Minimum wage, minimal results

Tax cuts boost workers' wealth more than minimum-wage hike

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If the Obama administration truly were interested in improving wages for American workers, it would be pushing for a reduction in corporate income tax rates instead of a minimum-wage hike.

The former is a meaningful and impactful solution; the latter is a largely symbolic gesture that will do the economy more harm than good.

First off, the administration’s goal of raising the minimum wage from $7.25 to $10.10 is meaningless to most Americans because very few (about one in 20 hourly workers) actually earn it. And, as government data shows, most of those earners are neither poor nor support a family. About 80 percent are above, not below, the poverty line, and nearly half are teens and young adults, a third of which live with their parents.

Secondly, minimum-wage hikes do nothing to stimulate job creation, particularly among small businesses. On the contrary, employers are more likely to reduce hours, freeze hiring or lay off workers and shift more duties to remaining employees.

“It’s simple math: If the cost of hiring goes up, hiring goes down,” National Retail Federation President Matthew Shay said.

Eventually, companies simply would pass along the increased costs to consumers in the form of price hikes, fueling inflation and eroding the value of workers’ wages.

The natural laws of economics have proved time and again that the key to boosting employee earnings is through increased productivity, not artificial wage manipulations.

If the president were serious about trying to “speed up growth, strengthen the middle class and build new ladders of opportunity into the middle class,” as he said during his State of the Union address, he could do something to substantially increase the nation’s productivity – cut the corporate tax rate.

The U.S. corporate tax rate, the highest in the world for a developed nation, discourages job and wage growth in two ways. It encourages U.S. companies to expand overseas, which robs Americans of an employment opportunity. And it robs companies of incentives to repatriating their overseas profits, which in turn robs the government of a revenue source and stunts the domestic investment of foreign profits.

“I really think the issue of companies sitting on cash is that a lot of their sales are occurring overseas. Their cash is essentially trapped,” said Wells Fargo economist Mark Vitner, who spoke recently at Augusta’s University of Georgia Economic Outlook luncheon. “To bring it back to the U.S. doesn’t make a lot of sense because we have the highest corporate tax rates in the world.”

Apple, for example, paid only 8 percent of its worldwide profits in U.S. corporate income taxes by piling up profits in operations overseas.

No wonder that, for all its compliance and collection costs, the corporate income tax produces very little revenue (1.8 percent of gross domestic product in 2013).

America’s statutory corporate tax rate, 40 percent, is 14 points above the average for Organisation for Economic Co-operation and Development-member countries. Even with loopholes and generous deductions, the rate still is higher than most other nations, including Canada (26 percent), China (25 percent) and the United Kingdom (23 percent).

We agree with the conclusion of the National Bureau of Economic Research’s December 2013 report, “Simulating the Elimination of the U.S. Corporate Income Tax,” which advocates cutting the corporate tax to 9 percent with no loopholes.

Such cuts can “produce rapid and dramatic increases in U.S. domestic investment, output, real wages and national saving.”

The question comes down to this: What will produce more long-term economic benefits for the American worker – putting more money in the hands of the nation’s relatively few lowest-paid employees, or toward businesses that can develop new products, expand production and create jobs?

Unfortunately, based on the Democrats’ penchant for using government policy as a vote-buying tool, we have a pretty good idea which agenda the president will push.

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deestafford
27774
Points
deestafford 03/03/14 - 12:05 am
9
3
Let me ask a question. If an increase in the minimum....

Let me ask a question. If an increase in the minimum wage to whatever is desired by today's politicians is to be the panacea to escape poverty, why has it not worked in the past when the minimum wage has been increase?

Could it be not about "lifting people out of poverty" but making the low information and no information people feel like the liberals are "on their side'' and looking out for the "working people"?

There are ways to have our economy take off and get to the top as we once were but we will never do it as long as the left has its strangle hold on the power and the establishment Republicans act as doormats rather than people who sincerely place the country ahead of their own political careers.

Once again, it's about power and the retention of power by the "elite'' ruling class which we have in DC. The government has grown so large and cumbersome with all the agencies and regulations who care only about their status and survival in their cubicle farms that it will take a perfect storm of Conservativism in all three branches of government that we have not seen in my lifetime and maybe not since the Founders met in Philadelphia in the 1780's.

bubbasauce
20727
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bubbasauce 03/03/14 - 12:55 am
8
3
You are so right Deestafford!

