Expanding the earned income tax credit might be a better way to curb poverty than increasing minimum wages.
A study by professors from the University of Alabama and East Carolina University claims that expanding the tax credit – currently available to low-income workers – would keep more than twice the number of people out of poverty than the 40 percent increase in the minimum wage that occurred between July 2007 and July 2009.
During 2009 alone, earned income tax credits would have provided low-income people with 94 percent more income than the 70 cent minimum wage increase.
Minimum wage increases continue to be politically popular because of the impression that poor families overwhelmingly benefit. But the recent census information shows that middle-class Americans received more financial benefits.
“The Census Bureau data show that 85 percent of low income families don’t contain a minimum wage worker,” said Michael Saltsman, research fellow at the Employment Policies Institute. “A higher minimum wage means that part-time workers from middle class families get bigger pay checks while the poorest families continue to suffer.”