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

Jeannette Wicks-Lim and Jeffrey Thompson ()

Published Studies from Political Economy Research Institute, University of Massachusetts at Amherst

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.

Keywords: Living wage; minimum wage; working poor; tipping point; earned income tax credit; labor standards (search for similar items in EconPapers)
JEL-codes: D04 J38 J88 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-lab
Date: 2010
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