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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

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.

Suggested Citation

  • Jeannette Wicks-Lim & Jeffrey Thompson, 2010. "Combining Minimum Wage and Earned Income Tax Credit Policies to Guarantee a Decent Living Standard to All U.S. Workers," Published Studies peri_mw_eitc_oct2010, Political Economy Research Institute, University of Massachusetts at Amherst.
    • Handle: RePEc:uma:perips:peri_mw_eitc_oct2010
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    Cited by:

    1. John Schmitt, 2012. "Low-wage Lessons," CEPR Reports and Issue Briefs 2012-03, Center for Economic and Policy Research (CEPR).
    2. Aaron Pacitti & W. Scott Trees, 2013. "Minimum Wages and Economic Justice: A Classroom Exercise," Forum for Social Economics, Taylor & Francis Journals, vol. 42(1), pages 59-69, March.

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    More about this item

    Keywords

    Living wage; minimum wage; working poor; tipping point; earned income tax credit; labor standards;
    All these keywords.

    JEL classification:

    • D04 - Microeconomics - - General - - - Microeconomic Policy: Formulation; Implementation; Evaluation
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • J88 - Labor and Demographic Economics - - Labor Standards - - - Public Policy

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