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Combining Minimum Wage and Earned Income Tax Credit Policies to Guarantee a Decent Living Standard to All U.S. Workers

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  • Jeannette Wicks-Lim
  • Jeffrey Thompson
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    Abstract

    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 their new study, Jeannette Wicks-Lim and Jeffrey Thompson advance proposals to substantially strengthen minimum wage laws and the federal Earned Income Tax Credit (EITC) program in the United States, so that, in combination, they can guarantee decent living standards for all full-time U.S. workers and their families. By considering minimum wage laws and the EITC as complements, they show how these measures can operate most effectively and, crucially, how any possible negative unintended consequences of each measure can be minimized. Their proposal increases the effectiveness of these two policy measures so that they would guarantee 60% of all low-income working families a decent living standard through full-time employment. Wicks-Lim and Thompson assess the federal fiscal impact of the changes they propose to the two policies, and consider potential sources of revenue to pay for the increases. They discuss the need for a full-employment economy as the context in which the maximum number of families can have a decent living standard, and propose policies towards that end.

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    Bibliographic Info

    Paper provided by Political Economy Research Institute, University of Massachusetts at Amherst in its series Published Studies with number peri_mw_eitc_oct2010.

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    Date of creation: 2010
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    Handle: RePEc:uma:perips:peri_mw_eitc_oct2010

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    Keywords: Living wage; minimum wage; working poor; tipping point; earned income tax credit; labor standards;

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    1. Dube, Andrajit & Lester, T. William & Reich, Michael, 2010. "Minimum Wage Effects Across State Borders: Estimates Using Contiguous Counties," Institute for Research on Labor and Employment, Working Paper Series qt86w5m90m, Institute of Industrial Relations, UC Berkeley.
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    11. Jekanowski, Mark D. & Binkley, James K. & Eales, James S., 2001. "Convenience, Accessibility, And The Demand For Fast Food," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 26(01), July.
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    14. Jesse Rothstein, 2008. "The Unintended Consequences of Encouraging Work: Tax Incidence and the EITC," Working Papers 1049, Princeton University, Department of Economics, Center for Economic Policy Studies..
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