The reasoning is relatively straightforward. By increasing the minimum wage from $7.25 to $10.10/hour:
- businesses would pay an additional $2.85/hour for all unskilled laborers, that's an "unskilled labor tax" of $114/week; and,
- adds $5.7k/year for each minimum wage worker employed.
That's bad enough, but the reality is actually worse:
- Employers must contribute 6.2% to FICA, 1.45% to Medicare, and 0.6% to the federal unemployment tax.
- The tax actually costs employers $6.17k/minimum wage worker.
Who's going to pay for the $6k+ tax?
One easy way would be for businesses to pass the costs on to consumers. But, doing so might come at the high price of losing customers.
The more likely scenario is that these business will engage in some of the following:
- reduce the number of employees;
- cut their hours; and,
- halt additional hiring or find ways to utilize automation to replace employees.
Rather than elminate positions, these businesses may cut employees' non-monetary fringe benefits.
In the end, the people who will be paying for the 39.3% hike in the minimum wage are all of those plants who are seated behind the President and applauding his geneous proposal that's guaranteed to hurt them.
Isn't "taking pleasure in pain" considered a mental disorder?
Let the discussion begin...
To read the American Enterprise Institute report, click on the following link:
"Instead of $10.10 per hour, think of the proposed minimum wage as a $5,700 annual tax per full-time unskilled worker."