Help Americans who need it with a major, carefully crafted expansion of the Earned Income Tax Credit.
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. And for many, that promise has been fulfilled. At the extreme, we have the Forbes 400, most of whom did not come from privileged backgrounds.
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. In 1982, the first year the Forbes 400 was compiled, those listed had a combined net worth of $93 billion. Today, the 400 possess $2.3 trillion, up 2,400% in slightly more than three decades, a period in which the median household income rose only about 180%.
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.
No conspiracy lies behind this depressing fact: The poor are most definitely not poor because the rich are rich. Nor are the rich undeserving. Most of them have contributed brilliant innovations or managerial expertise to America’s well-being. We all live far better because of Henry Ford, Steve Jobs, Sam Walton and the like.
Instead, 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.
Visualize an overlay graphic that positioned the job requirements of that day atop the skills of the early American labor force. Those two elements of employment would have lined up reasonably well. Not today. A comparable overlay would leave much of the labor force 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.
The remedy usually proposed for this mismatch is education. Indeed, a top-notch school system available to all is hugely important. But even with the finest educational system in the world, a significant portion of the population will continue, in a nation of great abundance, to earn no more than a bare subsistence.
To see why that is true, imagine we lived in a sports-based economy. In such a marketplace, I would be a flop. You could supply me with the world’s best instruction, and I could endlessly strive to improve my skills. But, alas, on the gridiron or basketball court I would never command even a minimum wage. The brutal truth is that an advanced economic system, whether it be geared to physical or mental skills, will leave a great many people behind.
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. Smaller increases, though obviously welcome, will still leave many hardworking Americans mired in poverty.
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. Payments to eligible workers diminish as their earnings increase. But there is no disincentive effect: A gain in wages always produces a gain in overall income. 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.
There is no perfect system, and some people, of course, are unable or unwilling to work. But the goal of the EITC—a livable income for everyone who works—is both appropriate and achievable for a great and prosperous nation. Let’s replace the American Nightmare with an American Promise: America will deliver a decent life for anyone willing to work.
The EITC seems like a more broadly agreeable way to achieve livable incomes for the poor because it doesn't require business owners to do anything (e.g., reduce profits, reduce workforce size). It still would require politicians on the right (by way of the public) to be okay with "major" wealth redistribution. So it would still require those on the right to agree that there is a problem that needs fixing in the first place. My own research in the Canadian context suggests that people with right-leaning worldviews are less likely (than those on the left) to perceive inequality as a problem that needs fixing by the gov't. So it would help if someone like the Koch Brothers wrote this instead of Warren Buffett.
This also wouldn't do anything to improve the employability of the poor - a fairer education system and more affordable/free skills training opportunities would help there, but there also needs to be more done to improve the well-being of poor kids in the first 5 years of life, in my experience.
Can't see the Cons going for an increase in the EITC. Not too long ago, those who benefit the most from the EITC were vilified as moochers, takers, and deadbeats. They are the 47% who pay no federal income tax. The 2012 GOP nominee personally called them out, and said it wasn't his job to worry about them.
The idea that Cons will increase the amount of money that these "moochers/takers" get back from system that the Cons wrongfully believe they pay zero in to is a fantasy.
Can't see the Cons going for an increase in the EITC. Not too long ago, those who benefit the most from the EITC were vilified as moochers, takers, and deadbeats. They are the 47% who pay no federal income tax. The 2012 GOP nominee personally called them out, and said it wasn't his job to worry about them.
The idea that Cons will increase the amount of money that these "moochers/takers" get back from system that the Cons wrongfully believe they pay zero in to is a fantasy.
This is a thread for discussing ideas, not for inane partisan bickering.
This also wouldn't do anything to improve the employability of the poor - a fairer education system and more affordable/free skills training opportunities would help there, but there also needs to be more done to improve the well-being of poor kids in the first 5 years of life, in my experience.
I think EIC changes definitely increases or at least maintains the immediate employment of low wage labor vs minimum wage increases that have widespread popularity. You're already seeing it with Walmart increasing the minimum wage at their stores but also closing a bunch of them and cutting hours. If you're able to work at a job for a longer period of time and show sustained employment, that in itself increases your employment opportunities. Raising the minimum wage shafts the bottom x% who probably are going to be less employable anyway than their coworkers.
Definitely agree with you on all the things (esp believe proactive >>>>> reactive solutions) that can be done to improve employment opportunities but 30-40 year olds who worked at Walmart or McDonalds their entire life are going to have dim job prospects no matter what training programs or education they go through. That same profile is very unlikely to have gone to college and extremely unlikely to go to college after a certain age. That alone is going to greatly restrict any opportunities in life. This is a sizable portion of the US population and basically an entire generation of people who are fucked for life.
