Tuesday, June 20, 2006

Tax Cuts Yes -- Minumum Wage No

Ok, the majority party in Congress believes that taxes should be cut for the wealthy.  They don't support an increase in the minumum wage. And the Congress, as a whole just voted themselves a pay raise.
Do you really need more reasons to vote the majority of them out in November ?   plk
Pay Raise Politics
by Jared Bernstein, TomPaine.com

     How is it that Republicans claim tax cuts are fine yet a moderate minimum wage increase will 'cripple' the economy?
An increase in the minimum wage is once again on the congressional agenda, as Democrats try to wedge it into various bills while Republicans try to sink it.

And once again, as reliable as clockwork, defenders and opponents are snapping into action, dusting off briefs and arguments, updating the analysis for inflation and generally doing the same dance we always do (I'm a defender: see http://www.epi.org/content.cfm/issueguides_minwage_minwage).

There's got to be a better way.

Facts matter, so I'm not for a second saying that progressives should ignore the superior research, summarized below, that supports an increase.

But I think we should also fight this one on basic fairness.

It's simply shameful, in an era of sharply increasing economic inequality, for Congress to incessantly cut rich people's taxes yet refuse to help low-wage workers.

First, a bit of context regarding the minimum wage.

As Isaac Shapiro and I report in a study coming out today (go to www.epi.org), the buying power of today's minimum wage is at its lowest since 1955.

Remember, unlike most other government programs, the wage floor is not adjusted for inflation.

Since the last increase in 1997 alone, inflation has eroded 25 percent of the minimum wage's value.

Second, the federal minimum wage has often been set with the level of other workers in mind, reflecting the principle that minimum-wage workers should share in economic gains and not fall far behind other workers.

During the 1950s and the 1960s, the minimum wage was typically about half the average wage of workers in nonsupervisory positions.

Today, the minimum wage has fallen to 31 percent of the average wage earned by other workers---its lowest share since economists began tracking it in 1947.

So what about the usual pushback against the increase: that it will hurt low-wage workers, whose employers would have to fire them when the wage mandate priced them out of the labor market?

Not to be snarky, but this concern doesn't seem to come up when Congress mandates their own pay hikes; since the last minimum wage increase in 1997, to $5.15, they've raise their pay by about $32,000.

Just last week, the House gave itself a $3,300 raise.

That "disemployment" argument would be plausible, were it not for the fact that tons of careful research has disproved it.

The federal minimum wage has been raised 19 times by Congress since its introduction in 1938.

These experiments allow us to compare before and after, or, even better, compare nearby places that face similar economic conditions but have different minimum wage laws.

The main thing about this research is that the evidence of job loss is weak.

And the fact that the evidence is weak suggests that the impact on jobs is small.

Instead, low-wage workers experienced the strongest job market in 30 years.

Well, they've been busy passing $70 billion worth of new tax cuts, mostly by extending earlier Bush cuts on dividends and capital gains.

These cuts reduce millionaire's tax payments by $43,000, middle-income payment by $20, and low-income payments by $0.

Oh, and they got awfully close to repealing the estate tax, a gift to the Paris Hiltons of the world that would have cost $1 trillion over 10 years.


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