Saturday, July 29, 2006

The Minimum Wage Increase Passed the House

I couldn't help myself. I had to have at this topic one more time.
(supporting Article)
Everyone seems to banter the Minimum wage around like it has no cause and effect. They seem to think that raising it will solve all the woes of the low earner. Somehow this extra money is going to make all their problems go away. I'm going to try real hard to not repeat what I wrote below in "Minimum Wage Comes Up Again", but I have to point out a few more issues.

By raising the minimum wage it does a lot more then just put more money in the workers pocket. Let's look at what other financial areas it also effects.
Workers Comp
Social Security
Medicare
State Unemployment
Federal Unemployment
Transit Taxes
Municipal Taxes
I delved into this when I wrote "How to Understand Price Structure in Business". A simple wage increase as they like to put it has many more factors and complexities then what we are hearing in the news.
Workers Comp -- Since this is based off of the earnings of the employee, raising those earnings raises the expense. Depending on the job you do a risk factor is calculated and a cost per $100 earned is payed by the company. The risk factor has its bases in the number of injuries and their cost industry wide. The company you work for is also rated based on previous injuries and what programs they have in place to minimize exposure to risk.
Social Security and Medicare -- I know the government is trying to find ways to fund these slowly bankrupting programs, but is this the way to go about it? Both of these taxes are employer matched. That means that the increase will be a double benefit to these programs. I realize that we are only talking about thirty cents an hour, but there are a lot of people out there. If I could make an extra $2.50 a day off of every person that makes minimum wage in America I could make Bill Gates look poor.
State & Federal Unemployment -- Another hidden tax that the employees don't see yet a substantial burden on business. Once again it is based on employee income and since they can force that upward so they force the extra expense on the employer.
Transit & Municipal Taxes -- Well it looks like they will be getting a raise soon. That's right they are also tied to the wages paid by business. Another hidden tax the employee is completely oblivious to that the employer knows all to well. You would be hard pressed to find a community satisfied with how these two entities spend their money and now they are looking at a raise to further add insult to injury.
Once again, this is not a simple issue. Instead of focusing on the minimum wage, why not focus on why people are stuck there? What keeps them from moving up the wage scale? Are they too stupid? ...too Lazy? ... too smelly? ...too irritating? What is it? Perhaps our welfare system makes it far to easy to simply stay on the dole? Why work when you can get it all for free?
I'm tired of carrying this load on my back. I bet a few of you reading this have noticed that your load feels a little heavier. You best drop a line to your senator and put the brakes on this whole thing or all of us are going to feel it even more.
Hey, can I get a .01% tax on all those who are too stupid to rise above the minimum wage? It would only be about two cents a week. They wouldn't even notice it.

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