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11.12 This Land is Your Land: The Zinke effect: how the US interior department became a tool of industry [behaving ignorantly again...]
11.11 Trump responds to worst fires in California’s history by threatening to withhold federal aid [behaving ignorantly again...]
11.11 Interior department sued for ‘secretive process’ in at-risk species assessment [behaving ignorantly again...]
11.11 Keystone XL pipeline: judge rules government 'jumped the gun' and orders halt [behaving ignorantly again...]
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11.09 Trump administration blocks asylum claims by those crossing border illegally [Making America Less Great Again...]
11.14 The Guardian view on Yemen’s misery: the west is complicit [WAR CRIMES]
11.10 US stops refuelling of Saudi-led coalition aircraft in Yemen war [But there are a few children still alive. It's too soon!]
Economics, Crony Capitalism
11.05 Under Trump, Corporate Giants See Massive Drop in Penalties: NYT [Mafia-government...]
11.02 Los Angeles’ Measure B Is a Moonshot Aimed at Creating a Public Bank [Could save the public $Billions if setup smartly]
International & Futurism
11.14 'Appalling' Khashoggi audio shocked Saudi intelligence – Erdogan [Exposing a psychopath?]
11.12 With Trump sitting nearby, Macron calls nationalism a betrayal [Trump was confused...; video]
Wall Street Journal Does the Minimum
In its editorial denouncing a the minimum wage increase, the WSJ omits essential facts.
Wednesday, 15 July 2009
The EITC is a tax-free subsidy for the businesses who hire minimum wage workers. If businesses pay workers more, then the government will subsidize them less.
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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Baltimore News Network, Inc., sponsor of this web site, is a nonprofit organization and does not make political endorsements. The opinions expressed in stories posted on this web site are the authors' own.This story was published on July 15, 2009.