Economic Realities of Struggling Families
House Budget, Economic Realities of Struggling Families, June 19, 2019
WM Subcommittee on Worker and Family Support, Leveling The Playing Field For Working Families, March 7, 2019
Sadly, we have actually gone backwards from the original testimony provided in May 2016. Families are working harder for less money when adjusted for inflation.
The most important factor in leveling the playing field is an adequate wage for work. Ideally, this should come from a higher minimum wage, which puts the burden on employers and ultimately customers for fair pay, rather than a tax support for low wage workers (regardless of parental status).
The market cannot provide this wage, as there will always be more desperate employees who can be taken advantage of to force wages lower for everyone else. A minimum wage protects those employers who would do the right thing by their employees if not for their competitors.
A $15 per hour minimum wage is currently being demanded by a significant share of the voters. Perhaps it is time to listen. If the marginal productive product of these employees is more than this rate, job losses will not occur – of course, the estimates of this product can be easily manipulated by opponents who believe that managers provide much more productivity than people who actually work, so such estimates should be examined critically. Internally, people usually have the correct number, but are loathe to share it if doing so hurts their political point.
In some industries, of course, there are plenty of low wage workers who are not as productive as the wage is high (although this makes one wonder whether such industries are worth supporting in the economy). For these employees, paid education should be available – and by pay we mean tuition and wages.
Workers that are less than literate at a tenth grade level deserve full remedial education, with pay at minimum wage levels. This can be paid for in a variety of ways under our model. The usual model is for state governments to provide this education – and in our model the educational institution will also provide case management and stipends and would be funded by the NBRT/Subtraction VAT. There are other options as well.
Employers could provide remedial education and payroll as an offset of their NBRT obligations. They could also contribute to a third party provider, such as Catholic Charities and their related education systems, again offsetting their NBRT with the contribution (a full credit for both tuition and stipends).
Other workers need vocational training. This should be provided through employers. Training costs would be NBRT deductible, but not creditable, because ideally new workers should pay back the employer with a service requirement in much the same way that military academy students are required to serve some period in uniform, with a student loan program to fund those new workers for whom the employment situation does not work out.
Training stipends would not be repayable nor would they be creditable or deductible, as allowing tax advantages for such wages at this level would invite no end of mischief in deducting or crediting the value added of mostly productive employees who are also receiving training. In this case, preventing the gaming of the training stipend will keep the Subtraction VAT lower than it otherwise would be.
Some employees require college educations to advance. The first two years of college would be grouped with the last two years of high school and would be provided by the state (including parochial high school and college), by employers directly or through a third party provider or through contributions to a public or private school. Students would receive a stipend and both tuition and stipend would be fully creditable against the NBRT. Labor provided as a supplement to the employer would be fully taxed as other value added. After the second of school, employees would be paid for the remainder of college and graduate school along the same lines as vocational training.
Aside from higher base wages and training, the best way to keep families out of poverty is to give them enough money. None other than Milton Friedman suggested a negative income tax and both Republican and Democratic presidents have enacted and expanded the Earned Income Tax Credit and the Child Tax Credit. Attachment One is our revised Tax Reform Proposal which addresses these proposals and how they relate to overall reform. Tax reform in the last Congress is a key factor in keeping worker wages static. See Attachment Two for our now oft repeated analysis of the law.
Employee-ownership is the ultimate protection for worker wages. Our proposal for expanding it involves diverting an every-increasing portion of the employer-
It is in our power to make low wage work and family poverty a thing of the past. Indeed, doing so is the primary reason the Center for Fiscal Equity was created. We are not proposing hand-outs but a hand up with adequate rewards for taking it. Please see Attachment Three for more on Employee Ownership.
WM Subcommittee on Worker and Family Support, Leveling The Playing Field For Working Families, March 7, 2019
Sadly, we have actually gone backwards from the original testimony provided in May 2016. Families are working harder for less money when adjusted for inflation.
The most important factor in leveling the playing field is an adequate wage for work. Ideally, this should come from a higher minimum wage, which puts the burden on employers and ultimately customers for fair pay, rather than a tax support for low wage workers (regardless of parental status).
The market cannot provide this wage, as there will always be more desperate employees who can be taken advantage of to force wages lower for everyone else. A minimum wage protects those employers who would do the right thing by their employees if not for their competitors.
A $15 per hour minimum wage is currently being demanded by a significant share of the voters. Perhaps it is time to listen. If the marginal productive product of these employees is more than this rate, job losses will not occur – of course, the estimates of this product can be easily manipulated by opponents who believe that managers provide much more productivity than people who actually work, so such estimates should be examined critically. Internally, people usually have the correct number, but are loathe to share it if doing so hurts their political point.
In some industries, of course, there are plenty of low wage workers who are not as productive as the wage is high (although this makes one wonder whether such industries are worth supporting in the economy). For these employees, paid education should be available – and by pay we mean tuition and wages.
Workers that are less than literate at a tenth grade level deserve full remedial education, with pay at minimum wage levels. This can be paid for in a variety of ways under our model. The usual model is for state governments to provide this education – and in our model the educational institution will also provide case management and stipends and would be funded by the NBRT/Subtraction VAT. There are other options as well.
Employers could provide remedial education and payroll as an offset of their NBRT obligations. They could also contribute to a third party provider, such as Catholic Charities and their related education systems, again offsetting their NBRT with the contribution (a full credit for both tuition and stipends).
Other workers need vocational training. This should be provided through employers. Training costs would be NBRT deductible, but not creditable, because ideally new workers should pay back the employer with a service requirement in much the same way that military academy students are required to serve some period in uniform, with a student loan program to fund those new workers for whom the employment situation does not work out.
Training stipends would not be repayable nor would they be creditable or deductible, as allowing tax advantages for such wages at this level would invite no end of mischief in deducting or crediting the value added of mostly productive employees who are also receiving training. In this case, preventing the gaming of the training stipend will keep the Subtraction VAT lower than it otherwise would be.
Some employees require college educations to advance. The first two years of college would be grouped with the last two years of high school and would be provided by the state (including parochial high school and college), by employers directly or through a third party provider or through contributions to a public or private school. Students would receive a stipend and both tuition and stipend would be fully creditable against the NBRT. Labor provided as a supplement to the employer would be fully taxed as other value added. After the second of school, employees would be paid for the remainder of college and graduate school along the same lines as vocational training.
Aside from higher base wages and training, the best way to keep families out of poverty is to give them enough money. None other than Milton Friedman suggested a negative income tax and both Republican and Democratic presidents have enacted and expanded the Earned Income Tax Credit and the Child Tax Credit. Attachment One is our revised Tax Reform Proposal which addresses these proposals and how they relate to overall reform. Tax reform in the last Congress is a key factor in keeping worker wages static. See Attachment Two for our now oft repeated analysis of the law.
Employee-ownership is the ultimate protection for worker wages. Our proposal for expanding it involves diverting an every-increasing portion of the employer-
It is in our power to make low wage work and family poverty a thing of the past. Indeed, doing so is the primary reason the Center for Fiscal Equity was created. We are not proposing hand-outs but a hand up with adequate rewards for taking it. Please see Attachment Three for more on Employee Ownership.
posted by Michael Bindner at 10:00 AM
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