Local Views: Paul Ryan’s poverty plan comically ignores value of living wage

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Tom Breu
Monday, August 18, 2014

Rep. Paul Ryan’s new poverty plan received a soft review from The Gazette on July 31. The Gazette concluded the plan is a conversation starter, worth a look.

That’s right. The briefest look reveals its one-sided approach. The plan reads like it was lifted from a conservative website.

It’s hard to find a page that doesn’t include a report from the Heritage Foundation or some other conservative think tank, or an expression like “a rising tide lifts all boats” (Page 5), or “people ultimately are the vanguard, and government is the rearguard” (Page 7).

It’s illustrative, almost comic, that Ryan ignores the most important aspect of poverty: Earning a living wage.

Only two paragraphs, deep within the report, mention minimum wage.

The first includes the oft-repeated declaration that there are two ways to pay for higher wages, by raising prices or cutting jobs.

For support, Ryan cites an official-sounding report by the official-sounding Employment Policies Institute. It turns out that the author, professor Joseph Sabia, was paid $180,000 by a shell company supported by EPI, which is itself a front for the restaurant lobby (NYTimes.com, Feb 9, 2014).

This is classic “echo chamber” politics. Find a tilted result from an expert-for-hire tilted report, and repeat, repeat, repeat. Ed Lump, Wisconsin Restaurant Association (Gazette, March 11) and Scott Acker, local chain restaurateur (Feb. 23) add to the echo, like Ryan repeating, repeating.

For Acker (or for any chain-store operator) another way to help pay for higher wages would be to get a percent or two reduction in his corporate “5 percent royalty haircut.” A fourth choice, as done in Germany, would be to add labor representatives to boards of directors. Additional options include tying corporate profit and executive compensation to employee wages; reducing “contract” labor (which frequently translates to “no benefit” labor); assessing corporate-support taxes to help pay for employee use of food stamps and health care; higher productivity; better technology; single-payer health care; and unionizing.

Ryan’s other minimum wage paragraph repeats the jobs-lost projection from the Congressional Budget Office minimum wage report (February 2014) but doesn’t mention any of the CBO’s positive projections. At $10.10/hour, nearly 1 million individuals rise above the poverty line, total national income rises, and there’s no federal budget impact. A minimum wage increase is well targeted. The CBO report lists wide ranges for many outcomes, including zero jobs lost.

Ryan’s poverty plan doubles the maximum childless Earned Income Tax Credit from $500 to $1,000. That’s a raise of about 25 cents per hour for a full-time worker. Nice but almost insignificant.

For anyone serious about incentivizing work, unlike Ryan’s 25-cent raise, here’s a real conversation starter: For 16- and 17-year-olds, lower the minimum wage from $7.25/hour to $7/hour. Increase the minimum wage to $8/hour for 18-year-olds and $10/hour for 19-year-olds. At age 20, it goes to $12, and then $15 at age 21. The lower wage helps keep kids in school. The highest wage is livable.

The ticket out of poverty? Double the minimum wage.

Tom Breu is treasurer of the Democratic Party of Rock County; phone 608-741-2020; email democraticpartyofrockcounty@gmail.com.

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