Congress Enacts A New Minimum Wage Increase - Bush To Sign It

Dear Everyone;

Congress approved a new minimum wage increase which Bush says he will sign. Yet lost in the rush to enact was some mathematics on what the real cost is to low wage workers and their employers not counting lost jobs and job opportunities. Remember every 10% increase in minimum wages causes a 1% drop in employment and for women this can rise to 4%. The new minimum wage increase provides for an overall phased increase of 40%.

Below the news article is an analysis I did of the minimum wage increase program as originally proposed by Speaker Pelosi in her first 100 days scramble to over-ride Congressional debate in the House back in January and published on Lew Rockwell.

Using rough figures the cost to low wage workers and their employers in extra income and payroll taxes and using the figures Pelosi proved on the number of workers helped - state and federal governments would rake in an extra $75 billion in taxes.
About $6,000 per low wage worker and $4,000 per employer for each low wage worker over the first three years. That's the real story.

As I stated in the article the best way to increase the benefits for low wage workers is to repeal all minimum wage laws, repeal all income and payroll taxes for everyone earning below the federal poverty guidelines and require the states to do the same plus put a floor on state sales taxes of at least $100.00. Then repeal the employer matching payroll taxes for all employers employing minimum wage workers. This is how you help low wage workers.

Ron Getty
SF Libertarian

Congress approves minimum-wage increase
Staff and agencies
24 May, 2007

By JESSE J. HOLLAND, AP Labor Writer 2 minutes ago
WASHINGTON - America‘s lowest-paid workers won a $2.10 raise Thursday, with Congress approving the first increase in the federal minimum wage in almost a decade.
President Bush was expected to sign the bill quickly, and workers who now make $5.15 an hour will see their paychecks go up by 70 cents per hour before the end of the summer. Another 70 cents will be added next year, and by summer 2009, all minimum-wage jobs will pay no less than $7.25 an hour.
That almost became the fate of this year‘s proposal. Democratic leaders attached the provision to the $120 billion Iraq war spending bill, which was vetoed by the GOP-controlled White House on May 1 because Democrats insisted on a pullout date for American troops.
Sen. Edward M. Kennedy, D-Mass., called the increase one of "the proudest achievements of this new Congress."
Bush announced earlier this year that he supported an increase in the minimum wage.
This would be the first change since the minimum wage went from $4.75 to $5.15 on Sept. 1, 1997, under former President Clinton and a Republican-controlled Congress.
"This is a gre, , ), D-Calif., chairman of the House Education and Labor Committee. "America‘s workers have been waiting for a raise for a long time."
The full increase, according to Miller, is enough to pay for 15 months of groceries for a family of three.
Raising the minimum wage was a key part of Democrats‘ midterm election platform. To help make it palatable for Republicans, they added $4.84 billion in tax relief for small businesses to help them hire new workers and offset any cost associated with an increase in the minimum wage.
"From a small-business standpoint, the House bill w, , ), R-Iowa.
According to the National Restaurant Association, the last minimum wage increase cost the restaurant industry more than 146,000 jobs and restaurant owners put off plans to hire an additional 106,000 employees.
"A minimum-wage increase will cost our industry jobs, and the vital discussion of how to minimize this job loss is getting lost in the debate," said Peter Kilgore, the group‘s acting interim president and chief executive officer.

http://www.lewrockwell.com/orig8/getty1.html
Speaker Pelosi – Minimum Wage Queen
by Ron Getty
by Ron Getty
         
