Negatives on California Minimum Wage increase to $15 per hour.
California Minimum Wage Increase
Governor Brown signed into law a bill that will increase the State minimum wage from $10 to $15 per hour by Jan. 1, 2022.
This law applies to employers with 26 or more employees.
The law will be applied to employers with less than 26 employees in 2023.
At first glance this new law would appear to be a very good thing for minimum wage earners, but is it really a good thing?
Money in and money out.
Laws of Physics apply.
Physics class taught us that "every action has an opposite and equal reaction". Here are a few bits of information that may not have been covered when announcing this wage increase.
The tax implications are not a minor issue.
A family of four where both spouses are minimum age earners will see the following tax increases.
Federal tax will increase from $4,106 to $7,219.
Payroll tax will increase from $2,579 to $3,869.
Their earned income credits (EITC) will be cut from $596 to zero.
California State Tax will increase from zero to $379.
Their $2,400 food-stamps allotment will be totally lost.
The total wage increase from $10 to $15 per hour will divert $7,778 of their income to the government.
They will also face the possible loss of other income-dependent government welfare programs and loss due to inflation caused by the higher wages employers are required to pay employees. That $6 burger and fries will now cost $10 for everyone including the minimum wage employees.
Now, if you really read this, you will see that the major benefactor of this wage increase is not the employees, but is the Federal and State governments. Over 1/3 of the wage increase money will now go to governments. Governments will receive increased tax revenue and they will save money on entitlements they no longer have to pay.
Is there a better way?
It appears to me that our current system is designed to keep people dependent on government for their very survival.
I can think of several ways to make it better.
Many who have been depending on "entitlements" for a long time are discouraged from seeking even a minimum wage employment because they would lose some or all of their government assistance. The added costs of commuting to work, day care for the children, clothing, and miscellaneous job related expenses makes working impossible for them.
A system whereby they could phase out of the "entitlements" system rather than losing them all at once would not be that difficult to devise. They should be rewarded for going to work rather than punished by total loss of their assistance programs.
Minimum wage jobs were at one time mostly for entry level jobs for recent high school graduates. They were never meant to be career positions. Yet today, huge numbers of people are forced to work these jobs because that is all that is available.
Learn some skills.
Most of our high schools have long ago discontinued "shop classes" where students could be exposed to various different job skills. These included wood shop, welding, auto mechanics, machine shop, and several others.
I have never heard a real reason for these classes to disappear, but have heard a few excuses such as lack of student interest, liability issues, lack of funding, and others. These classes were designed to let students try out different skilled labor jobs and perhaps decide on one of these as a career. Not every student was born to go to college.
Now what if our Federal and State governments teamed up with Industry to supplement pay instead of giving out food-stamps. Using this method the employee would hire on at minimum wage which would be supplemented by the government for skills training. As the employee gained skills they would get regular pay increases but not suffer the loss of entitlements by going to work. When they successfully mastered the skill they were learning they would be at top pay for that trade and the governments obligation would end.
By using this method the employees dependence on government assistance would be over and the employee would "own" the skills he or she had been taught. The employee would become a self sufficient member of society with skills that would serve them well for the rest of their lives.
Is this what we want?
Action is needed now.
If you look at the chart in the photo above, it is clear we are on the wrong path in this country.
Many will disagree, but it seems we have worked hard at creating dependency on government in this country rather than trying to solve the problem.
I'm not sure if this was intentional, or just a lack of foresight and action by those we have elected to lead this country.
It is obvious to me that this problem could be easily resolved, with little or no additional cost to we taxpayers. Job skills training in lieu of welfare programs makes perfect sense to me. I do realize there are some who are not able to work and will always need assistance and I have no problem with that.
But for the good of our people, and the good of our country, changes need to be made to reduce the dependence on government we see today.
Would you rather see skills training or more entitlements
Your comments are both welcome and appreciated as long as you stay on topic. Comments that include personal attacks will be deleted.