New Study: Combining and Strengthening Current Policies Would Guarantee Decent Wages for Workers

[Omaha Steve]

New Study: Combining and Strengthening Current Policies Would Guarantee Decent Wages for Workers in the U.S.

http://talkingunion.wordpress.com/2010/10/21/peri-decent_wages/

Posted on October 21, 2010 by dsalaborblogmoderator

Political Economy Research Institute

Current federal policies to ‘make work pay’ leave the vast majority―88%―of low-income working families in the U.S. without the guarantee of a decent living standard, even with full-time work. In Combining Minimum Wage and Earned Income Tax Credit Policies to Guarantee a Decent Living Standard to All U.S. Workers, a new study from the Political Economy Research Institute at the University of Massachusetts, Amherst, Jeannette Wicks-Lim and Jeffrey Thompson craft policy proposals that would substantially strengthen minimum wage laws and the federal Earned Income Tax Credit (EITC) program in the United States, so that, in combination, they would guarantee decent living standards for full-time U.S. workers and their families.

In their current form, these two policies are inadequate for the task of guaranteeing a decent living standard. Wicks-Lim and Thompson show how these measures can operate most effectively and, crucially, how, by considering the two policies in tandem, any negative unintended consequences of each measure can be minimized. The risks inherent in each policy—unsustainably raising business costs with too high a minimum wage, or enabling employers to pay low wages with too generous an EITC—can be dramatically reduced with a careful balance of the two policies.

Current policies leave a 63% gap between earnings at a full-time, year-round job at the $7.25 federal minimum wage and what can reasonably be called a decent living standard for a family of three. For the families living with this gap, it translates into worrying about food, relying on a hospital emergency room to meet their health care needs, and having their utilities shut off. Given the size of the gap, developing effective measures for closing it may seem daunting.

Wicks-Lim and Thompson propose ambitious, but realistic, increases to the minimum wage and the EITC so that in combination, these policies can deliver a decent living standard to workers fully engaged in paid employment. The combined proposal must be ambitious because of the size of the gap between what current policies guarantee and what working families need; the proposal must be realistic in order to have real potential impact on economic policies discussions.

FULL story at link.

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