Marquette economist: There's a better solution for the working class than raising the minimum wage

MILWAUKEE (WITI) -- Protesters marched from McDonald's to Burger King near Fond du Lac and Capitol Thursday morning, September 4th. They're calling for a minimum wage of $15/hour. It sounds a lot better than calling for an increased and expanded earned income tax credit.

Marquette economist says raising the minimum wage is not the best way to ensure working class people earn enough to get by. Andrew Hanson has studied the minimum wage, and believes increasing tax credits for low-income workers is a better solution.

"It depends on the characteristics of the worker, but say it would give you an extra 25 cents for every dollar you earn -- if you're earning $8 an hour, it would really be like you're earning $10 an hour and then at the end of the year, Uncle Sam sends a bigger check," said Hanson.

The protesters say it's reasonable to ask fast food chains to pay their employees more, because those business have the money to do it.

"These workers are hard-working Americans. They literally bring in billions of dollars in profit for these corporations. The least they should be able to do is survive without public assistance," said Jennifer Epps-Addison, from Wisconsin Jobs Now.

Hanson says that could have unintended consequences, especially for low-income families.

"If you think more carefully about it, you might say, well McDonald's isn't gonna take that out of their bottom line. What are they gonna do? They're gonna raise prices. And who buys from McDonald's? It tends to be people, not all, but on the lower half of the income distribution," said Hanson.

Hanson says that's the beauty of expanding the earned income credit. It would raise wages without raising prices or risking layoffs.

"The reason economists like that is because employers are not sharing that burden. The burden is shared by all taxpayers," Hanson said.

Right now, there is a federal earned income tax credit. 25 states, including Wisconsin offer their own credits as well.

Information about the Earned Income Credit can be found by clicking the links below:

Federal Income Credit

State Income Credit