Paycheck To Paycheck workers

[Geek Goddess]

If so, you run a grave risk of substantially reducing your standard of living. You'll make an extra $105 per month that you can spend how you like, but you'll also lose $500 in "free" food. What's your incentive to try to better yourself?

The amount you have on which to support yourself will be reduced by at least $500 if you take a job that pays $105 more -- by making an extra $105, you cost yourself $500 out of pocket. You lose nearly five times the value of your raise. Whether you call it "taxation" or not is largely irrelevant.

I understand all that. If someone receives LESS government subsidies, for whatever reason, that is NOT taxation. It is less subsidies (or assistance, if that is the preferred term). It is not irrelevant, it is important to call things what they are. Calling a reduction or elimination in a subsidy a "tax increase" is wrong, unless one is trying to manipulate the perceptions of what is actually happening. In my above posting of the results of several tax calculations at various incomes $7 through $14 per hour, one child, no other deductions: in none of those three examples did the tax payer owe ANY tax for the year. If, in any of those cases, someone began receiving child care assistance, would you refer to that as a tax rebate?

Understand, I am not talking about the effect on a wallet, I am talking about identifying and labeling things correctly.

It's a completely broken system that ends up making it worth more to you to NOT improve yourself, in the short term.

I was getting a bit confused by the use of the term 'marginal tax rate' myself, GG - but the way the term is being used is analogous, not exact. In essence, what they're saying is that it would be like having a 100% income tax on their raise for those who need child care, and receive a raise.

In other words, in the situation I originally proposed, if you earn $500, and the state pays for your child care $500... and then you earn $510 and the state only pays $490, you owe that extra $10 to your child care people. So you didn't get a raise that you can spend - you got a raise to pay part of the child care the state had been paying for you previously. It's the same effect as a taxation on your raise.

Under the situation as it currently stands, if you earn $500, and the state pays $500 for child care - and then you earn $510, the state then drops child care to $250. In other words, you end up having to spend $240 that you weren't spending prior to the $10 raise, which is basically equal to having your raise amount taxed 2400%.

However, I think under the system JB and I were just considering, if you earn that extra $10, the state cuts your child care benefit to $495 - so now you have to pay $5 from your wallet for child care, and still have an extra $5 to do with as you please, meaning your raise is effectively $5.

The whole reason we're discussing this aspect is the fact that, to simplify the minimum-living wage, you'd have to consider the living costs of a single adult; the extra costs of day care/dependents would have to be worked out some other way, so that single adults weren't getting paid for kids they didn't have. And at the same time, you wouldn't want to have the state pay for all day care, period; so you have to have some means of reducing or cutting off that support. But if you just take it all back at the point where someone is earning CoL + DC amount, then you've just neutralized a HUGE part of their wages at once. I was originally suggesting the same thing, but in increments instead (unless you get that amazing $500 raise...), but I think now a percent incremental decrease would make more sense.

I agree that families need help, and that not all people who work hard have made bad choices about having children, going into debt for consumer goods, etc. However, when we keep talking about 'the state paying for child care' I hope that it will be remembered that 'the state' is YOU and ME paying for child care and the "free" food. I am not discussing in this thread that issue, just pointing out the inaccurate descriptions. The *state* has only what it receives from its citizens.
The marginal tax rates for 2007 income in the US is below - I hope the formatting comes across OK. Note, a single parent with a child, or with a dependent parent, qualifies for 'head of household' which has a lower tax rate than a single taxpayer. I qualified as Head of Household until this year, when my youngest turned 19. Note also, for example, that a head of household has a 10% tax rate on the first $11,200 of adjusted gross income, and a 15% tax on the incremental from $11,201 to $42,650 of adjusted gross income. That is the marginal tax rate - the 5% additional tax on the amount between $11K and $42K. I emphasized adjusted gross income, AGR. If your paycheck gross is $15,000, by the time you figure in your standard deduction of (roughly) $7800 for you and one dependent, that brings your AGR down to (15,000-7800) $7200, which would fall in the 10% bracket. Add the Earned Income Credit and a child care deduction credit, you would drop to owning no tax for the year (as per the examples that I calculated straight off the IRS site). The marginal rate goes to 25% after $42K, but again that is on the AGR. Currently in the US, the top marginal rate for individuals is 35%. It wasn't that long ago that was over 50% - in the 1980s


The table didn't copy correctly, here is a link to the margin tax rates for 2007

http://www.dinkytown.net/java/TaxMargin.html
Filing Status and Income Tax Rates 2007
Caution: Do not use these tax rate schedules to figure 2006 taxes. Use only to figure 2007 estimates.

