December 20, 2006

Bush says backs minimum wage raise with tax relief

Posted at Reuters
WASHINGTON (Reuters) - President George W. Bush said on Wednesday that he supports a Democratic proposal to increase the U.S. minimum wage but said it should be coupled with tax and regulatory relief for small businesses.

In a relatively short article, the President makes a reasonable suggestion concerning the new Congress' desire to push an increased minimum wage. As noted in the article, President Bush would like to see something a little more comprehensive than just increasing the minimum wage. When the cost of doing business increases for businesses with a very small profit margin that margin shrinks or disappears. This either forces the business to limit the hours a minimum wage earner works, lay off senior and junior wage earners in favor of the minimum wage earners in order to save labor costs, or both. These cost saving strategies are counter productive for the Democrats in their efforts to increase the income for minimum wage earners as it poses the risk of those workers losing income due to low hours, or losing their jobs outright due to the company they work for not being able to afford their employment.

In order to forestall these complications it would behoove Congress to work out a plan which would benefit both the wage earners AND the small businesses that employ them. Lowering the taxes the small business pays will allow the wage earners to keep their jobs, most likely with the hours they are used to working, with the possible benefit of allowing the small business to increase their workforce with the extra capital the lower tax base will allow for them. This way the government wins, mostly through the increase in tax revenue from the increased income-tax base of both the higher wage and the increased number of workers earning the wage.

Of course, my input is negligible. There's no way anyone who makes decisions will hear or even pay attention to what I have to say. We'll just have to see if the people we've elected to make our decisions for us have thought this through enough to allow for the possibility of a bipartisan approach instead of the typically divisive partisanship that has been attributed to this issue in the past by the Democrats. Everyone gear up for the next round in the "Income War"!

UPDATE!!! 20DEC06
I have sent an email to both Senators from the state of California. Lets see if that makes much of a difference.

UPDATE 2!!!! 21DEC06
I received the following email response from Senator Barbara Boxer concerning the comments I have made in this post. Notice how she blithely ignores the core of what I am trying to suggest. She even thanks me for my support of the proposed increase in the minimum wage! Amazing how one dimensional our elected officials can be sometimes. Her reply and my response to her reply are attached below. Unfortunately I was not able to save the email I sent to her the first time, but I'm sure you'll be able to get the idea from my response to her reply.

SENATOR BOXER'S REPLY

Dear Petty Officer First Class Pisano:

Thank you for writing to me in support of increasing the federal minimum wage. I appreciate hearing from you, and I completely agree that an increase of the minimum wage is needed to help lower-wage workers make ends meet.

In the 109 th Congress, most Senate Republicans supported a bill that would have raised the minimum wage. However, this bill would have also shortchanged hundreds of thousands of workers who rely on tips for a large portion of their income. I am pleased that this bill, which would have penalized countless lower-wage workers, died in the Senate.

Passing a real increase of the federal minimum wage is one of the top priorities for the Democrats in the next Congress.

The minimum wage is about fairness, a fair wage that rewards people for an honest day's work. In these difficult economic times, it is even more important that working families be able to support themselves with the wages they earn. I will join my colleagues in the fight to obtain an increase in the minimum wage , and I will remain committed to ensuring that all American workers receive the fair pay that they deserve.

Again, thank you for taking the time to write to me about this important issue.

Barbara Boxer
United States Senator
Please visit my website at http://boxer.senate.gov

MY RESPONSE TO HER REPLY
Senator Boxer,
You have misunderstood my aim in emailing you. The purpose of my message wasn't to ask you to support a simple increase in the Federal minimum wage. This would ultimately hurt low income families because businesses will react to the increase in their cost of doing business by lowering their labor costs through lay-offs. My intent was to help you see the need for a comprehensive plan developed to help low income families AND small businesses achieve more by increasing the minimum wage while at the same time providing for tax relief for the small businesses who employ minimum wage earners. This way small businesses won't have to consider lay-offs as a solution to the shrinking bottom line issues which would be created by simply increasing the minimum wage alone. I do not support a simple increase in minimum wage.
Please take my comments into consideration, and make sure you consider everything that's being said to you, even if the ideas presented are not popular to you or your colleagues. As a servant of the public, I know my job is to be a protector of the public trust, regardless of my personal or political aim. You, as a public servant, would do well to remember there is more to the picture you're painting than the low income families you're purporting to protect.
ET1 James Pisano

5 comments:

D Truth said...

Hello Jim, this is your favorite former SK. I would like to say that your opinion on this subject was written very well, but I will have to disagree with your take on this subject. First I need to address your comment about Democrats relying on partisanship like they have in the past. Let's not forget that we have just ended the most partisans congress that this country has ever had, that said I think we owe it to our democracy to give this congress a chance with out condeming them before they even get a start. (You know me I am about being fair and speaking the truth). IMO we need to raise the minimum wage so that hard working people have the chance to make a living instead of being some $9000 under the poverty line if they work eight hours a day. Now on to the whole argument of small business will fold if we raise the minimum wage. The largest employers are from huge corporations like Wall Mart and Macdonald's, These companies take advantage of people with lesser education and stick them in dead end situations working for next to nothing.

The JimP said...

