Discussion Response – Should Minimum Wage and Living Wage Laws be Eliminated?

Discussion Response – Should Minimum Wage and Living Wage Laws be Eliminated?

Hello Whitney,

Although the discussion is on the elimination of minimum and living wages, I will digress and comment on the issue you have raised regarding the rich.  Taxing the rich more sounds unfair, and you mention they should not be punished for working hard. I tend to disagree to some extent, though. I believe most, if not all, Americans work hard. The student working two jobs to pay part of his tuition fee can only honestly describe himself as working hard. A waitress who has children to feed and works endless shifts also works hard. It’s the amount of money that one makes from working hard that brings the disparity. The tax system in the US is un-progressive. 1% of America’s richest pay 24.7% as the effective federal income tax rate. A person earning an average of $75,000 pays 19.3%, which is only a 5.4% gap from the rich. Billionaires evade high taxes in several ways (Marr et al., 2013). For starters, they pay tax rates, which are lower than the majority of Americans because the federal taxes on income (that is, unearned income) are much lower than the taxes paid by the average American on wage income and salary (that is, earned income). Because billionaires get a larger percentage of their sum income from investments, they pay income tax rates that are lower than their employees. The rich are also able to get tax breaks, which are bigger compared to the middle class for the same tax deductions. For example, a middle-class family living in a two-bedroom house will get a lower deduction on the mortgage interest compared to a wealthy family in a mansion, which gets a hefty tax deduction (Stein, 2014). These tax loopholes can be closed by passing the Buffet rule, where billionaires will be required to pay a 30% minimum tax rate.

References

Brundage, A. White House Report–The Buffet Rule: A Basic Principle of Tax Fairness.

Marr, C., Huang, C. C., & Friedman, J. (2013). Tax expenditure reform: an essential ingredient of needed deficit reduction. Center on Budget and Policy Priorities.

Stein, H. (2014). How the government subsidizes wealth inequality. Washington: Center for American Progress.

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Lisa

In my opinion, minimum wage and living wages ought to be eliminated because the two affect the elderly, minorities, and teenagers in adverse ways. The high unemployment rates amongst minority communities are a testament to the harmful effects. By eliminating the minimum wage, a GDP increase would follow since, for every percentage increase in unemployment, a 2-3% fall in GDP follows (Speltzer, 2009). Historically, several economists, their political persuasions notwithstanding, think that minimum wage laws, though well-intended, tend to be counterproductive when it comes to improving low-wage workers’ well-being, especially when compared to other policies such as the expansion of the Earned Income Tax Credit. When an organization deems that an employee is unproductive to warrant the mandated higher wage, such an employee may become jobless or even not hired right from the onset (Kreider, 2019).

If the aim of minimum wage laws is poverty reduction, even where it could be viewed as practical, the laws are perceived to be less efficient in targeting compared to policies that are designed to subsidize poor households’ income in a direct way, for example, via tax credits including the expansion of Earned Income Tax Credit, or through in-kind transfers such as subsidized health insurance and food assistance. While the public may perceive that such programs are costly and yet an increase in the minimum wage would appear free, the measuring of actual cost is complicated in comparison to measuring the cost of running a program; an increase in the minimum wage is not free. Hence, it would make better economic sense to remove the laws and focus on other programs to reduce poverty (Kreider, 2019). The best option, in my opinion, is to empower people to run small businesses by offering tax incentives. This would increase job opportunities and create economic growth (Köehler, 2009).  ‘Made in America’ should increase with incentives and with more goods being exported.

References

Köehler, G. (2009). Job Creation : The Long-term Growth of Employment, Normal, and Abnormal. New York: Nova Science Publishers, Inc. Retrieved from https://search-ebscohost-com.ezproxy.ccu.edu/login.aspx?direct=true&db=nlebk&AN=243027&site=ehost-live.

Kreider, B (2019). Iowa State University: Department of Economics. What would happen if the minimum wage laws were repealed? Would businesses pay their employees a penny an hour? https://www.econ.iastate.edu/node/712

Speltzer (2009). Should living wage laws and minimum wage laws be eliminated? https://economicissuesandpublicpolicies.wordpress.com

Whitney

RE: Should Minimum Wage and Living Laws be Eliminated

I also feel min. Wages should be eliminated, but through this discussion, you brought up a good point about political persuasion. Since the gap between the rich and the poor had grossly separated since 2009, when the last recession ended, politicians play the side of welfare, minimum wage raises, and expansions for healthcare reform to gain the votes of the 43.1 million Americans who are considered to be living at a poverty level. All of these people vote for this candidate based on their ability to benefit from this particular politician. It’s not the people’s vault, it’s the system thats broken. In 1935, when President Franklin created the Welfare System, it was supposed to be temporary. Put time limits on welfare benefits, shorten unemployment benefits, etc, and see what kind of political persuasion that turns for the poorer part of Americans. (this includes me)

I also continue to stand on the side of the rich. If you work hard and make lots of money, should you be punished for this by having to share?

www,census.gov/povertyintheunitedstates