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Comment by random28345 | Hacker News Reader

> I'm going to need a cite for that.

You're going to need a citation for... employers seeking lower wages? And that these lower wages are subsidized by government benefits?

The citation would be nearly every company, ever. So start with Walmart and work your way down, I guess.

https://americansfortaxfairness.org/files/Taxpayers-and-Walm...

tl;dr: Taxpayers pay $5/hr in benefits to allow the employees of Walmart to be paid a wage under the poverty line.

== EDIT ==

You would agree that rent subsidies flow to landlords, and mortgage tax deductions flow to sellers, right? Why would you not understand that wage subsidies flow to employers?

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No I'm going to need a cite for the EITC claim. I speaking about how it specifically aligns motivations and interests, because it is different than other welfare programs.

Or are you just saying all welfare programs are bad? That's not a discussion I'm willing to engage in.

On the edit - yes I agree that part of the subsidy is split, as with all subsidies, but I think the EITC uniquely incentivizes those in the program to work themselves out of it, unlike other programs. That's why I like it so much, because I think other programs do fall under your critique.

> I think the EITC uniquely incentivizes those in the program to work themselves out of it, unlike other programs. That's why I like it so much, because I think other programs do fall under your critique.

This experiment has never been done, but I think we could probably agree on the outcome of this thought experiment: In the absence of any other social programs, the net effect of EITC would be higher employment and lower (employer paid) wages as the demand for labor is (somewhat) elastic, and employers and labor will settle on a lower clearing price for hourly labor at a higher employment level.

I also agree that many welfare programs have a negative impact on work and personal income, as many social services have cliffs that reduce a recipient's net income if their wage income goes over a certain amount. That's not necessarily bad; some people do not have the option of meaningful work, a problem that many think will be exacerbated by automation. If we start actually seeing the 42% unemployment rates that were recently promoted by Trump, then tying social services to income would be devastating.

> but I think the EITC uniquely incentivizes those in the program to work themselves out of it, unlike other programs

No, it doesn't, it incentives them to work their way into the middle of it. Once you're there, like other means-tested programs, it mitigates market incentives to further progress by reducing benefits with increasing outside income, reducing the marginal utility of each additional dollar of income.

Now, it may be that it empowers people enough that the increase in the ability to move up outweighs the incentive mitigation at the top end of the range, and that it is in that way more effective than some other programs. But, it's incenitved have the same failings criticized by UBI advocates as other means-tested benefit programs.

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