BOONE - Since the Clinton administration granted power to the states to set their own minimum wages, 18 of them have raised it above the federal level. North Carolina recently joined this group when policymakers agreed to increase the state's minimum wage $1 to $6.15. Wide support from the public ensures the move is politically beneficial, but it shortchanges the working poor.

Lawmakers debated the standard arguments for and against a minimum wage: higher wages vs. lost jobs. But that debate misses the real problems with the minimum wage and diverts attention away from a better idea.

Keep in mind the goal of such legislation is to help working North Carolinians who have too little money to make ends meet. Raising the minimum wage helps too few of these people and misdirects much of the assistance to those not in need. The raise will benefit about 135,000 people, but more than half of them are teenagers and part-time workers. This means that half of the assistance from the raise goes to teenagers and part-time workers, the vast majority living in households well above the poverty line. It also means that well over half of the working poor in North Carolina do not benefit from the raise.

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RAISING THE MINIMUM WAGE ALSO UNFAIRLY PLACES the burden of poverty assistance on a subgroup of businesses and their customers. The raise is a hidden tax that disproportionately burdens these individuals who are often struggling themselves. This hidden tax can be substantial. An increase of $1 per hour translates to about $10,000 of additional annual labor costs for businesses with five full-time workers earning minimum wage, and a considerable part of that amount will inevitably be transferred to the customers.

Most troubling, the focus on increasing the minimum wage diverts attention from a better policy. An earned income tax credit (EITC) is a better way to assist the working poor. The EITC provides wage supplements directly to low-income workers through tax breaks, refunds and even as "negative withholdings" in paychecks. Given that it operates through existing tax administration, an EITC requires little, if any, additional government bureaucracy.

EITC programs work better because they define need better. While the minimum wage defines need solely by wages, EITC programs employ a more sophisticated approach of defining need using household characteristics, specifically the household earnings and status, and the number of dependents.

The EITC reaches more people in need by not limiting assistance to those earning at or near minimum wage. It also provides more appropriate levels of assistance because it is proportionate to need. And the EITC distinguishes the 16-year-old from an upper-middle-class family who's working at the mall for extra spending money and the 33-year-old single parent working alongside that teenager.

The EITC spreads the burden of poverty assistance more broadly and fairly because assistance is funded by all taxpayers through income and sales taxes, and therefore the burden is assigned progressively through income and spending levels. With such broad support, a relatively small contribution from each person would lead to much more help to many more people.

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OVER ONE MILLION NORTH CAROLINIANS ALREADY RECEIVE HELP from the federal EITC program -- one of the most effective anti-poverty programs ever developed, lifting five million people out of poverty each year. Rather than focus on the minimum wage, policymakers should follow other states by establishing a state-level EITC program to supplement the federal program.

The question we might ask is: Why the minimum wage hike hype? Unfortunately, it seems the easiest approach for the public and policymakers to accept. It doesn't ask most of us to make any real contribution to the cause, so whatever help it does provide is enough to satisfy our desire to help the working poor in North Carolina. If we, the voters and taxpayers, do not know the numbers and alternatives, it's easy to assume an increased minimum wage deserves our attention and support. For elected officials, getting behind a minimum wage hike is a political gold mine. If only it were for the poor as well.

(Todd Cherry is an associate professor of economics at Appalachian State University and a GlaxoSmithKline Faculty Fellow at the Institute for Emerging Issues in Raleigh.)