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The Minimum Wage Stealth Tax on the Poor - Assignment Example

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In the paper “The Minimum Wage Stealth Tax on the Poor” the author discusses the case when the government has compelled employers to increase their employees’ minimum wages. The mandate seems like a victory for the employees because it means that they will be pocketing in more…
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The Minimum Wage Stealth Tax on the Poor
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Download file to see previous pages Employers will increase the wages of their workers by increasing the prices of the goods they sell. For example, a retail shop will increase the prices of their goods, which are necessities, to cater to the government’s requirement. The changes in consumer goods will fall hard on the individuals living below the poverty level because they will have to pay more for such goods (Macurdy n.pag). The government will have increased their purchasing power but also caused them to spend more on their consumptions. They do not benefit because the extra money they have earned goes straight to the profits of their employers. They might have to spend more because the minimum wage bill affects the various sphere of the economy.
Companies do not only hike prices to meet their profit objectives. They may also lay off workers. The low earners will be forced to look for jobs elsewhere (Macurdy n.pag). This increases in the burden of social workers who have to provide benefits for the unemployed. The law will increase the rate of unemployment, a state that brings with its problems. Employees will have to lose the salary that has helped them survive in the severe economy. The workers who will be retained will be forced to do a lot more for a marginal increase in their salaries. The retrenched workers will have left a gap that can only be filled with the remaining workers. They will be willing to take up the extra work because they will be too grateful to have retained their jobs. However, they will be under strenuous conditions that will reduce their job satisfaction.
An increase in salaries will cause the low-income earner to lose out on social benefits such as food stamps and subsidized housing charges.  ...Download file to see next pagesRead More
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