This is a thread for discussing ideas, not for inane partisan bickering.
Nice whine, patty.
Need a tissue, little guy?
b/w
Exhibit A that the Cons won't go for it. Instead of manning up and admitting that they won't be for it and why, they'll have cryfest over "partisan bickering".
"The emerging tax legislation would make permanent 10 provisions, including an expanded research and development tax credit, which businesses and the Obama administration have wanted to make permanent for years; "
"Left off were the two tax breaks valued most by liberal Democrats: a permanently expanded earned-income credit and a child tax credit for the working poor. Friday night, Republican negotiators announced they would exclude those measures as payback for the president’s executive order on immigration, saying a surge of newly legalized workers would claim the credit, tax aides from both parties said."
This is a thread for discussing ideas, not for inane partisan bickering.
Nice whine, patty.
Need a tissue, little guy?
b/w
Exhibit A that the Cons won't go for it. Instead of manning up and admitting that they won't be for it and why, they'll have cryfest over "partisan bickering".
Thanks for the assist, pattycakes!
Grow up.
The money for an increased EITC has to come from somewhere, which means someone else will be taxed to fund it, or services will have to be reduced. Per a previous comment, it may not come directly from business owners in the form of increased wages for employees or the like, but it will come from somewhere.
The money for an increased EITC has to come from somewhere, which means someone else will be taxed to fund it, or services will have to be reduced. Per a previous comment, it may not come directly from business owners in the form of increased wages for employees or the like, but it will come from somewhere.
Again, Cons aren't for it. No amount of your or patty's kvetching will change that.
More tax credits, especially for those who already pay little into the system, will lead to lower revenues. Guess where the Cons want to make up the difference? Cuts to SS and Medicare. Why? Because they refuse to raise revenues. This is US politics 101, or as patty would say "partisan bickering".
" You're already seeing it with Walmart increasing the minimum wage at their stores but also closing a bunch of them and cutting hours."
Hmm. I dunno. Paying people more for their work will likely mean more productivity out of those people because they're more satisfied and able to manage other things in their lives, and less likely quit/be fired. So businesses could stand to actually offset higher wages through more profit resulting from less hiring/training, and more sales. So I don't see why it absolutely has to be a trade-off that necessarily leads to businesses reducing job/hours to compensation for higher wages. Hell, they could also take a cut in their profit margin, but I guess that's a whole other topic.
Besides, I do agree that it's the government's responsibility to ensure social justice, and not the job of corporations (although corporate social responsibility can have its advantages too).
"Definitely agree with you on all the things (esp believe proactive >>>>> reactive solutions) that can be done to improve employment opportunities but 30-40 year olds who worked at Walmart or McDonalds their entire life are going to have dim job prospects no matter what training programs or education they go through. That same profile is very unlikely to have gone to college and extremely unlikely to go to college after a certain age. That alone is going to greatly restrict any opportunities in life. This is a sizable portion of the US population and basically an entire generation of people who are fucked for life."
Yeah, I was talking about proactive policies.
Still, I'm no expert on this, but there's gotta be models of successful active labour market policies out there that the US could adopt. I refuse to believe that low-skilled adults have to be "fucked for life". In fact, a friend of mine used to work at the Bread Project out in Emeryville (http://www.breadproject.org/). That sort of thing could be expanded, I'm sure.
I nominate Jamie Dimon as the first head to roll. Of course as his head rolled into the basket it would still be contemplating ways to fuck the non-rich sideways up the ass.
The Koch brothers should go stacked up under the same blade.
Call me a socialist or whatever, but I think a living wage should be paid to any worker.
I also think there needs to be a cultural shift that sees achievement and status measured in impacts made while serving one's community rather than in material accumulation.
I'm not opposed to giving the EITC to poor people instead of rich people.
But government hand outs should not replace a fair wage.
I can tell you that Oregon's high Minimum wage has not decreased the number of restaurants or fast food chains here. In fact that continue to expand at an alarming rate.
Right.
A mother with 2 children, working full time at minimum wage, will be entitled to SNAP and a host of other government benefits. With out them her family is not going to be clothed, housed an fed.
But government hand outs should not replace a fair wage.
Agreed. But some business owners believe that a minimum wage is fair enough. It isn't, of course.
I think that sadly the US's standard of living will fall faster than reasonable minimum wage increases will occur.
At the base is that working the drive through at McDonald's shouldn't be a career. But with the erosion of traditional high-school-to-living-wage-employment jobs (I'm not going to call them low skill, because many are not) in manufacturing and other areas, it's now falling on those kinds of jobs to support families. On top of that, traditional employers are simply employing less people. They don't need them.
It's a scary thing when you think about it, especially at a time when it seems like people are loading themselves down in debt to try to stay ahead of the curve.
