It’s time to raise the wage

It’s time to raise the wage

President-elect Joe Biden’s plans to raise the federal minimum wage to $15 per hour – outlined as part of his economic stimulus plan last week – would be especially meaningful in Louisiana, where nearly half of all workers currently are paid below that threshold. While the Covid-19 pandemic has highlighted the importance of front-line workers – and their vulnerability to economic shocks – even modest state-level efforts to ensure that such employees are paid a decent wage have traditionally died in the House Labor Committee. The Advocate’s Will Sentell reports

Jan Moller, executive director of the Louisiana Budget Project, praised the proposal. “This is wonderful news and very long overdue,” Moller said. “We know that the economic crisis has disproportionately hit low-wage workers,” Moller added. “The best thing that we can do for low-income workers it to pay them more money.”

Business interests opposed to decent wages have long argued that it will lead to people losing their jobs. But The New York Times’ Paul Krugman writes that most economists have realized that these fears are overblown. 

Why did economists change their minds? No, the profession wasn’t infiltrated by antifa; it was moved by evidence, specifically the results of “natural experiments” that take place when an individual state raises its minimum wage while neighboring states don’t. The lesson from this evidence is that unless minimum wages are raised to levels higher than anything currently being proposed, hiking the minimum won’t have major negative effects on employment — but it will have significant benefits in terms of higher earnings and a reduction in poverty.

The ‘easiest big decision’
More than five years have passed since Gov. John Bel Edwards, on his first full day as governor, signed an executive order to expand Medicaid eligibility to low-income adults in Louisiana. Since the expansion took effect in July 2016, more than 600,000 people have signed up for the coverage, which is mostly financed with federal dollars. The Times-Picayune | Baton Rouge Advocate notes in an editorial that while critics sometimes grumble about the program’s cost, the price tag needs to be seen in proper context: 

The statistics can be cited endlessly, but the ones that the Health Department ought to be proudest of are the adults whose new insurance card saved lives. More than 17,000 people averted colon cancer, for example, by having polyps removed after screenings through the Medicaid expansion. … Whenever the costs of Medicaid are calculated, particularly from Edwards’ expansion, the savings ought to be considered: A cancer surgery can be avoided, saving potentially hundreds of thousands of dollars if a man or woman tried to live and work through the pain until it was too late. Access to care in America is often too expensive for working-class incomes.

Tax credits for low-income families
A lot of attention has focused on the $1,400 checks that would go to most Americans under President-elect Joe Biden’s economic stimulus plan. But perhaps more important is Biden’s plan to give a big, temporary boost to two tax credits that mainly benefit people with low incomes. The plan would boost the federal Child Tax Credit to $3,000 per child ($3,500 for children 0-6) and make the benefit payable in monthly installments, so parents could use it to pay for ongoing expenses. It also would make the credit available to millions of families that don’t currently qualify because they make too little money. WAFB-TV’s Matt Houston reports

“If we don’t do these things now – if children grow up in poverty, it is going to cost us more in the long run,” Louisiana Budget Project head Jan Moller said. “An investment today in reducing child poverty is also an investment in the future economy.” … The “American Rescue Plan” also throws a bone to workers who make low wages, including millions in the service industry, by beefing-up the Earned Income tax credit. Biden would make more Americans eligible for the credit by raising the income cap to $21,000. He’d triple the credit’s value for single, childless workers and remove the age cap so elderly workers could qualify. It would remain fully refundable. “People who get these tax credits don’t put the money in the bank or go to Barbados on vacation,” Moller said. “They use it to buy groceries, clothes, and to pay the rent or take care of basic expenses. I think you’d be doing the economy a world of good.”

Covid’s drain on Americans’ savings
Last month, amid ongoing economic hardship from the Covid-19 pandemic, 1 in 4 adults was forced to dip into their personal savings to pay basic expenses. And while Congress acted at the end of 2020 to pass a Covid relief package, without additional action from Congress many more Americans — particularly those who were working low-paying jobs before the pandemic — will deplete their savings just to get by. Donald Moore of Bloomberg has more on this ongoing crisis:  

The data again highlights the increasingly divergent economic impact of the pandemic. While poorer Americans have depleted meager reserves and need new stimulus payments to survive, those who’ve kept their jobs and incomes have seen an unexpected windfall. For this cohort, the $600 checks represent an opportunity to buy stocks or treat themselves with new consumer goods.

Programming Note
An important meeting is taking place at the Louisiana Capitol today, Tuesday, January 19th, at 11:30 am when the Revenue Estimating Conference will forecast state tax revenues. Watch our video with LBP executive director Jan Moller, as he provides a breakdown of the REC and its crucial role in determining an up-to-date forecast on which to build the state budget.

Join LBP on Facebook Live on Wednesday, January 20th, at 9:30 am, as we recap the REC meeting and preview what the incoming Biden administration means for Louisiana.

Are You Or Someone You Know Interested in Becoming A Fellow?
The State Policy Fellowship is an exceptional opportunity to develop in-depth policy expertise.  Fellowship responsibilities include tracking and analyzing legislative proposals and state budgets as well  as conducting research and analysis on state budget, tax and other issues to improve the lives of  families from all backgrounds. Fellows will also produce reports and other materials for use by  policymakers, journalists, advocacy groups and civic organizations and collaborate with community based advocates to engage the public on the impacts of public policies on their communities.

Check out the information session on Thursday, January 21 at 3:00 PM ET. Click here to register

Number of the Day
36 – Number of prison sentences Gov. John Bel Edwards commuted in 2020, bringing his five-year total to 70. His predecessor, Bobby Jindal, commuted three sentences in eight years as Louisiana’s chief executive. (Source: The Advocate).