So is the proposed raise in the minimum wage an attempt at raising the number of people earning the minimum?

Question

Or is is just another one of those "progressive" taxes since an increase in the wages means an increase in the payroll taxes?

Some people think it is just an attempt at increasing the number of employees earning the base entry level salary. I think it's about the taxes since the Democrats won't consider tax relief for the small and low profit margin companies that are forced to pay minimum wage.

To Paul H: the Republican minimum wage increase proposal was rejected by Democrats because it involved giving tax breaks to businesses who would be forced to pay not just the salary increase but also the tax increase. (That is why this went to the floor without any committee input.)

Answer 1

That is an EXCELLENT point! I never thought of that, and I'm brilliant! :)

What gets me is hearing news reports saying "many workers will get a raise, because the minimum wage is going up." Seems like some of the liberal types don't understand that CHANGES IN LAWS CHANGE BEHAVIOR!!! It would be just as accurate to say "Congress imposed new costs on business today, that will be passed on to the consumer" or "Congress raised the minumim wage, putting the lowest-skilled employees out of work."

This is true in so many areas - a "windfall profits" tax on "big oil," etc. I could go on and on, but it's bad for my blood pressure!

Answer 2

It is because there has not been a pay raise for 10yrs. Some people argue that it is not good because it hurts the bottom line for business. It has nothing to do with increasing payroll taxes. Even when the minimum goes up too $7.25 per hour, they will get all taxe's back paid plus more with earned income credit. The government is not getting extra $$ for it. Imagine trying to live on $5.50 per hour which many people do in this day and age when a loaf of bread is almost $3 or more and milks is $4 per gallon. It is about time the minimum wage went up. Prices have risen on everything, but wages have not gone up, so it is about time. The cost of living is high now in most states, and if the minimum wage is not high enough, the poverty level becomes worse, and you end up with more homeless and more on welfare. Have you ever seen what some of these people have to do just to earn the minimum, the pay is not worth the jobs in a lot of cases, but these people do it because they have no other choice and have to put food on the table some how and they deserve to have a raise. If the government doesn't force the raise, Big business such as Walmart certainly won't.

Answer 3

You are right that the number of people earning minimum wage (which is not a salary and is nonexempt status) will increase and the competition for minimum wage earning jobs will increase, thus making those jobs less accessible to the poor.

It will definitely catalyze a small increase in the level of automation for processes/jobs which require little productive value from human work, while at the same time pressure minimum wage earners to produce more value (work harder and do several people's jobs at once).

What do the Democrats have to gain by it? A larger dependent constituency, that's for sure. Frankly, I don't see it hurting companies or helping government much, because the minimum wages are a VERY small part of any company's bottom line and because taxes on the poor account for such an small portion of the overall government revenue stream.

Answer 4

I disagree with your thinking that this is to increase tax revenue. The reasons I disagree are:

1) A ~$2 /hour raise will not generate much tax revenue. Remember, most people who make minimum wage pay hardly any taxes, because their income is barely above the tax exempt level, and they are in the lowest tax bracket.

2) Not very many people make the federal minimum wage. In 2005, only 1.5% of US workers earned the minimum wage. If they wanted to raise tax revenue, they would target a larger segment of the population.

In my view, this is a political move. They are trying to establish an image as good, benevolent people, which is exactly the opposite of the image that conservatives have gotten in recent years. So it's all a politicical move to distinguish themselves from conservatives.

Answer 5

Wal-Mart is a "low profit margin" company in need of tax relief? Your doctor's office isn't making enough money to pay the added payroll taxes associated with giving the receptionist another buck an hour? Will it bankrupt ExxonMobil? These companies are already on the public dole since most of these jobs don't come with health insurance and are often subsidized by the welfare system.

No, what this will really mean is a gradual adjustment in base salaries that will probably die out somewhere in the lower middle class range. Something that should happen every year, in part to lessen the burden on the small businesses that really are in need of relief, and not just greedy and parasitic. Yes, that means more payroll taxes and eventually more income taxes, but it also reduces the strain imposed by these companies on the welfare and public health systems.

Answer 6

Why would it matter if the number of people earning the minimum was raised if it resulted in people earning more overall?

You may be right about about the tax in disguise thing. But, it will help the Democrats get on the good side of the blue collar folks in preparation for '08.

Overall, I think the minimum wage raise is a good idea if it is accompanied by the proposed tax break for small businesses.

Answer 7

Raising the minimum wage 70 cents a year equals out to about $1456. It costs the employer around $1700 dollars for every employee after you add in the increase for SS that the employer pays and the workers compensation increase due to increased wages. Sounds fairly cheap until you start multiplying that by number of employees. Corporations like McDonalds, WalMart, and Target can handle the increase, it is the mom and pop shops that can't. They will have to raise prices to recoup their loss. It is either raise prices or lay people off. Now this is going to repeat for the next three years.

Answer 8

None of the above. It's a way to entice all the lower class to vote Democrat. It's not a tax relief cause who do you think will pay for the wage increase? Everybody. And a gallon of milk becomes $5. which generates a higher tax and so it goes. I've said it before,"As the bottom rises, we all become closer to the bottom."

Answer 9

Cons: taxes might bypass up OR federal investment in direction of different companies/areas of the gov. might shrink to offset the increasing minimum salary. execs: human beings could even have the skill to *stay* off what they are making. In Florida, the minimum salary is $6.sixty seven. I, a 17 y/o Senior, am now making $7.25 (i began out off at CVS making $6.seventy 5 whilst minimum replaced into $6.50). After working a 38-hour week over the summer season, I made a measly $228. My usually happening paychecks for twenty-four-hour weeks are ~$a hundred and forty. Now, what's going to ensue to me once I circulate out of the abode come June 2008? i will assure you that I won't have the skill to make lease on THAT salary, no longer to show pay for foodstuff, gasoline, or coverage, and that i've got a sprint ol' scooter! think of if I had a motor vehicle! no longer purely might I *no longer* have the skill to make ends meet, i does no longer have any ends to handle in any admire, what with college, books, labs, scoot coverage (~$60/month or greater), gasoline, groceries, lease, and so on. many persons are working minimum-salary jobs, and that they are not purely the severe-college/college drop-outs. scholars are working minimum--the two college and severe college--and it is unquestionably impossible to make a residing off of it. CVS has greater its income with tips from ~70% or so interior the previous few years, in accordance to my AP Gov. instructor, and will strengthen for CVS workers has purely greater with tips from a trifling a million-2% for the period of that comparable span of time.

Answer 10

Let's be realistic. The minimum wage increase won't do anything. Most states minimum wage is higher than the federal one anyway, and by the time it gets to the top of this three part increase, most states will still be higher than the Federal one.

Answer 11

Well, minimum wage increases are pushed by the labor unions. When Mimimum Wage increases, wages at all levels are pushed upward to meet the cost of living increase that results. This eventually pushes up union wages. That is the reason the democrats push minimum wage increases. Not because they care about the poor, it pushes up the union wage scale. Unions are the big Democrat voting block.