Only by people who have delved into the research literature.

Try looking at it this way:  if the boss is willing to pay someone X, and is observed to be paying someone X, and you institute an EIC that provides that person Y, and you then observe the person's income is X + Y, then it is not a subsidy to the employer.  It's to the worker.  It's a good thing. 

Max B. Sawicky

http://maxspeak.org/mt

max@maxspeak.org

Elmo 

"It seems like the only way the answer is no is if the employer wouldn't have to pony up Y if the government didn't (because the labor market was slack enough that they could find some other employee to do the work for < (X+Y), for instance)."

This is exactly right: the employer would *not* have to pony up Y to hire the employee in Max's scenario, not, however, because of a slack labor market, but, because the employee is only "worth" X to the employer.

The Y is essentially an extra bit thrown in by other taxpayers over and above what the employee is "worth" (no normatives here, just economics) to their employer. 

Now, if the employer was able to offer < X and still get the same worker due to the introduction of the EIC, then you could argue he was getting a benefit (paying the employee less that what he was worth, and, still having the employee show up because he needed a wage to be eligible for the EIC, which, combined with the lower market wage still pushed him out to a income leve at which he was willing to supply labor). Whether or not this is the case is an empirical question, and, the empirics really do seem to indicate that the entirety of the work subsidy is claimed by employees, not employers.

joshb 

I saw nothing in Krugman's columns about how the democrat's are selling out the "American worker," have been hijacked by gay elites of color that do not care about the working class, and do not care about policing the border.  So actually, Krugman appears to make none of the points that you have been making recently. 

Krugman's column, unlike what we have become accustomed to from Mr.Lind, is moderate in tone and fairly represents differing views in the debate.  I think everyone here can agree with Krugman's main point, that a guest worker program like they have in Dubai (and in Senator Crnyn' bill) which does not allow workers to become citizens is a really bad idea.  Luckily such a program was not included in the compromise bill voted out of the judiciary committee.

Krugman holds, rather wishy-washily ("the effects of low-skilled immigration are mixed at best") that low-skill immigrants drive down wages in low-skill occupations.  And then worries that a guest worker program that does not provide a path to citizenship is dire for the political health of the nation. 

I am not sure whether to agree with the first point and I heartily endorse the second.  (I do not know whether the studies Krugman relies on to reach his first conclusion take into account the fact that "low-skill" immigrants are really "no-rights" immigrants.  Anyone can tell you that workers without the right to organize will exert downward pressure on the wages of workers with the right to organize).

But anyway, I generally like what Paul Krugman has to say about immigration, even if I disagree with it on some salient points.  I'd have to say that his position seems a lot like Nathan's (see http://www.tpmcafe.com/node/28255 )

On paper, what neoclassical theory would predict is that the employee would be paid X + Y - epsilon, epsilon > 0 , and so the employer and/or the consumer pockets the epsilon. The epsilon is the implicit subsidy to employers and consumers.

What Max claims is that in practice, epsilon seems to be essentially zero, or even has thwe wrong sign. One of the first things one should learn in economics is you should never take the on-paper models too seriously, especially if data is available that contradicts the model.

second sentence...."article" should be "argument"

Two things.  One is that, if I understand economics right, epsilon should be a function of the elasticity of supply in the labor market.  In other words, how much less will a worker now accept because she is getting her wages subsidized upward by Y?  Which is the same curve with a translation X-> X+ Y.

In my limited knowledge, theory of minimum wage is that there are a lot of forces (even absent illegal immigration) at the lower end of the labor market that drive the total wage someone will accept down below socially acceptable levels (e.g. towards destitution).  After all, we implemented minimum wage laws long before there was substantial illegal immigration.  So a solid minimum wage is critical to make the EITC work at all, and is far more important in controlling wages than the presence or absence of EITC - especially given its complicated eligibility rules and relatively modest beneifts.

 Anyone care to correct my misunderstandings?

Man! What a bunch of ivory tower egg head crap! Obviously few in this thread, especially Dr. Sawicky, have ever had to make payroll. 

Every small business owner knows that EITC is a subsidy to the employer. If having a choice between two applicants, one who will qualify for EITC and one who wont, we'll always pick the one who will be needing and demanding a pay raise later rather than earlier.

KACHE WROTE "If having a choice between two applicants, one who will qualify for EITC and one who won't , we'll always pick the one who will be needing and demanding a pay raise later rather than earlier" UNQUOTE.............................................Won't  any minimum wage employee  at least "need " a pay raise ? And won't whether he or she "demands" one depend so much  on a variety of  personal factors that EITC will play a minor role . And therefore aren't Kache, Sawicky AND Lind all drawing  overly firm conclusions . Next subject........

Mark Schmitt seems (I think) to believe that Medicaid does subsidize employers; see here:  "What we have here is a massive decision by the federal government to subsidize low-wage work rather than to force employers to pay more or provide basic benefits."

Sort of depends what "force" means. If the government took away your mother's Social Security benefit, that might "force" you to support her, but it's stretch to say that her benefit is therefore a subsidy to you rather than to her.

Just a note on the EITC:  Yes, it does subsidize both working low wage taxpayers AND their employers.  What I'd point out, and I'm not sure about this, it's just something I fear is true, is that there are some jobs, and some services that people provide in working those jobs, that society would rather do without rather than support (by paying increased prices) better pay for those involved in the field.  In all too many cases, like in landscaping or gardening or drywall work, the people doing the work are doing it out of necessity, but there is also a myriad of underpaid white collar work that people take on, sometimes out of necessity and sometimes out of choice or hope for future reward (for examples, data entry, or being somebody's assistant).  it seems to me that if the underpaid worker is on the path to something better (could be in any of my examples, btw -- assistant moves to an indepedent staff position, a drywaller, perhaps, starts an indepdent drywalling business) than the subidy is okay.  But, when it leaves the worker stagnant and chronically underpaid for life, it isn't.  Not sure what conclusion to draw from that, but that's my impression. 

thosethingswesay.blogspot.com

Please read this article: <a href="http://quote.bloomberg.com/apps/news?pid=10000039&refer=columnist_hassett&sid=aRqmOcE7fSKw">In U.S. Immigration Debate, Specter Has It Right</a>

It is the most wonderful article I have found in the immigration debate.