This post was originally posted at The New Democrat on Blogger
If you want to encourage people, especially low-skilled adults, to work and not collect all of their income from public assistance, and you are not a Libertarian who believes that government has no role when it comes to public assistance, then work simply has to pay more than not working. The basic reason for a minimum wage is to have a floor that no one can fall through so they can pay most of their bills on their own.
We could debate forever whether the minimum wage affects job creation negatively or positively. I'm in favor of a minimum wage where employers, especially small employers, could receive a deduction or tax credit that is worth 30 percent of whatever the minimum wage at that point happens to be. This would keep their payroll costs down and I'm talking about employers who simply can't afford hikes in their payroll costs, not wealthy employers, just as long as we are encouraging work over unemployment.
I would like to see a $10 per hour minimum wage in America and index it for inflation, with a 30 percent tax credit for small employers and nonprofit employers. Then apply today's $7.25 per hour minimum wage to people who are on welfare and not working at all so they have more incentive to work and not remain unemployed, believing that work wouldn't pay their bills.