 

[balrog666]

I agree that families need help ... [snip]

You people are a one-note-band band, and keep coming back to some hypothetical single mother with no husband, no relatives, no friends, and no future. How can you be so incredibly ignorant of basic human nature.

Yes, people who can't manage their money need help. And the help they need is in learning to manage their spending, in making choices among competing options, and experiencing the joy and sorrow of juggling the trade offs involved in making their own decisions.

It's a rare bird who can learn those lessons from watching other people make decisions and, in general, they won't learn those lessons while spending your money.

It's all a matter of marginal utility*, so, get a grip and make people spending your money think of it as their money.

* - Marginal Utility

 

[Z]

You people are a one-note-band band, and keep coming back to some hypothetical single mother with no husband, no relatives, no friends, and no future. How can you be so incredibly ignorant of basic human nature.

Yes, people who can't manage their money need help. And the help they need is in learning to manage their spending, in making choices among competing options, and experiencing the joy and sorrow of juggling the trade offs involved in making their own decisions.

It's a rare bird who can learn those lessons from watching other people make decisions and, in general, they won't learn those lessons while spending your money.

It's all a matter of marginal utility*, so, get a grip and make people spending your money think of it as their money.

* - Marginal Utility

You really aren't listening at all. That 'hypothetical' single mother is my best friend. She made it out of that bad situation by sheer luck - she got hired for a job ordinarily requiring a bachelor's degree because she had bedroom eyes and hot legs.

If there's not enough money to manage, the best skills in the world won't help.
Yes, we here your repeated assertions that it's all about teenagers living with mom and dad and wasting their income on 90 inch plasma TVs and third Ferraris. But I don't really care about them. Not one bit. I care about the folks out there starving to death because they're not getting paid enough to survive.

If Junior is smart enough to stay at home and get mommy and daddy to foot his bills while he wastes income on PS3 games and Subway four times a day, more power to him. The gravy train will end some day, and then he'll be down at Burger Time with the rest of the poor slobs trying to get a third job. Either that, or he'll inherit Daddy's business and post his idiotic wealth-obsessed opinions on Internet forums, whining about those stupid poor, starving people who are 'too lazy' to go to college and get the better jobs.

But if he's working along side of Martha, who went to college but finds the job market swamped with her fellow graduates and not enough jobs, who has to work two jobs just to survive by herself - that's what the problem is. If a person works a 40 hour work week, they should earn enough to survive a week, at minimum. That is the absolute bottom line. If they're not earning at least that much, then the system is broken.

I don't care if Daddy Warbucks makes a billion bucks an hour. If he can, fine, whatever. I don't really care whether tax is progressive or proportional, either - as long as it's not regressive. I don't think progressive taxation is fair, but I can see where it might be useful.

I don't care if someone is too lazy to keep a minimum wage job - let them starve, in that case.

What I care about is that every person willing to work, and able to work, should be able to afford the basic necessities without putting their mental, physical, or other forms of health at significant risk. At present, that's not the case - not everywhere, at least.

But once minimum wage equals the cost of living, I frankly don't care if it ever goes above CoL. If it at least matches CoL, I think that's fine.

 

[balrog666]

You really aren't listening at all. That 'hypothetical' single mother is my best friend. She made it out of that bad situation by sheer luck - she got hired for a job ordinarily requiring a bachelor's degree because she had bedroom eyes and hot legs.

If there's not enough money to manage, the best skills in the world won't help.
Yes, we here your repeated assertions that it's all about teenagers living with mom and dad and wasting their income on 90 inch plasma TVs and third Ferraris. But I don't really care about them. Not one bit. I care about the folks out there starving to death because they're not getting paid enough to survive.

If Junior is smart enough to stay at home and get mommy and daddy to foot his bills while he wastes income on PS3 games and Subway four times a day, more power to him. The gravy train will end some day, and then he'll be down at Burger Time with the rest of the poor slobs trying to get a third job. Either that, or he'll inherit Daddy's business and post his idiotic wealth-obsessed opinions on Internet forums, whining about those stupid poor, starving people who are 'too lazy' to go to college and get the better jobs.

But if he's working along side of Martha, who went to college but finds the job market swamped with her fellow graduates and not enough jobs, who has to work two jobs just to survive by herself - that's what the problem is. If a person works a 40 hour work week, they should earn enough to survive a week, at minimum. That is the absolute bottom line. If they're not earning at least that much, then the system is broken.

I don't care if Daddy Warbucks makes a billion bucks an hour. If he can, fine, whatever. I don't really care whether tax is progressive or proportional, either - as long as it's not regressive. I don't think progressive taxation is fair, but I can see where it might be useful.

