Thursday, February 01, 2007

Ninety-four to Three?!

What a shame. Only three Senators understand economics.

Senator Obama, commenting on the vote: "If somebody's working full time, they should should not be in poverty."

I'm all for getting people out of poverty, but the minimum wage is not the tool to use.

From Wikipedia:

The Earned Income Tax Credit is the largest poverty reduction program in the United States. Almost 21 million American families received more than $36 billion in refunds through the EITC in 2004. These EITC dollars had a significant impact on the lives and communities of the nation’s lowest paid working people, lifting more than 5 million of these families above the federal poverty line.

Further, economists suggest that every increased dollar received by low and moderate-income families has a multiplier effect of between 1.5 to 2 times the original amount, in terms of its impact on the local economy and how much money is spent in and around the communities where these families live. Using the conservative estimate that for every $1 in EITC funds received, $1.50 ends up being spent locally, would mean that low income neighborhoods are effectively gaining as much as $18.4 billion.

Due to its structure, the EITC is effective at targeting assistance to low-income families. By contrast, only 30% of minimum wage workers live in families near or below the federal poverty line, as most are teenagers, young adults, students, or spouses supplementing their studies or family income.


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