Saturday, March 03, 2007

Minimum Wage?

Who really benefits from an increase in minimum wage and who is hurt by it. The truth as I see it goes like this; if the government raises minimum wage, it means that restaurants, retail shops, auto parts stores, golf courses, etc. who are running on tight profit margins to begin with, have to raise prices in order to stay in business. Consequently, their suppliers in turn must also raise prices, same with the manufacturers, on up the line.

The employee's receiving the increase are lead to believe that it's aim is to help them out due to cost of living increases. I reality though, that pay raise translates into a cost of living increase. That same individual who could once buy a hamburger for lets say, $5.25 is now paying $5.50 for the same burger. Therefore, the value of their dollar remains the same in terms of purchasing power. The employee's already above minimum wage and not benefited from a wage increase, paying $5.50 for the same burger has actually lost value in the dollar he/she earns. We already know it temporarily hurts the business which then gets past on to the consumer, so who's this benefiting?

As I see it, the higher amount reflected on the minimum wage employee's W-2 form leads to an increase in tax revenue for the government. Everything from income tax to sales tax is incrementally that much more. So it seems the only one actually getting a raise, is the government. Thanks for your concern on the cost of living!!!

2 comments:

Anonymous said...

Huh, I guess I'd never thought about it like that. You always think that you're somehow getting ahead just to have 'em "stick it" to you in another way.

Anonymous said...

The burden of raising minumum wage rests purly on the middle class or those who are closer to the top of the middle class. They are pushed into a 35% tax bracket instead of a 15%. So discounting the inflation factor these poor souls are left to pay for the increse in wages and know having a hard time affording the new price for a burger.