The Problem with Corporate Subsidies for Low Wage Workers

The discussion about wages, specifically the minimum wage, is never-ending.  Economists are all over the board with their recommendations.  Most Republicans and businesses don’t want an increase.  Most Democrats and the general population do.

Nobel Laureate, Edmond Phelps, thinks the U.S. Government should provide graduated subsidies to companies that higher low-wage workers.  He believes this would incent businesses to hirer more low-wage workers.  The problem is that he’s not proposing a system to ensure low-wage works receive any subsidies. 

High Unemployment + Stagnant Wages + Record High Corporate Profits ≠ More Corporate Welfare

More consumer spending benefits businesses and shareholders.

More consumer spending benefits businesses and shareholders.

People don’t spend when they don’t have money to spend.  Businesses should install a graduated increase in wages and salaries, providing the biggest percentage increases to the lowest paid employees.  If managed smartly, this would increase consumer cash flows, increase consumer spending and increase business revenues.  Business profits and shareholders can afford to give up immediate gains for long-term gains.     

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