You are so right Deestafford! No need to comment any further.

burninater
9606
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burninater 03/03/14 - 03:45 am
6
13
"The natural laws of

"The natural laws of economics have proved time and again that the key to boosting employee earnings is through increased productivity, not artificial wage manipulations."
-------
FALSE.

That is an infuriatingly bold misrepresentation of fact.

American productivity has increased 80.2% since 1973.

The median hourly wage over that same period has increased 10.7%.

CEO pay, on the other hand, has increased 700% over that same period.

The "natural laws of economics" are NOT natural laws, they are assumptions used to model economic behavior. This assumption has been shown to be incorrect. It doesn't matter how many times you try to lie about it -- it's still a lie.

There is a profound disconnect in this country between productivity growth and wage growth. There is no "natural law" mandating one increase with the other. The facts clearly show otherwise, and more and more Americans are waking to that fact.

burninater
9606
Points
burninater 03/03/14 - 03:45 am
5
12
"The question comes down to

"The question comes down to this: What will produce more long-term economic benefits for the American worker – putting more money in the hands of the nation’s relatively few lowest-paid employees, or toward businesses that can develop new products, expand production and create jobs?"
------
Private sector earnings, profits, shareholder value, and executive pay are at historically high levels.

They have NEVER had as much money as they do now to "develop new products, expand production and create jobs".

So, the ANSWER to your question is that more money given to business creates what our job market looks like NOW. As a policy and a strategy, it's a FAILURE for the average American. It has concentrated the wealth of our nation in a manner unprecedented in modern history, and the job outlook for the median American is horrible.

We've TRIED it the way you claim, and it DOESN'T WORK. The proof is right there in front of us.

carcraft
25984
Points
carcraft 03/03/14 - 04:15 am
10
3
When I first started working

When I first started working the minimum wage was $1.50. It has gone up and we are still in poverty. The other issue is inflation. Up until I was about 12 years old $25.00 in silver coins was worth $25.00 . Today that same $25.00 in silver coins is worth $300.00. Minimium wages have not increased as rapidly as the devaluation of the dollar. Government harrowing and printing money to pay our debts is what is increasing poverty. We just can't keep doing this!

RichmanA2
126
Points
RichmanA2 03/03/14 - 05:22 am
0
0
ACES resorting to whitewashing the corporate tax rate
Unpublished

ACES conveniently forgot to mention the fact that most companies in the US don't pay that 40% tax rate. For instance, out of S&P 500 companies, 57 paid effective tax rates of ZERO in 2013. That's right, ZERO. Considering the effective tax rate is a measure investors use to determine how much companies pay in tax relative to profit, I think this is a huge omission to this objective piece of editorial garbage. For instance, the Government Accountability Office released a report showing that companies reported an average effective tax rate of 12.6%, well below the 35% federal corporate tax rate in 2010. Verizon paid an effective tax rate of -4.8% that year, and yes that is negative(!). Verizon had a market value of around $148 billion that year, I think they can pay their taxes. Or how about the billions Apple hasn't paid in taxes? More accountant magicianry I supposed. There are 56 other companies, even more most years, that did the exact same thing. Wanting corporations to pay their fair share of taxes is not anti-business, as much as ACES wants to portray it that way. Where is the editorial complaining about the REAL problem with our budget, corporate welfare? ACES bitches about welfare consistently, but shockingly I have yet to read the term "corporate welfare" in the Augusta Chronicle. We spend far, far more on feeding the corporate teet than food stamps, yet no one seems to mind. Sad times we live in.
And the federal government is getting smaller, I don't know why I see the lie of "big government" in and around this newspaper so often. It employs around 6.2% of the population now, compared to the 7.5% of the population that Ron Regan employed, after firing everyone of course.

