2008 May 2008 April 2008 March 2008 February 2008 January 2008 December 2007 November 2007 October 2007 September 2007 August 2007 July 2007 June 2007 May 2007

TAKE THE

Religious Wisdom Quiz

What does "Selah," found often in Psalms, likely mean?

Select your answer to see how you score.

Give thanks Pause or reflect Sing loudly Forever