Another story of why the minimum wage is awful

An economic lesson is playing out in California.

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Insane: Professor paid $120/hr to study minimum wage

Government is just stupid on their economic studies.
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Minimum Wage Hikes Stifling Job Hiring

Several states and cities took on new minimum wage hikes in 2015 and the beginning of 2016. Now a new report out shows it is affecting hiring Continue reading →

What An $15/hr Fast Food Worker Looks Like

With fast food workers demanding equality and $15/hr wages being enacted by some major cities, franchisees are now unveiling what their new workers look like:

H/T Economic Policy Journal

Why Government Supports Minimum Wage Increases

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Tuesday, five states voted to hike minimum wage for workers. The common theme is that government really cares for the people. Not exactly. Government likes minimum wage increases because it means more taxes collected. Here is example:

“The minimum wage increase is not just the dollar an hour, but it’s also a raise in our taxes,” said Jason Lerner of Little Learner Academy. His family owns five child care centers in New Jersey, where the minimum wage rose from $7.25 to $8.25 on Jan. 1.
In total, these taxes add an extra 10.5% to Little Learner Academy’s payroll expenses.
Take Social Security. Employees have 6.2% of their wages withheld from each paycheck for Social Security. But what they don’t see is that their employer also chips in, matching the 6.2%. For Medicare, both the employer and the employee pay 1.45% of the wage.

Payroll taxes are a big concern when running a business. This tax is also regressive when managing a business. On top of this tax, business owners must also pay to the state disability/unemployment taxes based upon amount of employees they have.

Many years ago I had a boss tell me that payroll is the #1 controllable expense. When payroll goes up and sales don’t, payroll gets slashed.