A common bipartisan (Republican and Democrat) solution at present is to continue raising the minimum wage. The result of this is that it costs more to hire people. This in turn phases out jobs that are already only marginally cost-effective. More lower end people become unemployed. Fewer unskilled people can generate enough money for their employer to justify their jobs. More people who were previously receiving a wage above the legal minimum now find themselves in a minimum wage job because their job is next to be phased out with the next minimum wage increase.

With higher minimum wages the taxes on labor go up and the government is able to extract more money out of the economy because of the work of people. The cash increase to the government comes at the expense of fewer jobs and a higher percentage of jobs at minimum wage. More money is drained out of our economy and into the hands of the politicians when minimum wage increases.

If the trend continues, the losses the people suffer will even offset the associated labor tax increases, and even the government will not get more money by causing higher unemployment and a greater cash loss from our economy. There would be a cycling loss. The loss caused by increased labor taxes and phased out jobs would cycle around and further hurt our economy as prices go up and more people are unemployed or making minimum wage.

Compare the bipartisan solution to the Libertarian solution. The Libertarian solution is to end all employment taxes. Everyone would get 7.5% more take home pay and it would not cost their employer one penny more. In fact it would cost their employer 15% less because their share of the taxes would be eliminated too. This would allow them to lower consumer prices and still maintain their return to shareholders. With higher take home pay and lower prices, everyone would be able to afford more consumer goods. This increased consumer demand would drive the need for more jobs. There would be a cycling benefit where the benefits of one influence cycle around and benefit the economy as prices dropped and more people were employed.

Everyone--workers, business owners, retired, and those living on charity--would be better off with lower prices because of lower taxes. Jobs that could not be financially justified could be affordable without the 22.5% employee and employer shares of the labor tax. There would be more jobs, more buying power, more profits, and a higher standard of living for all.

This page was last updated 07/02/00 01:50 PM