Study: Higher minimum wage, tax credits together help workers

By JERRY WOLFFE

Raising the minimum wage and expanding state Earned Income Tax Credits are two key strategies to be used together to help working families as the economy slowly recovers from the Great Recession, a new national report said.

Michigan has taken steps in the right direction but has much room for improvement, researchers said.

“Workers in Michigan continue to struggle with low wages that have declined over the years. Strengthening the state’s minimum wage and Earned Income Tax Credit even more would help those earning the least in our state, and it would boost our economy,’’ said Gilda Z. Jacobs of the Michigan League for Public Policy.

The report, State Earned Income Tax Credits and Minimum Wages Work Best Together, released by the Center on Budget and Policy Priorities, concludes that states should use both options together to boost income, widen the path out of poverty and reduce income inequality.

Michigan’s declining and stagnating wages were documented in the League’s Labor Day report released last week. Wages for workers in the lowest 20 percent of incomes have fallen dramatically, with a 31 percent drop since 1979 for male workers earning the least.

A report by the Michigan Association of United Ways this week also estimated that 40 percent of Michigan families do not earn enough to pay the basic bills.

Increasing the EITC and minimum wage are ways to reward work as opposed to increasing public assistance to meet the basic needs of housing, utilities, transportation, and food.

Michigan’s minimum wage on Monday increased from $7.40 an hour to $8.15 an hour and will climb to $9.25 by 2018. It will be indexed to inflation, with some exceptions, but does not eliminate the tipped wage. A ballot proposal to push it to $10.10 an hour and include tipped workers narrowly missed the ballot, and polls showed public support for the higher minimum wage. The state’s EITC is 6 percent of the federal EITC.

Jerry Wolffe is the writer-in-residence and advocate-at-large at the Macomb-Oakland Regional Center. He can be reached at 586 263-8950.

Study: Higher minimum wage, tax credits together help workers

By JERRY WOLFFE

Raising the minimum wage and expanding state Earned Income Tax Credits are two key strategies to be used together to help working families as the economy slowly recovers from the Great Recession, a new national report said.

Michigan has taken steps in the right direction but has much room for improvement, researchers said.

“Workers in Michigan continue to struggle with low wages that have declined over the years. Strengthening the state’s minimum wage and Earned Income Tax Credit even more would help those earning the least in our state, and it would boost our economy,’’ said Gilda Z. Jacobs of the Michigan League for Public Policy.

The report, State Earned Income Tax Credits and Minimum Wages Work Best Together, released by the Center on Budget and Policy Priorities, concludes that states should use both options together to boost income, widen the path out of poverty and reduce income inequality.

Michigan’s declining and stagnating wages were documented in the League’s Labor Day report released last week. Wages for workers in the lowest 20 percent of incomes have fallen dramatically, with a 31 percent drop since 1979 for male workers earning the least.

A report by the Michigan Association of United Ways this week also estimated that 40 percent of Michigan families do not earn enough to pay the basic bills.

Increasing the EITC and minimum wage are ways to reward work as opposed to increasing public assistance to meet the basic needs of housing, utilities, transportation, and food.

Michigan’s minimum wage on Monday increased from $7.40 an hour to $8.15 an hour and will climb to $9.25 by 2018. It will be indexed to inflation, with some exceptions, but does not eliminate the tipped wage. A ballot proposal to push it to $10.10 an hour and include tipped workers narrowly missed the ballot, and polls showed public support for the higher minimum wage. The state’s EITC is 6 percent of the federal EITC.

Jerry Wolffe is the writer-in-residence and advocate-at-large at the Macomb-Oakland Regional Center. He can be reached at 586 263-8950.