ymnbde
9789
Points
ymnbde 03/03/14 - 06:19 am
10
4
machines can flip burgers

and does that kid who just put my eggs in the same bag as cans
really deserve $10 an hour?
nope
O's minimum wage crusade is because, quite simply
THREE SCHOOLS IN RICHMOND COUNTY HAD ZERO STUDENTS PASS THE AP EXAMS LAST YEAR!
and kids educated at those schools can't get a good job
they are in bondage to whatever handouts they can scrounge from government
democrats are in charge of education
THREE SCHOOLS IN RICHMOND COUNTY HAD ZERO STUDENTS PASS THE AP EXAMS LAST YEAR!
democrats are in charge of education
they have taken it and they have abused it and they have formed it
into something that profits democrats
they have ignorant voters subservient to government
they abuse a group of people to gain votes
and that is the racism personified... oops, excuse me
the individual racists are hiding in the bureaucratic thicket
not my fault! it's the system!
just like looking for a black face in the audience at the movie awards last night
there were so few! but the few were in the front row!
yet it wasn't any individual's fault, it can be blamed on the system
guess what award democrat party controlled schools get?
THREE SCHOOLS IN RICHMOND COUNTY HAD ZERO STUDENTS PASS THE AP EXAMS LAST YEAR!
ZERO!

ymnbde
9789
Points
ymnbde 03/03/14 - 06:27 am
9
3
infuriatingly bold misrepresentation of fact, burninator

productivity has not gone up because of anything our government did
it has gone up in spite of what our government did
it has gone up because of private innovations in computers
in technology
basically, our productivity has ridden the backs of our best and brightest, those who sacrificed to get educated and then put their work over their lethargy and leisure
not government, as you think
but you support a racist government, so you have to deceive
lest you wake up and realize you're part of the racism
did you know that
THREE SCHOOLS IN RICHMOND COUNTY HAD ZERO STUDENTS PASS THE AP EXAMS LAST YEAR!
yet you're jealous of how much a ceo makes? what every ceo in the entire country is just a drop in the bucket!
your marxism is based on class envy and jealousy
and the marxism of the democratic party is based on lethargy
in keeping them, well, not barefoot and pregnant
but ignorant and voting!
this is what the democrat party does
THREE SCHOOLS IN RICHMOND COUNTY HAD ZERO STUDENTS PASS THE AP EXAMS LAST YEAR!
throw your little jealousy tantrums elsewhere... we've had quite enough... and we've had quite enough of this racism
THREE SCHOOLS IN RICHMOND COUNTY HAD ZERO STUDENTS PASS THE AP EXAMS LAST YEAR!
and that is pure racism, practiced by the democratic party
and democrat party supporters
but do go on, burninator... what else were you jealous about?

Pond Life
17682
Points
Pond Life 03/03/14 - 06:56 am
9
3
When you force employers to
Unpublished

When you force employers to increase pay, where do you think that increase in pay comes from?

Pond Life
17682
Points
Pond Life 03/03/14 - 07:07 am
9
4
Burn....why don't you become
Unpublished

Burn....why don't you become a CEO, then turn down the pay that they offer you? You are free to do so if you have the ambition and ability. Make a difference instead of showing such wealth envy.

RichmanA2
126
Points
RichmanA2 03/03/14 - 07:08 am
0
0
Last I checked
Unpublished

Productivity most certainly has increased due to government inventions. In the 60s, the military wanted to develop a communications system that was less vulnerable to attack than telephone operators’ rooms and began working on linking together computers. The first network was called the ARPANET which was the basis for the internet we are on right now. The DOD also invented the GPS in the 70's. I don't think i need to explain how much productivity has been effected by that one. How about Google? Again, thanks to the government, Google was born due to a grant from the National Science Foundation. I don't think I need to explain how Google has upped our productivity. Oh yeah, the NSF also funded the invention of bar codes in the 1970's. How about all of the tech that we have gleaned from NASA? Everything from memory foam, braces, Goodyear tires, and telecommunications came from government funded NASA. I haven't even brought up the micro chip yet, something that pretty much defines productivity in today's world of computers. Speaking of today's world, do you own an iPhone? The touch screen, which made the iPhone possible, was also directly due to NSF funding at the University of Delaware in 1996. Apple purchased that technology in 2005 to give us the iPhone a year later. Have you ever gotten a vaccine? hepatitis A and B vaccines, the flu shot, and the HPV vaccine are all brought to you by the research of the National Institute of Health. But no you're right we don't get any productivity from the government, because Fox News says so. I will be taking anything you say with a spoonful of salt and a big shot of whiskey, ymnbde

carcraft
25984
Points
carcraft 03/03/14 - 07:16 am
13
1
My favorite story about taxes

My favorite story about taxes is John Kerry and New England luxury Yacht building. Liberals thought "we can put a luxury tax on yachts, soon the rich, they can afford it "! Will the rich quit buying luxury yachts in New England and a small American industry was destroyed. John Kerry, who supported the tax had his yacht built in New Zealand, because it was cheaper. Then Kerry docked his yacht in New Jersey to avoid Massachusetts taxes. Of course Kerry claimed it was a mistake. But if a tax the rich liberal goes to those extents to avoid taxes what will corporations do?

