Pretend you are a poor, single parent of two in Chicago, earning $12 an hour, working full time, and determined to do what is best for your family. And suppose your employer, impressed with your work, offers you training for and promotion to a new job paying $15. Should you take the offer?
It sounds like a no-brainer, but it’s not.
My friend Prof. Jeremy Horpedahl posted this clarifying comment in a Facebook discussion:
“This is real, and important. But crucial edit: both the absolute size of the benefits and the biggest cliff (at $15/hour) are because of housing assistance. Most poor people don’t receive housing assistance: http://www.npr.org/sections/money/2016/04/29/476179674/episode-698-the-long-way-home
And the second big cliff at $18/hour is due to the loss of childcare subsidies. So it primarily applies to families whose children are too young to be in school.
With those caveats, this is clearly a bone-headed way to assist the poor.”