Over at the Becker-Posner Blog, Seventh Circuit Federal Appellate Judge Richard Posner declines to comment on the constitutionality of Chicago’s new big-box minimum wage. (That question is likely to wind up in his in box one of these years.) Meanwhile, he makes some interesting admissions, in his characteristically Olympian way. Final paragraph:
“At the current minimum wage in Illinois of $7.75 an hour, an employee who works 2000 hours a year (a 40-hour week with two weeks of annual vacation) and is paid the minimum wage earns only $15,500 a year. This is a pittance,”
You’re coming in loud and clear, judge.
“though if the minimum-wage employee’s spouse is employed at a significantly higher wage, the family’s income may not be at a hardship level. Similarly, the minimum-wage employee may be an elderly person who receives social security and Medicare and may have a company pension in addition.”
Also true for some.
“These possibilities show that minimum wage laws, even if they had no disemployment effects, would be a clumsy instrument for combating poverty. A better approach than raising the mininum wage would be increasing the earned-income tax credit (negative income tax), which is a method of increasing the earnings of marginal workers without confronting their employer with a higher cost of labor and thus inducing the employer to discharge those workers whose marginal product is lower than the minimum wage.”
Illinois has a state EITC.
“But this would be difficult for an individual city or even state to do; it would require federal action.”
Gee, I wonder which party would be more likely to enact this. But, further deponent sayeth not.