Wednesday, December 11, 2013

ACA Penalty is Really a form of "Minimum Wage"? Grand Game

I'm not sure this fellow could be more confused.  For one thing, he parrots the bizarre canard that the minimum wage has fallen, withered, etc.  But that's only because he selects a purely strategic point of comparison.  He says:

The minimum wage has been allowed to erode substantially. I earned $1.25 an hour while in high school in the mid-1960s; if that amount had grown at the same rate as per capita personal income, high school kids and others would now be earning $20 instead of $7.25.

Now, check this out:

In 2005$, the minimum wage is up more than 50% since 1947 (it has doubled since it was established).  Now, that's fine, because productivity is up.  But it's just nonsense to claim that overall the minimum wage has "eroded," just because you want to pick the highest historical point as a comparison.  The minimum wage is MUCH higher than it was, in real terms, over the post-WWII era.

More importantly, he actually claims that the ACA penalty on employers who do not pay for insurance is a "minimum wage."  Seriously?  That would only be true if you think that the worker should not receive the pay, and it should go to the state instead.  Oh....wait...I guess he does believe that.  What matters is that those evil corporations have to PAY more.  He doesn't actually care if the workers RECEIVE the money.  Calling that a "minimum wage" seems...confused.

Nod to Kevin Lewis.


John Thacker said...

A big problem with this chart, as pointed out by David Neumark in the New York Times, is that the decline in the real value of the minimum wage coincides with the rise of the EITC. The real value of "minimum wage plus EITC for minimum wage worker supporting a family" has stayed stable-- though EITC has the virtue of not going to, e.g., minimum wage teenage kids of middle class families.

Anonymous said...

I agree generally, but how can you say "The minimum wage is MUCH higher than it was"? It looks like the post-WWII era real average is something like $6. It also looks like the current minimum wage is on par with that average, not "MUCH higher".