Buffett: Better Than Raising the Minimum Wage

[question everything]

The American Dream promises that a combination of education, hard work and good behavior can move any citizen from humble beginnings to at least reasonable success... Recently, however, the economic rewards flowing to people with specialized talents have grown dramatically faster than those going to equally decent men and women possessing more commonplace skills.

(snip)

Meanwhile, a huge number of their fellow citizens have been living the American Nightmare—behaving well and working hard but barely getting by. In 1982, 15% of Americans were living below the poverty level; in 2013 the proportion was nearly the same, a dismaying 14.5%. In recent decades, our country’s rising tide has not lifted the boats of the poor.

(snip)

This widening gap is an inevitable consequence of an advanced market-based economy. Think back to the agrarian America of only 200 years ago. Most jobs could then be ably performed by most people. In a world where only primitive machinery and animals were available to aid farmers, the difference in productivity between the most talented among them and those with ordinary skills was modest. Many other jobs of that time could also be carried out by almost any willing worker. True, some laborers would outdo others in intelligence or hustle, but the market value of their output would not differ much from that of the less talented.

Not today.Much of the labor force (is) unmatched to the universe of attractive jobs. That mismatch is neither the fault of the market system nor the fault of the disadvantaged individuals. It is simply a consequence of an economic engine that constantly requires more high-order talents while reducing the need for commodity-like tasks.

(snip)

In my mind, the country’s economic policies should have two main objectives. First, we should wish, in our rich society, for every person who is willing to work to receive income that will provide him or her a decent lifestyle. Second, any plan to do that should not distort our market system, the key element required for growth and prosperity. That second goal crumbles in the face of any plan to sizably increase the minimum wage. I may wish to have all jobs pay at least $15 an hour. But that minimum would almost certainly reduce employment in a major way, crushing many workers possessing only basic skills.

(snip)

The better answer is a major and carefully crafted expansion of the Earned Income Tax Credit (EITC), which currently goes to millions of low-income workers... The process is simple: You file a tax return, and the government sends you a check. In essence, the EITC rewards work and provides an incentive for workers to improve their skills. Equally important, it does not distort market forces, thereby maximizing employment.

The existing EITC needs much improvement. Fraud is a big problem; penalties for it should be stiffened. There should be widespread publicity that workers can receive free and convenient filing help. An annual payment is now the rule; monthly installments would make more sense, since they would discourage people from taking out loans while waiting for their refunds to come through. Dollar amounts should be increased, particularly for those earning the least.

More..

http://www.wsj.com/articles/better-than-raising-the-minimum-wage-1432249927

[questionseverything]

1. the personal exemption should be doubled too

[jwirr]

3. Agreed.

[jwirr]

2. Hmm. Have been there done. I am not to sure that I do not agree with him. Earned income

credit vs. higher wages. Assuming that the dollar amounts are actually increase to have the same spending effect as the $15.

When my daughter got the wage increase offered by my state MN she lost her food stamps, child care credit and health care. Her increase did not come close to covering these. On the other hand earned income credit is not counted by these other programs as income so they do not go down. Of course I am sure that the Rs would quickly end that.

I also think that earned income would help more if given monthly because it would be used for regular monthly costs. But there are a few problems with that. First it would require more government workers to process and send the checks. Secondly it would no longer be exempt as income because it is no longer treated as a one time lump sum source.

[questionseverything]

8. i like the lump sum

and it really is important to keep it as "non income"

[jwirr]

9. Yes, if used right it is a way of getting those big things you need. My family uses it that way also

[Scootaloo]

4. $15 Minimum wage isn't crushing anything here in Seattle

Maybe Buffett has forgotten that there actually are municipalities i nthe Us who have taken up the $15 minimum, and are doing just fine.

If a business cannot survive while paying its workers competitive, livable wages, then that business should not survive. It's really very simple. Buffett, for all his good ideas and positive virtues, does still place the investor above the worker, the boss above the hire, the institution over the community.

[questionseverything]

6. but at 15/hr most peops would lose other govt safety net features

the earned income credit does not count as income so it does not affect food stamps ,medicaid or subsidized housing benefits

the goals of the 15/hr folks and the expand earned income credit are the same....that working people should have a decent minimum standard of living,,,,how we get to that point is more than worth the discussion

[Scootaloo]

7. Which is a problem with those programs being nearly thirty years out of date

[elehhhhna]

5. supplementing low wages with tax $ doesn't distort the market"?

Bullshit

[stuffmatters]

10. Typical, knee jerk 1% deflection of costs to taxpayers from corps & it's not "either/or" anyway

A glaring reason that the corporate 1% are so resistant to both raising the minimum wage and scrapping the social security cap ( so they must pay the employer % of income on all salaries) is that these are automatic costs that cannot be finessed away by legal and accounting jujitsu.

[TexasBushwhacker]

11. Not no but HELL NO!

Why should taxpayer dollars be subsidizing corporations paying low wages? He says fraud in EITC is a big problem. Does he think increasing EITC will make fraud go down? Hell no. It will make it more tempting.

Walmart's net profit in 2014 was almost $13 Billion, but their employees received approximately $6 Billion in public assistance.

http://www.forbes.com/sites/clareoconnor/2014/04/15/report-walmart-workers-cost-taxpayers-6-2-billion-in-public-assistance/

Walmart will brag that the hourly average for all full and part time workers is almost $13 an hour. The problem with averagrs is that the executives making ten of millions a year skew the average way up. In fact, the average for hourly workers is less than $9 an hour., and Wally World is notorious for scheduling its full time workers less than 40 hours a week.

http://m.csmonitor.com/Business/2013/1212/CEO-vs.-worker-pay-Walmart-McDonald-s-and-eight-other-firms-with-biggest-gaps/Walmart

Of course, I don't mean to beat up only on Walmart. There are plenty of employers in retail and food service that are as bad or worse. There is something inherently wrong with a person making hundreds of times more than the employees that keep the whole thing going. These corporations are the welfare queens, not single moms driving imaginary Cadillacs.

[JayhawkSD]

12. I'm from Missouri, show me.

I'm actually from California, but as to, "I may wish to have all jobs pay at least $15 an hour. But that minimum would almost certainly reduce employment in a major way."

Not only has that nonsense never been adequately proven to be true, it has repeatedly and convincingly been showh to be totally and utterly false.