Pond Life
17682
Points
Pond Life 03/03/14 - 07:19 am
10
2
If raising the minimum wage
Unpublished

If raising the minimum wage to $10 doesn't hurt small business, and helps the worker, then why not raise it to $20, or $40? Is $10 all you have decided they are worth?

corgimom
32627
Points
corgimom 03/03/14 - 07:26 am
3
7
People- it's about income tax

People- it's about income tax and Social Security taxes.

nocnoc
42779
Points
nocnoc 03/03/14 - 07:46 am
8
1
We have discussed this 1000 times

Economic dictates.
If the cost to produce something increases, then the price it is sold must reflect that increase, or the business fails and workers are laid off.

The spending power of a Minimum Wage increase lasts between
15 to 30 days in a economy. Then the prices increase to meet the increased labor prices.

If a person takes an entry level position, then does not advance in skills or education, and does not move up the career ladder, then why should they be paid more?

It is a business, not a Government Check YET!

Bodhisattva
6235
Points
Bodhisattva 03/03/14 - 07:57 am
3
9
Trickle down economcs is a farce

"about one in 20 hourly workers) actually earn it." A meaningless statistic since someone could earn $7.26 an hour and earn above the minimum wage. The truth is, about 25% of private sector worker earn less than $10.00 an hour. Bureau of Labor Statistics

Increased worker pay comes the same place it always came from, decent owners who saw the value of their workers and weren't the greedy ....... we have today. CEO's who used to earn 40x the average worker pay, and that was enough for them. Now 300x, 400x, or more isn't enough. The businesses are earning record profits, thanks to greed at the top they're keeping it there. They don't believe in paying their workers, even though productivity has skyrocketed and they get the same work out of one person that they used to get out of 2 or 3. It's basic Reaganism. Greedus Maximus. Voodoo economics. It's just not wealth that they're trickling down on you. I recommend an umbrella. It's slavery by a different name. The south is good at that.

RichmanA2
126
Points
RichmanA2 03/03/14 - 07:58 am
0
0
carcraft
Unpublished

If Kerry were a businessman, Forbes would be loathing over what a savvy businessman he is.

ymnbde
9789
Points
ymnbde 03/03/14 - 08:05 am
7
2
bod, your own democrats are better at racism

and your post reeks of jealousy
Reagan's rising economic tide lifted ALL boats
but you know the results of YOUR DEMOCRAT PARTY BEING IN CONTROL OF EDUCATION? OF VOODOO EDUCATION?
i bet ya do
THREE SCHOOLS IN RICHMOND COUNTY HAD ZERO STUDENTS PASS THE AP EXAMS LAST YEAR!
fix that and get back to us about your little class envy problem
plus, corgimom is right
an increase in the minimum wage does give the government an increase in taxes... a slight increase when looked at superficially
which will be taken away in increased unemployment and food stamp benefits when the government educated workers lose their jobs
to burger flipping machines
because guess what, bod? have you gotten it yet?
have you gotten what your party does to poor black kids?
THREE SCHOOLS IN RICHMOND COUNTY HAD ZERO STUDENTS PASS THE AP EXAMS LAST YEAR!

Pond Life
17682
Points
Pond Life 03/03/14 - 08:11 am
7
2
" CEO's who used to earn 40x
Unpublished

" CEO's who used to earn 40x the average worker pay, and that was enough for them. Now 300x, 400x, or more isn't enough. "

So why aren't those minimum wage workers doing what is necessary to become a CEO instead of complaining and demanding more money for the same amount of work?

Rhetor
1014
Points
Rhetor 03/03/14 - 08:17 am
1
7
well, sort of

If you actually take time to read the actual economic literature, you will indeed find that most economists agree that raising the minimum wage will increase unemployment. You will also find that most of them believe that the effect will be very small. Employers will still need workers. I agree with the President. Give America a raise.