In the long term I think the US will adjust back to a standard where it isn't expected that everyone owns a car, dines out regularly, and has piles of disposable consumer goods. Public transportation will expand because of societal necessity and people will live more simple lifestyles ... out of necessity. The shift (back) towards entrepreneurship is because the stability of working for an employer is rapidly fading away.
A higher minimum wage, in my opinion, is treating the symptom, not the cause. I'm not against anyone making a living wage but I think like others have said it will just accelerate the motion toward minimizing human staff and increasing automation and technology.
A higher minimum wage, in my opinion, is treating the symptom, not the cause. I'm not against anyone making a living wage but I think like others have said it will just accelerate the motion toward minimizing human staff and increasing automation and technology.
Yeah.
What are the implications for the singularity? WHAT HAPPENS WHEN WE ARE THE MACHINES?!!
Comments
Help Americans who need it with a major, carefully crafted expansion of the Earned Income Tax Credit.
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. And for many, that promise has been fulfilled. At the extreme, we have the Forbes 400, most of whom did not come from privileged backgrounds.
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. In 1982, the first year the Forbes 400 was compiled, those listed had a combined net worth of $93 billion. Today, the 400 possess $2.3 trillion, up 2,400% in slightly more than three decades, a period in which the median household income rose only about 180%.
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.
No conspiracy lies behind this depressing fact: The poor are most definitely not poor because the rich are rich. Nor are the rich undeserving. Most of them have contributed brilliant innovations or managerial expertise to America’s well-being. We all live far better because of Henry Ford, Steve Jobs, Sam Walton and the like.
Instead, 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.
Visualize an overlay graphic that positioned the job requirements of that day atop the skills of the early American labor force. Those two elements of employment would have lined up reasonably well. Not today. A comparable overlay would leave much of the labor force 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.
The remedy usually proposed for this mismatch is education. Indeed, a top-notch school system available to all is hugely important. But even with the finest educational system in the world, a significant portion of the population will continue, in a nation of great abundance, to earn no more than a bare subsistence.
To see why that is true, imagine we lived in a sports-based economy. In such a marketplace, I would be a flop. You could supply me with the world’s best instruction, and I could endlessly strive to improve my skills. But, alas, on the gridiron or basketball court I would never command even a minimum wage. The brutal truth is that an advanced economic system, whether it be geared to physical or mental skills, will leave a great many people behind.
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. Smaller increases, though obviously welcome, will still leave many hardworking Americans mired in poverty.
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. Payments to eligible workers diminish as their earnings increase. But there is no disincentive effect: A gain in wages always produces a gain in overall income. 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.
There is no perfect system, and some people, of course, are unable or unwilling to work. But the goal of the EITC—a livable income for everyone who works—is both appropriate and achievable for a great and prosperous nation. Let’s replace the American Nightmare with an American Promise: America will deliver a decent life for anyone willing to work.
The EITC seems like a more broadly agreeable way to achieve livable incomes for the poor because it doesn't require business owners to do anything (e.g., reduce profits, reduce workforce size). It still would require politicians on the right (by way of the public) to be okay with "major" wealth redistribution. So it would still require those on the right to agree that there is a problem that needs fixing in the first place. My own research in the Canadian context suggests that people with right-leaning worldviews are less likely (than those on the left) to perceive inequality as a problem that needs fixing by the gov't. So it would help if someone like the Koch Brothers wrote this instead of Warren Buffett.
This also wouldn't do anything to improve the employability of the poor - a fairer education system and more affordable/free skills training opportunities would help there, but there also needs to be more done to improve the well-being of poor kids in the first 5 years of life, in my experience.
The idea that Cons will increase the amount of money that these "moochers/takers" get back from system that the Cons wrongfully believe they pay zero in to is a fantasy.
This is a thread for discussing ideas, not for inane partisan bickering.
I think EIC changes definitely increases or at least maintains the immediate employment of low wage labor vs minimum wage increases that have widespread popularity. You're already seeing it with Walmart increasing the minimum wage at their stores but also closing a bunch of them and cutting hours. If you're able to work at a job for a longer period of time and show sustained employment, that in itself increases your employment opportunities. Raising the minimum wage shafts the bottom x% who probably are going to be less employable anyway than their coworkers.
Definitely agree with you on all the things (esp believe proactive >>>>> reactive solutions) that can be done to improve employment opportunities but 30-40 year olds who worked at Walmart or McDonalds their entire life are going to have dim job prospects no matter what training programs or education they go through. That same profile is very unlikely to have gone to college and extremely unlikely to go to college after a certain age. That alone is going to greatly restrict any opportunities in life. This is a sizable portion of the US population and basically an entire generation of people who are fucked for life.
Nice whine, patty.