I don't care if someone is too lazy to keep a minimum wage job - let them starve, in that case.

What I care about is that every person willing to work, and able to work, should be able to afford the basic necessities without putting their mental, physical, or other forms of health at significant risk. At present, that's not the case - not everywhere, at least.

But once minimum wage equals the cost of living, I frankly don't care if it ever goes above CoL. If it at least matches CoL, I think that's fine.

That's utter crap. Luck doesn't cut it in the real world. You can't rely on luck to feed, clothe, and educate your children to their full advantage. And anything other than 100% effort towards that goal isn't worth wasting time on.

And, gosh, believe it or not, if you can't manage $50, you sure can't manage $500.

Furthermore, relying on the government to force employers to pay you more than your are worth doesn't work either.

Frankly, listening to the pathetic sob stories of people who have made poor choices, haven't learned from that, and who then refuse to take another step to help themselves gets old. Eff 'em.

I work with people who want to change their lives for the better and who are willing to abandon their idyllic, idiotic lifestyles in order to build a better future for themselves and their families and anyone who accepts less than that, or who enables a lesser standard, deserves every stupid heartbreak they engender.

So, stick that in your pipe and smoke it for all it's worth.

 

[plumjam]

But, hey, I can post this instead:

please do

 

[GreNME]

That's utter crap. Luck doesn't cut it in the real world. You can't rely on luck to feed, clothe, and educate your children to their full advantage. And anything other than 100% effort towards that goal isn't worth wasting time on.

Baloney. Part of being an entrepreneur is a gamble-- there are no sure things out there when risking your livelihood on your own business. That's why so many don't make it

And, gosh, believe it or not, if you can't manage $50, you sure can't manage $500.

Both of which are not big deals if you can manage $5,000 or $50,000. And if you think your two figures make that impossible, you need to get out and meet more people who make more than $50,000.

Furthermore, relying on the government to force employers to pay you more than your are worth doesn't work either.

"Worth" is arbitrary. It isn't "worth" that employers are paying employees. It's "value." Very big difference.

Frankly, listening to the pathetic sob stories of people who have made poor choices, haven't learned from that, and who then refuse to take another step to help themselves gets old. Eff 'em.

Nice straw man-- a pre-emptive strike at an argument that hasn't been made. All the arguments I've seen so far have been of people who made bad choices, wanted to change their direction, and at least tried something to make it happen.

I work with people who want to change their lives for the better and who are willing to abandon their idyllic, idiotic lifestyles in order to build a better future for themselves and their families and anyone who accepts less than that, or who enables a lesser standard, deserves every stupid heartbreak they engender.

I highly doubt you speak to the people you claim to 'work with' like you are here. You likely wouldn't 'work with' them any more.

So, stick that in your pipe and smoke it for all it's worth.

I just want to note for everyone else reading that when I said earlier that I'm fiscally conservative, I personally find this kind of attitude abhorrent. the whole 'boostraps' idea is a myth for a huge percentage of people out there, because the only real fiscal option is to be able to pay their bills and essentially subsist. It's not that there aren't jobs, it's that many jobs below the median wage numbers have barely changed base rates of pay for nearly ten years, while inflation has continued to rise.

Further, the median wage numbers are skewed by the top wage earners. You can have a thousand people who make $1,000, and ten people who make $500,000. The median wage would be $250,000, the (somewhat more indicative) average wage would be $5940 and some change, and the (most significantly indicative) mode wage would be $1000. Why is the mode most significant? Because it shows the group who is most directly affected by any economic policy and subsequent changes.

 

[Z]

Ok, balrog, believe whatever you like. Attack that strawman some more, tilt at a few windmills, whatever.

I bet you couldn't manage half so well if I stripped you of everything and made you try to get by in Cinci during winter. I bet you would be afraid to even try.

Don't bother though - your opinions are no longer even worth reading.

 

[Gregoire]

No problem.

Taking the fast-food restaurants example... introducing a living wage throughout society wouldn't, I think, have the effects you say. I don't believe they'd sell less food. People would still eat away from their homes.. and fast-food is just about the cheapest option for this. It would remain about the cheapest option.
Most patrons of fast food restaurants are not high earners, they are average or below average earners. With the introduction of the living wage it is this section of the society that would gain the most, comparatively, and would have more disposable income available. They'd most likely eat at fast food restaurants more regularly. I believe the net effect would be beneficial for fast food.

