Economics

If You Work Full Time, You Will Not Be Poor

The poverty of Obama’s economic understanding.

By 2.5.14

UPI/Pres. Obama at UN luncheon during meetings on poverty alleviation and economic development, Sept. 23, 2010
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President Obama said in his State of the Union last week, “But Americans overwhelmingly agree that no one who works full time should ever have to raise a family in poverty.”

Thank you, Mr. President. But even without you, as already enacted in current law, for anyone who works full time in America, the minimum wage, plus the Earned Income Tax Credit, plus the Child Tax Credit, equals or exceeds the poverty level for every possible family combination, including single mothers with children.

Full time work at the current federal minimum wage of $7.25 equals $15,080 a year. That exceed the federal poverty level for 2014 for one single person living alone, at $11,670. In addition, that single person still qualifies for an earned income tax credit of $496. Because that is “refundable,” the individual still gets that in cash even if he or she is not liable for any federal income taxes.

With one child, the single person gets an additional $1,000. Plus the Earned Income Tax Credit increases to $3,305, for a grand total of $19,385. The poverty level for 2014 for a single mother with a child is $15,730.

With 2 children, the family gets $2,000 in child tax credits, and the Earned Income Tax Credit increases to $5,460. So with full time work, that comes to $22,540 in total income. The poverty level for 2014 for a single mother with two children is $19,790.

With 3 children, the family gets $3,000 in child tax credits, and the Earned Income Tax Credit increases to $6,143. With full time work, family income totals $24,223, compared to the federal poverty level for 2014 for a mother and 3 children of $23,850.

And so it goes. Your job, Mr. President, is not to give pretty sounding speeches proclaiming to everyone how you are more moral and caring than they are. Your job is to adopt policies that will foster the creation of jobs, so the poor can get full time work.

You can start with approving the Keystone Pipeline, and telling billionaire Tom Steyer who keeps threatening you if you do to report to the nearest poverty office in California and take personal responsibility for all the poor people there without full time work.

Then you can support Ted Cruz in his effort to repeal Obamacare, which is strongly discouraging employers from offering full time work. You can also repeal all the new taxes on capital investment you forced through at the start of last year, because capital investment is what creates jobs and increases wages in a capitalist economy.

I am sorry you never learned that from all your “progressive” parents, mentors, and teachers growing up, or through your inadequate education at Columbia and Harvard. I know, I got the same inadequate education at Harvard College and Harvard Law School myself. But I at least supplemented that with independent thinking and reading.

So I know, unlike you, that if you increase the legal minimum wage above what some workers can produce, employers will just not hire them at all. That is why after your thoughtless Democrat friends raised the minimum wage when they took over Congress in 2007, teenage unemployment soared to 25%, teenage Hispanic unemployment exploded to 30%, and black teenage unemployment skyrocketed to 45%.

Those numbers have come down a bit more recently. But now you want to raise them again.

The way jobs and wages are increased in a capitalist economy like ours is though capital investment. That creates jobs and increased demand for labor, which increases wages. It also gives workers the tools to be more productive, so employers can finance hiring them at higher wages.

It would help as well if fathers would stick around and work full time and contribute to the welfare of their children. That would add at least another $15,080 a year to the above family income levels. That is why there is no poverty among two parent families with both parents working. Zero, zip, nada.

But that would mean all of your social liberal friends would have to stop promoting family breakup and chaos. And that would mean a lot less fun for everyone. Except the children.

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About the Author
Peter Ferrara is Director of Entitlement and Budget Policy at the Heartland Institute, General Counsel of the American Civil Rights Union, Senior Fellow at the National Center for Policy Analysis, and Senior Policy Advisor on Entitlements and Budget Policy at the National Tax Limitation Foundation. He served in the White House Office of Policy Development under President Reagan, and as Associate Deputy Attorney General of the United States under President George H.W. Bush.