The Consequences

GaryCharacter, congress, diligence, entry level wages,,, government, leadership, McDonald's, Medicare, minimum wage, Politicans, U.S. debt, U.S. National Debt, Uncategorized, unfunded government liabilites, United States of America

Did you ever stop to think who really benefited from the dramatic raise with regard to the minimum wage earners?

The minimum wage was originally considered “entry level wages”. The concept provided the ability for the worker to elevate oneself through hard work, diligence and eventually providing for a more rewarding financial future.

Since the late 1950’s, McDonald’s Corporation is a perfect example of how this worked; as thousands upon thousands were paid entry wages are now today’s managers, or for that matter! Owners of Franchises. Many, of course, left this company, entering into thousands of companies nationwide, now with great skills in leadership, management skills, utilizing the learned experience and work ethic experience they have acquired during their tenure beginning at entry level hourly pay.

Now comes the glitch in the minimum wage.

One is out of touch if they have not noticed the rise in food, housing and just about everything else, since these new minimum wage concepts were put in place. The very people who received the increase in wages are now paying much more due to all of the increased cost of living, why?


For one thing; the employers had no choice but to raise prices on just about every item due to their increased labor operating cost. This travels down to the local clothing store, grocery, and day care, as most have very low mark-up costs, especially grocery chains. Not only has the minimum wage earner been affected by the rising cost, everyone else has too.


The real winner here is non-other than the Federal and State Governments. Why you ask? Because all who now are receiving these increased wages, are paying more in taxes. The largest obvious one being their *Social Security (SSI) deduction, which not only affects the employee, but is matched by the employer’s contribution. Further, now many of these employees are in a higher tax bracket. Sadly, these very monies (Your Money) with regard to Social Security deductions are not placed in a secure interest-bearing account for future use by you when you retire, but is now placed in the Federal Governments ‘general funds’. There is no money in the Social Security trust, just an I.O.U. Social Security is now an unfunded liability, it was not just twenty years ago, then is was a fund that kept growing until the politicians got their hands on it, this is precisely why Social Security will not be there in less than 30 years or sooner, as it likely will be bankrupt before then.

As to the States that collect **state income tax, it is a bonanza from those who now have had their hourly rate increased via the minimum wage. One more level to be considered, many, many employers facing this new fixed cost are not providing full time employment; of course, many people have had multiple jobs at the same time for the last century, plus, this is nothing new. Twenty years ago most employers offered Health Insurance, the employee paying a small part of it. today it is a thing of the past for small employers, as the cost of providing it is extreme. As to those employed by State & the Federal governments, they all enjoy annual automatic cost of living adjustment (COLA), something that rarely exist in the private sector.


There does not appear to be a logical solution out of this dilemma, not to mention the fact that this is going to eventually fuel inflation and once again, everything goes up in price, the one big benefactor being the Government coffers.


*The current tax rate for social security is 6.2% for the employer and 6.2% for the employee, or 12.4% total. The current rate for Medicare is 1.45% for the employer and 1.45% for the employee, or 2.9% total


**As an example, California income tax for those making over $19,001 is 5 % percent.


For now,