Saturday, December 21, 2013

minimum wage versus EITC

This is interesting. (File under "things every citizen should understand about economics" and "things about economics I should've been familiar with already but was not because I'm almost more of a mathematical sociologist than what most people would think of as an economist* and because politics depresses the living hell out of me so I try not to read too much about it**.")

First look at this graph, showing that the diminishing real wages of minimum wage workers often reported has been compensated for by increases in often neglected EITC (see this for more details):

Then go read this short and extremely clear post by Steven Landsberg on why we should be happy that EITC has replaced minimum wage as the social safety net mechanism, which is also stated in the NYTimes article but without much elaboration.

Steven Landsberg is great; you should read him in general. He explains things more clearly than any other blogger I know of. Sometimes a little too virulent for my taste, but hey, considering the target is consistently Paul Krugman, it's only fair... And he makes up for it with fun math puzzles.

*Pssst, don't tell the job market people :)

**See number 3. I highly recommend this list, even though 1, 5, and 10 are still challenging for me. (But on that point, see the coda.)

1 comment:

Anonymous said...

Really? This & Landsberg's piece are so purely argued, it makes one wonder. Why do business employ minimum wage people? Customers .... You should take some time out from your studies and work a real job and serve some customers ...