Need a tissue, little guy?
b/w
Exhibit A that the Cons won't go for it. Instead of manning up and admitting that they won't be for it and why, they'll have cryfest over "partisan bickering".
Thanks for the assist, pattycakes!
http://www.nytimes.com/2014/11/26/business/congress-nears-deal-on-major-business-tax-breaks.html?hp&action=click&pgtype=Homepage&module=first-column-region®ion=top-news&WT;.nav=top-news&_r=1
"The emerging tax legislation would make permanent 10 provisions, including an expanded research and development tax credit, which businesses and the Obama administration have wanted to make permanent for years; "
"Left off were the two tax breaks valued most by liberal Democrats: a permanently expanded earned-income credit and a child tax credit for the working poor. Friday night, Republican negotiators announced they would exclude those measures as payback for the president’s executive order on immigration, saying a surge of newly legalized workers would claim the credit, tax aides from both parties said."
Cue the whine of "partisan bickering".
Grow up.
The money for an increased EITC has to come from somewhere, which means someone else will be taxed to fund it, or services will have to be reduced. Per a previous comment, it may not come directly from business owners in the form of increased wages for employees or the like, but it will come from somewhere.
Again, Cons aren't for it. No amount of your or patty's kvetching will change that.
More tax credits, especially for those who already pay little into the system, will lead to lower revenues. Guess where the Cons want to make up the difference? Cuts to SS and Medicare. Why? Because they refuse to raise revenues. This is US politics 101, or as patty would say "partisan bickering".
Hmm. I dunno. Paying people more for their work will likely mean more productivity out of those people because they're more satisfied and able to manage other things in their lives, and less likely quit/be fired. So businesses could stand to actually offset higher wages through more profit resulting from less hiring/training, and more sales. So I don't see why it absolutely has to be a trade-off that necessarily leads to businesses reducing job/hours to compensation for higher wages. Hell, they could also take a cut in their profit margin, but I guess that's a whole other topic.
Besides, I do agree that it's the government's responsibility to ensure social justice, and not the job of corporations (although corporate social responsibility can have its advantages too).
"Definitely agree with you on all the things (esp believe proactive >>>>> reactive solutions) that can be done to improve employment opportunities but 30-40 year olds who worked at Walmart or McDonalds their entire life are going to have dim job prospects no matter what training programs or education they go through. That same profile is very unlikely to have gone to college and extremely unlikely to go to college after a certain age. That alone is going to greatly restrict any opportunities in life. This is a sizable portion of the US population and basically an entire generation of people who are fucked for life."
Yeah, I was talking about proactive policies.
Still, I'm no expert on this, but there's gotta be models of successful active labour market policies out there that the US could adopt. I refuse to believe that low-skilled adults have to be "fucked for life". In fact, a friend of mine used to work at the Bread Project out in Emeryville (http://www.breadproject.org/). That sort of thing could be expanded, I'm sure.
Guillotines.
I nominate Jamie Dimon as the first head to roll. Of course as his head rolled into the basket it would still be contemplating ways to fuck the non-rich sideways up the ass.
The Koch brothers should go stacked up under the same blade.
I also think there needs to be a cultural shift that sees achievement and status measured in impacts made while serving one's community rather than in material accumulation.
But government hand outs should not replace a fair wage.
I can tell you that Oregon's high Minimum wage has not decreased the number of restaurants or fast food chains here. In fact that continue to expand at an alarming rate.
Agreed. But some business owners believe that a minimum wage is fair enough. It isn't, of course.
A mother with 2 children, working full time at minimum wage, will be entitled to SNAP and a host of other government benefits. With out them her family is not going to be clothed, housed an fed.
I think that sadly the US's standard of living will fall faster than reasonable minimum wage increases will occur.
At the base is that working the drive through at McDonald's shouldn't be a career. But with the erosion of traditional high-school-to-living-wage-employment jobs (I'm not going to call them low skill, because many are not) in manufacturing and other areas, it's now falling on those kinds of jobs to support families. On top of that, traditional employers are simply employing less people. They don't need them.
It's a scary thing when you think about it, especially at a time when it seems like people are loading themselves down in debt to try to stay ahead of the curve.
In the long term I think the US will adjust back to a standard where it isn't expected that everyone owns a car, dines out regularly, and has piles of disposable consumer goods. Public transportation will expand because of societal necessity and people will live more simple lifestyles ... out of necessity. The shift (back) towards entrepreneurship is because the stability of working for an employer is rapidly fading away.
A higher minimum wage, in my opinion, is treating the symptom, not the cause. I'm not against anyone making a living wage but I think like others have said it will just accelerate the motion toward minimizing human staff and increasing automation and technology.
Yeah.
What are the implications for the singularity? WHAT HAPPENS WHEN WE ARE THE MACHINES?!!
Removed with the quickness