Congress is currently addressing two major proposals to help the working poor: an increase in the federal minimum wage to $10.10 an hour from $7.25 an hour, where it has been set since July 24, 2009, and an increase in the earned income tax credit, proposed by the White House, that sends cash payments to those with low earnings. Supporters of a higher minimum wage point out that it has fallen 32 percent in inflation-adjusted terms since 1968.

One problem with proceeding simultaneously with two very different programs designed to aid the same population is calculating their interactions. It may be possible to minimize budgetary costs one way, maximize worker well-being another way. There may also be unintended, even perverse, implications for those whom both programs are designed to help unless one is fully aware of how they interact.

For example, a higher minimum wage will lead to additional earned income tax credit payments for some workers because they will now have more wages to which the tax credit applies, giving them a double benefit. On the other hand, others may find that their higher earnings have pushed them up into the zone where the earned income tax credit is withdrawn. Higher earnings may also cause workers to lose other means-tested benefits, creating high de facto marginal tax rates.

Congressional Budget Office

Earnings aren’t the only factor that contributes to disparate impact; so do family characteristics such as marriage and the presence of children. The following tables from the Congressional Research Service show how various programs interact to significantly affect net income depending on program eligibility.

Congressional Research Service

Congressional Research Service

The second table does not take account of changes in the earned income tax credit proposed by the Obama administration but only how the current program would work under a higher minimum wage.

Relative to the official poverty level, even an increase in the minimum wage to $10.10 an hour would be insufficient to eliminate poverty, according to the Pew Research Center. In fact, the Congressional Research Service projects that the poverty rate will increase slightly by 2016, owing to projected increases in the minimum poverty level income that will rise more than the minimum wage, even should it increase to $10.10.

One limitation of using only the minimum wage to raise incomes is its relatively limited impact. In 2012, only 1.6 million people worked at the minimum wage, with another two million legally below it. Of those at the minimum, about half were young people and about two-thirds worked only part time. Just half a million people worked full time at a minimum-wage job. Thus the potential universe of those whose incomes would rise from a higher minimum wage is quite small in a labor force of 155 million.

Pew Research Center

One factor driving continued discussion of this issue is the widespread belief that society owes something to the working poor – that is, those who play by the rules, try to better themselves and are not stereotypical parasites living off welfare. People who work full time ought to at least be able to live decently, most Americans believe, and deserve a little extra help if they can’t.

Indeed, many working at the minimum wage in the fast-food industry depend on public welfare to supplement their incomes, according to a study by the Labor Center at the University of California, Berkeley. Some critics charge that taxpayers are, in effect, subsidizing profitable businesses to pay lower wages than they could afford.

But the fact is that even with supplementary welfare programs, many workers remain officially poor. An April 2013 study of the working poor by the Bureau of Labor Statistics found that poverty rose among this group between 2007 and 2011. This is why the Obama administration has proposed a higher earned income tax credit, as well as a higher minimum wage.

The earned income tax credit is a refundable credit that adds to a worker’s income rather than subtracting from it as taxes normally do. It has long been championed by both conservative and liberal economists as encouraging work and helping workers lift themselves out of poverty. The Council of Economic Advisers estimates that the proposal will lift about half a million additional people out of poverty.

It is probably a foregone conclusion that the minimum wage will rise this year. Every poll on the subject shows widespread support. The question may simply be when supporters feel they can achieve maximum political advantage going into the fall election cycle. Changes to the earned income tax credit, however, are more problematic, in part owing to the great uncertainty of doing anything on taxes in the current political environment.

Bruce Bartlett held senior policy roles in the Reagan and George H.W. Bush administrations and served on the staffs of Representatives Jack Kemp and Ron Paul. He is the author of “The Benefit and the Burden: Tax Reform — Why We Need It and What It Will Take.”