You can fix inequality on the front end and on the back end. I prefer the front.
by David Atkins
A new report shows that boosting the minimum wage to a paltry $10.10 an hour would reduce SNAP expenditures by $4.6 billion:
Raising the minimum wage to $10.10 an hour would cut federal government outlays on food stamps by $4.6 billion per year, according to a study released Wednesday.The standard way you'll hear most progressives address inequality issues is to allow the labor market to run as usual, but levy heavy taxes on the back for redistribution.
The estimate published by the Center for American Progress, a left-leaning think tank, is among the first to assess the effect of increasing the minimum wage on the Supplemental Nutrition Assistance Program (better known as food stamps). The study backs supporters who say the policy change would benefit not just low-wage workers, but also taxpayers by reducing government expenditures.
The group’s analysis found that increasing the minimum wage to $10.10 from the current $7.25 rate would lower total food-stamp aid by $4.6 billion, or 6% of the program’s budget.
“Our results show that a minimum-wage increase to $10.10 would reduce the need for 3.5 million people to support themselves on food stamps,” said Michael Reich, one of the study’s authors and an economist at the University of California, Berkeley.
No doubt that is the simplest way of doing it. But it also creates some problems, including a perception of unfairness, the potential to simply lower the tax rates when conservatives are put in charge, and capital mobility in which the richest people simply leave the country.
Front-end fixes that distribute wealth more fairly before it makes it to the hands to the plutocrats is more desirable in my book. They're harder to get rid of legislatively, they eliminate the "we're overtaxed" argument, and they reduce the incentive for capital mobility.
Raising the minimum wage, altering the structure of corporate law to encourage worker ownership, and instituting regulation and transaction taxes on Wall Street to encourage real long-term investment instead of job-slashing hollow corporations are all examples of front end fixes.
We need to focus on both sides of the equation, of course, but it would be great if the progressive movement as a whole spend a little more time on the front end than it does.