Council mulls a minimum wage hike
Original post made
on May 2, 2014
On Tuesday night all but two members of the City Council expressed interest in raising Mountain View's minimum wage, possibly working with neighboring cities to bring the sort of increase seen in San Jose to more of Silicon Valley.
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posted Friday, May 2, 2014, 10:13 AM
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Posted by think
a resident of North Whisman
on May 3, 2014 at 12:33 pm
If minimum wage increases by $3.00 per hour then a 40 hour a week employee will increase his/her wages by $120 (40 x $3.00 = $120) dollars per week. If a small business owner has five employees then the owner will see an increase in costs of $600 in wages ($120 x 5 = $600) per week. I am not including payroll taxes in my simple example, but taxes will also increase the business owner's costs.
Over four weeks approximately one month the cost to the small business owner is $2,400 ($600 x 4 = $2,400). If the owner was clearing a profit of $5,000 per month, then her profit is almost cut in half reducing what she can pay to maintain her lifestyle and/or pay her mortgage, car payment, gas, groceries, etc. The owner will have to raise her prices, lay off workers, and/or accept fewer children/clients. If she is the owner of a daycare center and she decides to raise her prices, then the parents of children at her daycare center will see an increase in the cost of daycare.
The parents of children at the day care center may be owners of lumber, paint, interior decorating businesses, etc., and because their cost of living has gone up they will have to charge more for their products. These products often go into homes, cars, etc., which will increase their costs thus their prices will go up and the endless cycle goes on and on increasing the cost of living.
We are chasing our tails by raising the minimum wage. Raising the minimum wage increases the cost of living which causes us to increase the minimum wage, which increases the cost of living, and so on. When the cost of living goes up the cost of social programs/welfare increases, thus taxes increase, and jobs go overseas. Raising the minimum wage is similar to the story of the old woman who swallowed a fly...
The problem is not the minimum wage, the problem is the high cost of living. In the 1950s and 60s Steve Jobs' parents (a machinist and a bookkeeper) could afford a home in Mountain View and then Los Altos. Today, I don't think they could even afford to rent an apartment because the cost of living is so high.
Rather than raising the minimum wage we need to reduce the cost of living by
1. Limiting the amount a company can deduct to for compensation to $100,000 per employee, annually. Companies, Wall Street firms, sports teams, Hollywood movies, etc., should be not able to deduct more than $100,000 per employee, annually. Companies, Wall Street firms, sports teams, Hollywood movies, etc., would be less likely to pay huge salaries if they had to bear the full cost of high salaries rather than shifting the costs to taxpayers through deductions.
2. No more bailouts. The Fed must end the $75/$65 billion (almost $1 trillion annually) a month it is pouring into the economy, which allows investors to use the cheap money to drive up the cost of stocks and homes prices.
3. Long-term capital gains and all capital gains should be taxed at the same rate as all income. Whether your income is passive or active it should be taxed at the same rate. Allowing Wall Street and hedge funds compensation/income to be taxed at the 15% rate is unfair and ridiculous.
4. No amnesty. Illegal immigrants and immigrants in general are driving up housing costs and driving down wages. When millions of US citizens are homeless, jobless, and working poor, why is our government even considering amnesty? Use e-verify and give jobs to veterans and all US citizens.
5. Restore win big and lose big especially for Wall Street and investors. No more bailouts for investors and use the money to back the FDIC and protect depositors. This will prevent runs on banks. We would be much better off right now if we had not bailed out the investors and by bailing out the investors we have created a moral hazard. Investors will continue to take unimaginable risks and drive up housing and stocks as long as they know their investments are protected by taxpayers.