A similar effect would pertain throughout society. Less money would be spent on the kinds of things bought by the rich and the middle class, and more money would be spent on the kind of things bought by the poor.
Porsche car dealers might sell a few less cars, Gucci sales might drop a bit.. I don't think 99% of society would care about that.

I have been working a lot and so have been unable to log on lately.

It sounds like you agree higher prices will decrease sales in fast food restaurants. But you are arguing there will be an offsetting increase in sales because unskilled workers will have more money to spend in these restaurants. I would argue that this appears to be quite an assumption.

And you also have to account for the fact that low wage workers work in more industries than just those where they spend their money. For example, you would see office workers and workers in expensive restaurants also losing their jobs (or working fewer hours) because their employers' higher prices decrease their overall sales. And here there would be little to no offsetting increase.

As an alternative, I have agreed that the EITC may be a better antipoverty program. One could argue against me by pointing out that the Earned Income Tax Credit (EITC) too is detrimental to employers in the sense that it is funded by taxation. (Increased taxation could lead to lower consumer spending.) But that taxation at least is spread throughout the economy rather than the Living Wage law which targets only the employers of unskilled workers.

 

[69dodge]

Further, the median wage numbers are skewed by the top wage earners. You can have a thousand people who make $1,000, and ten people who make $500,000. The median wage would be $250,000, the (somewhat more indicative) average wage would be $5940 and some change, and the (most significantly indicative) mode wage would be $1000.

How do you get $250,000 for the median?

I get $1000.

(Line up all thousand and ten people in order of their earnings, then look at the middle one, number 505. He earns $1000.)

 

[jimbob]

Can you point me to one of those jobs?

Lord Simpson of GEC

Sell your defense arm to BAe Systems, and use that and borrow heavily to buy into telecoms just before the speculative bubble burst.

He still managed a pretty good renumeration for destroying a company's share price.

 

[GreNME]

How do you get $250,000 for the median?

I get $1000.

(Line up all thousand and ten people in order of their earnings, then look at the middle one, number 505. He earns $1000.)

You're right, and I should not try to do that when I'm tired. My apologies.

The national statistics for income are based on the mean, not the median, which is why they're skewed. I don't even know why I had the other numbers in my head.

 

[Jaggy Bunnet]

I understand all that. If someone receives LESS government subsidies, for whatever reason, that is NOT taxation. It is less subsidies (or assistance, if that is the preferred term). It is not irrelevant, it is important to call things what they are. Calling a reduction or elimination in a subsidy a "tax increase" is wrong, unless one is trying to manipulate the perceptions of what is actually happening. In my above posting of the results of several tax calculations at various incomes $7 through $14 per hour, one child, no other deductions: in none of those three examples did the tax payer owe ANY tax for the year. If, in any of those cases, someone began receiving child care assistance, would you refer to that as a tax rebate?

Understand, I am not talking about the effect on a wallet, I am talking about identifying and labeling things correctly.

Under the UK system, you receive a tax credit if your income is below a certain level. As your earnings increase, the amount of that credit is reduced. In addition you are subject to tax on the increase, meaning that you keep in many cases approx 30% of each additional pound earned. All of this happens through the tax line of your payslip - presumably you agree it is reasonable to talk about a marginal tax rate of 70% in that case?

That system replaced one where the payment was made directly from the government to the claimant following a social security claim completely separate from the tax system. The purpose of the two was identical but different methods were used - marginal tax rate allows the two to be compared in the effect they have on the indvidual. Including only tax and not benefits makes it impossible to compare the two.

Marginal tax rate is a measure of how much of each additional pound of earnings are actually available to you as increased disposable income. Not including loss of benefits in the calculation makes it meaningless - what matters is the TOTAL impact, however that comes about.

 

[tuc0]

I have read maybe half the thread and have to say that the emotional anti-capitalist reasoning of some people sounds very wooish. Not that they will ever admit that...

 

[quixotecoyote]

Generally if you're going to bump something off the 2nd page, it's nice to have something of substance to offer.

 

[tuc0]

So very very sorry. I just noticed the poll, read the thread and commented without knowing when the last post has been made. I hope it didn't upset you too much

 

[Esperdome]

I wouldn't worry about it too much. Some newbies have resurrected threads 2-3 years old!

But there is a thread over in Social Issues currently discussing much of the same stuff.

 

[Gregoire]

I have read maybe half the thread and have to say that the emotional anti-capitalist reasoning of some people sounds very wooish. Not that they will ever admit that...

I actually tried to point something like this out noting that the Science of Economics, though not perfect, has done a great deal to empirically test some of the claims made on this thread. I was going to actually quote an Economics 101 textbook at one point, but decided against it.