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It is common sense once you think about it. The widely-praised Earned Income Tax Credit, which is a paid by taxpayers, encourages more low-wage employers . Don't get me wrong, the EITC has great effects. It expands labor force participation and increases income to families. The EITC helps working-poor mothers become economically engaged, and improves the life chances of their children by keeping them in school, enabling their families to access better food, and even increasing their vocabulary. But the crucial negative economic effects of the EITC are often overlooked. The EITC subsidizes low-wage employers, who are able to attract EITC-eligible workers at lower wages than they otherwise would have to pay. Some workers get a raise from the government via the EITC. But the workers who don’t qualify for the EITC end up with reduced wages. It is more and more likely that those workers are older workers . (en) |
