The July 13, 2009 edition of the Wall Street Journal carried an editorial, "Mandating Unemployment," that rails against the idea that the U.S. minimum wage should be increased. It starts out by informing us that the June unemployment rate for U.S. teenagers is 24% (38% for black teens), then tosses out the usual "free market" bromide that raising wages will result in even higher unemployment (called "disemployment").
The heart of the editorial's argument is that, if a minimum wage employee gets paid more, that person will receive less Earned Income Tax Credit from the federal government. Employers, it seems, are doing employees a big favor by paying them the current minimum wage of $6.55 an hour (before taxes and FICA are deducted), because, if they earn more, they'll get less federal money.
The Journal helpfully trots out a chart (prepared by the Tax Foundation) showing that a full-time minimum wage employee earns only $13,100 a year, but in actuality will have an annual cash flow of $20,043, thanks to an EITC of $5,028, a refundable child tax credit of $1,515, and a "making work pay credit" of $400.
Nowhere in this sorry editorial is there any discussion of the value of work performed by workers at the bottom rungs of the employment ladder, and whether the jobs available to minimum wage workers are worth what the employees are paid. There is a whiff of suggestion that some of those receiving minimum wage are so marginal that they wouldn't be "worth" 70 cents an hour more in their paychecks. Employers are doing society a favor, readers are led to infer, by hiring people who add little value to their bottom lines. They shouldn't be asked to pay them enough to live on. Instead, they—and the Wall Street Journal—are happy to allow all U.S. taxpayers to make up the difference.
Wouldn't it be reasonable to expect the Wall Street Journal, of all entities, to endorse the concept of people supporting themselves without any form of government subsidy? Not when it comes to the bottom line of Wall Street Journal constituents. In 2005, over $39.7 billion in EITC claims were made by 21.9 million tax filers. That's great for minimum wage employees, but it's also a $39.7 billion tax-free subsidy for the businesses who employ those workers.
The disingenuous editorial concludes, "If Congress were wise and compassionate, it would at least suspend the wage hike for one or two years until the job market recovers. We know this Congress won't do that, but someone has to speak up for the poorest, least skilled Americans."
Yes, Wall Street Journal, someone does need to speak up for "the poorest, least skilled Americans." And it's not you.
P.S. to the Journal: The EITC is not available to the very group that's most in need of jobs: young males. To qualify for the credit, you cannot be someone's dependent for tax purposes; and, unless you have a "qualifying child," you need to be at least age 25.
Alice Cherbonnier is the Managing Editor of this newspaper.
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