Every so often, the resounding crusade to raise the federal minimum wage picks up steam.  The latest cry came from President Barack Obama on Labor Day as he admonished House Republicans for refusing to raise the federal minimum wage.

I applaud the GOP for standing its ground on such an important issue.  Raising the minimum wage is a costly tool to fight poverty.  Less costly alternatives need to be considered, specifically the earned income tax credit.

Many supporters of raising the federal minimum wage believe that people should have a “living wage.”  Unfortunately, economics are not that simple.

Raising the federal minimum wage would eliminate about 500,000 jobs from the U.S. economy by 2016, according to a Feb. 20 Wall Street Journal article.  In an economy that is already struggling and a U-6 unemployment — unemployed plus underemployed and those who have given up looking for work — rate at 12 percent, according to the U.S. Bureau of Labor Statistics, this is something the federal government cannot afford to do.

Raising the minimum wage increases the cost to hire workers, therefore, many firms will be forced to either cut hours or fire employees.  Some may cry foul against businesses for not swallowing the increased cost of hiring unskilled workers, but businessmen and businesswomen are economic actors, not moral actors.
One of the major arguments for raising the minimum wage is that it would lift workers out of poverty. According to the Congressional Budget Office, this argument has validity. The CBO reports that 900,000 people would be lifted out of poverty by 2016.

Contrary to popular belief, I, along with many other conservatives, am not heartless. Plenty of right-wingers want to see as few people in poverty as possible. Lowering the poverty rate is achievable through raising the federal minimum wage, however it comes with a heavy cost of lost jobs.  A very viable alternative to this costly solution would be to expand the earned income tax credit.

The EITC is a refundable tax credit for working families based off of their income and number of children.  Expanding this tax measure would ensure that hard-working families get the tax break they deserve.

According to the Brookings Institution, the extension of the EITC and child tax credit from the 2009 Recovery Act lowered the poverty rate by 2.8 percent. In addition, the child poverty rate was reduced by 6.8 percent in 2011, based on the Supplemental Poverty Measure provided by the U.S. Census Bureau.

Clearly, the EITC is an effective anti-poverty measure that is work-centered and especially beneficial for children, without the cost of losing jobs in a sluggish economy. It is also much more politically feasible than raising the minimum wage. The Democrats would be in favor of the EITC because it gives tax breaks to individuals and families who need the most help.  Most of the GOP would also sign on because it is centered on working and lifts people out of poverty without the heavy cost of lost jobs.

Being in favor of raising the federal minimum wage in the name of a “living wage” sounds great on the surface. But, the politically feasible and less costly alternative of the earned income tax credit needs to be considered in the name of assisting Americans who truly need the help. Being conservative and compassionate is possible. The EITC is a great place to start.

Chris Pulliam is a sophomore policy studies and political science major. His column appears weekly.   He can be reached at [email protected].

Published on September 10, 2014 at 12:47 am