DIGG THIS
Speaker Pelosi’s minimum wage act is really all about the taxes state and federal governments would take in on the backs of the minimum wage workers and their employers.
479,000 workers are reported to the Bureau of Labor Statistics as making the minimum wage. There are an additional 300,000 workers reported as earning exactly $5.00 an hour. If these workers were included along with those earning the current $5.15 minimum plus restaurant and drinking establishment and service industry workers the total estimated workers directly affected by the new minimum wage rules would be 1.9 million. There are an additional estimated 3.7 million workers who make above $5.15 and less than the $7.25.
Let’s do the math on the 479,000 reported minimum wage workers using as a basis a single worker with no dependents other than themselves living in California.
Starting 60 days after the new minimum wage legislation is enacted hourly wages will be increased $.70 to $5.85 an hour or $234 gross pay a week netting $202.59 after income and payroll taxes. Increased net weekly income is $22.55 over the previous $5.15.
The $31.41 of increased income and payroll taxes gets the government $15 million a week or $780 million a year in new tax income from minimum wage workers.
An employer has total payroll expenses of $258.63 with Social Security – Medicare – Unemployment Taxes. The $24.63 in increased employer taxes generates some $615 million of new tax revenue paid to government coffers.
$1.4 billion of new increased tax revenue from minimum wage workers and employers is paid in taxes to the government from the first $.70 minimum wage increase.
The 2nd year minimum wage increase is $6.55. A worker receives $262.00 netting $224.84 after income and payroll taxes. Increased net weekly income is $44.50 more over the $5.15 minimum wage.
This $37.16 increase in taxes gets the government $17.8 million a week or $925 million in taxes paid by minimum wage workers.
An employer has payroll expenses of $288.77. The $26.77 in increased employer taxes generates $666 million of revenue paid to the government by employers.
$1.6 billion is paid to the government from minimum wage workers and employers in the 2nd year.
The 3rd Year minimum wage increase is $7.25. A worker would get gross pay of $290.00 netting $245.77 after income and payroll taxes. Increased net weekly income is $65.73 more over the $5.15 minimum wage.
The $44.23 in increased weekly income and payroll taxes generates $21 million to the government coffers from minimum wage workers or $1.1 billion annually.
An employer has payroll expenses of $318.92 and this $28.92 in increased employer taxes will generate some $720 million of revenue paid to the government by employers.
$1.8 billion is paid in taxes to the government from minimum wage workers and employers in the 3rd year.
Thus $4.8 billion is paid by the 479,000 minimum wage workers and their employers to the government in extra income and payroll taxes in first three years.
If these figures were applied to the 1.9 million minimum wage workers and their employers this would generate four times the $4.8 billion government revenue or $20 billion in extra government income.
If these figures were applied to the 3.7 million minimum wage workers and their employers this would generate 8 times the $4.8 billion government revenue or $38 billion in increased government revenues.
If the figures were applied to the number of minimum wage workers Speaker Pelosi is claiming of 7.5 million this would be almost 16 times the $4.8 billion or $75 billion in additional government revenue.
In pure general terms during the first three years the Speaker Pelosi pogrom against minimum wage workers takes an average of $6,000 out of their pockets with her be-knighted plan to help low-wage workers. Each employer has $4,000 taken out of their pockets for each minimum wage worker during the same period.
If Speaker Pelosi desires to help minimum wage workers do these things. Repeal the federal minimum wage law. Repeal income and payroll taxes for everyone earning below the federal poverty guidelines. Absolve all employers from providing matching payroll taxes for Social Security and Medicare for all workers earning below the federal poverty guidelines. This also increases the capital available to small business owners for new hiring and capital expansion.
Then by federal mandate, which is an extremely sad but unfortunate necessity to prevent states from adjusting their income taxes upward, require all states to repeal their income taxes for poverty level workers and their minimum wage laws. Further, require all states with a sales tax to put a floor of at least $100.00 on purchases as sales taxes is extremely regressive to low-wage workers.
I am certain we can count on Speaker Pelosi’s compliance in these matters since she is so concerned about the welfare of low-wage workers and their employers.
January 17, 2007
Ron Getty [send him mail] is the senior staff member of a tax attorney with his practice located in San Francisco. He is a Chu Lai I Corp Vietnam Veteran. A recipient of the Lights of Liberty award for dozens of Letters-to-the Editor published under his name as Chair of the Initiatives Committee – Libertarian Party of San Francisco in various Bay Area newspapers. Several of his op-eds espousing the Libertarian message have been published in various mainstream media in California.