Pond Life
17682
Points
Pond Life 03/03/14 - 08:23 am
7
2
You agree to give them a
Unpublished

You agree to give them a raise even though the effect will be small and it will increase unemployment. Your logic is mind boggling. Give some a raise at the expense of those who lose their jobs because of it?

Oedipus
83
Points
Oedipus 03/03/14 - 08:46 am
3
8
Listening to Republican editor these, as they talk( and talk and

about minimum wage boost we harm the economy, can be apoignant experience.

4.4 million Americans currently earn the federal minimum wage $7.25, or less. 284,00 of them are college graduates worse, the minimum wAfe has not kept up with the cost of living. After adjusting for inflation, the minimum wage is lower than it was in 1956. Raising the minimum wage would not only help the working poor, but also the economy as a whole. According to the Economic Policy Institute, raising the minimum wage to $10.10 would grow the economy by increasing consumer spending, and we know that's something the Republicans do not want to happen, resulting in approximately 140,000 net new jobs over three years.

Bizkit
31572
Points
Bizkit 03/03/14 - 08:47 am
4
2
Burn , False the effect on

Burn , False the effect on the economy differes-you are just looking at the Keynesian view that has publications to support it, but the classical view has counter publications too. So neither is correct or wrong-just counter theoretical views. I don't have a problem with raising the minimum wage but it is has to be regional and not a national standard-cause the cost of living and wages differ between say California, New York, or Georgia or South Carolina. You won't pay the same for a house or health insurance in Georgia compared to California.

Bizkit
31572
Points
Bizkit 03/03/14 - 08:48 am
5
1
Tricke up economics is a

Tricke up economics is a greater farce.

Bizkit
31572
Points
Bizkit 03/03/14 - 08:56 am
5
2
Seems many posters believe

Seems many posters believe the wealthy are considered too wealthy and have earned too much. So they reason raising the minimum wage and wealth redistribution will decrease the disparity. Which I don't think is a solution to the disparity because it addresses none of the issues for the disparity. Two income families is a big reason for the 1%, but we have a society moving toward single family incomes. I find some irony that progressives have always denigrated traditional conservative women who stayed at home, but now with the CBO stating 2.3 million workers won't have to work they state women can now afford to stay at home. Gosh I bet they were choking to death getting those words out.

Pond Life
17682
Points
Pond Life 03/03/14 - 09:17 am
6
2
"According to the Economic
Unpublished

"According to the Economic Policy Institute, "..............so you believe them, but not the CBO who states that it will increase unemployment. How does that help the working poor, if they are no longer working?

But you are right about one thing. Consumer spending WILL go up, because businesses will increase the price of everything to cover the increase in their operating expenses. The amount of dollars spent will go up, but the amount of goods and services received for those dollars will remain the same. Why is that so hard for a liberal to understand. It's not like it hasn't been done before.

Bizkit
31572
Points
Bizkit 03/03/14 - 09:07 am
4
1
"Some idea of the empirical

"Some idea of the empirical problems of this debate can be seen by looking at recent trends in the United States. The minimum wage fell about 29% in real terms between 1979 and 2003. For the median worker, real hourly earnings have increased since 1979; however, for the lowest deciles, there have been significant decreases in the real wage without much decrease in the rate of unemployment. Some argue that an increasing minimum wage might reduce youth employment (since these workers are likely to have fewer skills than older workers). Furthermore, some economics research has shown that restaurant prices rise in response to minimum wage increases."

ymnbde
9789
Points
ymnbde 03/03/14 - 09:09 am
5
1
oedipus, 12 years a slave is really

going to school in Richmond County
THREE SCHOOLS IN RICHMOND COUNTY HAD ZERO STUDENTS PASS THE AP EXAMS LAST YEAR!
yet they gotta go to those schools for 12 years... well, no... lots of them drop out... but can you blame them?
and your assertions are bogus
raising the minimum wage would raise unemployment for young blacks
it has done that every time

localguy55
5477
Points
localguy55 03/03/14 - 11:11 am
5
2
burninater

burninater, you are just plain wrong.

Reaganomics, Vs, Obamanomics that's all you need to compare.

justthefacts
22046
Points
justthefacts 03/03/14 - 09:36 am
6
1
Let's just do it

The Republicans should endorse raising it to $15. Let the Democrats sort out the results. Come on Repubs. Be the nice, irresponsible parent for once.

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