Courtesy of Mish.
A friend of mine who wishes to remain anonymous claims the following:
- Walmart employees (as a group) are often the biggest recipients of federal and state aid within each state.
- McDonalds employees are up there as well.
Specifically, my friend asks “Why are Taxpayers Subsidizing Big Mac buyers?“
His proposed solution is to raise the minimum wage to the poverty level, about $23,550 for a family of four.
My friend claims the employer, not the taxpayer will pick up the tab.
Seen and Unseen
My otherwise bright friend is not bright enough to examine the seen and the unseen costs and benefits of his proposal.
It’s a given that those who are employed by McDonalds and WalMart will be better off, provided they retain their jobs.
That’s a pretty big “provided“. But it’s far worse than that. Here are 10 things I came up with (and it only took a few minutes to do so). I am sure my list is incomplete.
- There are no proposals to reduce food stamps or any other government subsidies if minimum wages rise. Money allocated on food stamps and other subsidies will still be spent unless Democrats agree to cuts.
- Prices at at WalMart and McDonalds will rise
- The higher the wages, the more pressure there will be on businesses to reduce the overall number of employees by other methods, including hardware and software robots
- The higher the overall costs (of which wages are huge component), the fewer the number of store that will be built
- When corporations don’t open stores they otherwise would have, construction jobs are lost, shipping jobs are lost, merchandising jobs are lost, corporate income taxes do not rise as they would have, and property tax collection does not rise as it would have.
- Marginal stores will be shut.
- Employees at those marginal stores will be laid off .
- Shut stores pay no corporate income taxes or property taxes.
- Vacant stores are a form of blight. They reduce property tax collection and lower rent prices.
- Marginal store closings and refusal to open new marginal stores will most likely happen in the very neighborhoods most desperately in need of jobs and services.
Moreover, for all the bashing of WalMart, please note that it pays one of the highest corporate tax rates in the country.
Other Problems With Minimum Wage Laws
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