Raise the minimum wage AND expand the EITC: Jared Bernstein

Aaron Task
Editor in Chief
Daily Ticker

Sen. Elizabeth Warren has penned an op-ed entitled 17 Million Reasons to Raise the Minimum Wage and AFL-CIO chief Richard Trumka has proposed debating Heritage Foundation President (and Tea Party favorite) Jim DeMint on the issue. But the reality is a federal minimum wage hike is almost certainly not happening this year, despite popular support for the measure.

"This current Congress does not seem disposed to do anything I consider useful," Jared Bernstein, senior fellow at the Center on Budget and Policy Priorities, tells me in the accompanying video.

Related: Raising the minimum wage is bad policy: Douglas Holtz-Eakin

Bernstein supports the proposed congressional bill that would raise the minimum wage to $10.10 an hour and hasn't given up hope that "there's a role for better fiscal policies targeting the employment of groups left behind."

In addition to raising the minimum wage -- “there would be relatively few job losses compared to the number of workers who would remain at work with higher wages,” he says of the CBO's estimate of 500,000 lost jobs -- Bernstein also recommends expanding the Earned Income Tax Credit (EITC), something many conservatives currently support.

Related: Raising the minimum wage won't help the working poor: AEI's Conard

"I'm a huge fan, just like Ronald Reagan, of the Earned Income Tax Credit. That's a wage subsidy," says Bernstein, formerly chief economist to Vice President Joe Biden.

Citing research showing every dollar of EITC results in roughly 25 cent decrease in wages for low-income workers, Bernstein says "you need a higher minimum wage to counteract the...dampening effect of the EITC. So they actually work together."

'Working together' isn't exactly in vogue in Washington right now so don't hold your breath on a combination EITC-minimum wage bill making its way through Congress. But there's probably more bipartsan support for Bernstein's other proposal, which is for the govenrment to address our trade deficit by "going after some folks who manage [their] currencies," a.k.a. China.

Aaron Task is the host of The Daily Ticker and Editor-in-Chief of Yahoo Finance. You can follow him on Twitter at @aarontask or email him at altask@yahoo.com.