D Truth,
Thank you for your comment. Having had opposition to my opinions in the past with little or no actual reason for that opposition given aside from invective it is refreshing to see someone willing to use constructive criticism in this venue, where it is appropriate.

Now, to address your comments... One of the reasons this latest Congress has been the most partisan could be attributed to a bitter minority. Mind you, I said could. There have been plenty of things the right wing has done that I am not happy with, even though for the most part I associate myself with them. However, I am not talking about everything our elected officials do in our name if not with our blessing. I'm talking about the simple issue of minimum wage increase.

I agree with you that minimum wage should be increased. Having earned minimum wage myself while having to support a family the lack of a more lucrative income was felt very keenly. However, I do understand the economics of the situation. If a company is forced to increase its labor cash output by "X" because of an imposed wage increase in order to decrease that "X" they are invariably going to consider reducing their labor work force. This happens at the big corporation level as well as the small business level, so what you said about Mc Donald's and Walmart is technically correct. However, the problem is that small businesses also have minimum wage employees, and they also have to make the decision to either lay them off or take a hit in their profits.

A tax break for employers who pay minimum wage would eliminate the potential loss of jobs an increase in the minimum wage will inevitably create. Aside from this, the idea that giant employers like Walmart, Burger King, Pizza Hut and the like, who pay minimum wage to the mass majority of their employees won't reduce their workforce in order to keep their profits from taking too much of a hit is ludicrous. In fact, if the big corporations who pay minimum wage are forced to reduce their workforce in order to protect their profits the loss in jobs would push unemployment up, reducing the number of wage earners, and also increasing the number of people being forced to live below the poverty line, though this time because they don't have a job, not because they aren't making enough to survive at their current job.

Hopefully our elected officials will come to their senses and make an informed decision concerning an increase to minimum wage. Unfortunately, at least based on the political track record, our elected officials spend the majority of their time making "incremental benefit" legislation in order to make them look good enough to be elected again without actually making the real tough decisions, regardless of how it affects their jobs. Their jobs are actually to do what is best for the people they represent, right? That's why they were elected, right? Some people think electing someone means you'll get what you want because you elected them, but the real way things should work is that you elect who you think will do the right thing, not so they'll do what you want them to. What you want may not help out the guy down the street, and then how does he get to live when he's forced to be under the poverty line?

D Truth said...

Jim once again you give me a huge smile and have me believe that as Americans we should think of all of us as that first and not by political
affiliation first. That being said I think to look at the increase in the minimum wage we need to look at inflation. With everything we look at
with statistics, we always adjust for inflation. Congress has found it fit to give out military a wage increase every year to combat inflation (though not large enough), also they have found it fit to give them selves a pay raise every year. Now the problem is that our back bone of America has no protection against inflation. Companies raise prices to go with the rate of inflation to protect their profit. We need to ask the question in the richest country in the world how can we not allow our citizens the chance to get from under the poverty line?

My stance is that if we give these companies a tax break for hiring minimum wage earners we need to make sure the tax burden is spread evenly. Point blank it's just not fair to pay taxes on 100% of income and people who gross over $120,000 a year don't.

Great topic man!

The JimP said...

Saleem, you make a wonderful point, and I do agree, the working poor have no actual inflationary protection measure. The solution can't be one sided, though, and I think you agree with me. As well as creating inflationary minimum wage increases Congress should also work out a way for the government to hold trust accounts for every working adult based on contributions from those working adults' income. The contributions to these accounts would be tax deferred, and will be invested by the government in a way so that they will gather interest at a rate at least 2% faster than inflation so that by the time you're able to retire you'll have a nice little next egg to support you in your golden years. That way, when you're old enough to start drawing on them you won't pay so much in taxes. That should nicely take care of your assertion that it isn't fair that people who make minimum wage pay taxes on 100% of their income while those who make a good living don't. The fact of the matter is, poor people spend so much time and effort just making it the thought of actually retiring is never very realistic. When the government forces you to do something with your money while also putting more money in your pocket people start to feel good about how much money they actually make, thus spending more, or saving more, or investing more, because there's just more to go around. Everyone wins.

Then they should do away with Social Security, except for what it would take to pay for the support of those able to retire within the next 40 years (basically everyone over the age of 30). The money in the Social Security system now will be able to support all Americans age 30+ until their deaths if no other beneficiaries are added after such a plan is started, and if Congress learns to keep their hands out of the pot. This plan will allow for Congress to ween itself off the wonderful teat its been suckling on for the better part of a third of a century, and there will be a realistic expectation that our government will be able to manage the retirements of its citizens, as is expected by most liberals. In this way the retirees won't be a burden on the government, but on themselves, leaving the government to its real job... Public protection, public works and law enforcement.

Now, I know this isn't really what would happen, even if the powers that be started listening to me. Everyone has their own wants, regardless of what is actually beneficial for the largest number of people, and of course I haven't actually laid out the whole of what it is I see possible for our government/personal financial interaction scheme. Even though my blog would be a good forum for such an endeavor, the comments section for a single post wouldn't be. So, if I ever get my head in the right place, I'll do it in the open.

D Truth said...

Hey Jim again we have come to a conclusion that we agree, but we just need to work out the details. I agree that people need to start putting money aside as though it was a tax. I don't know how this will work though.
I don't agree that social security should be eliminated because it would leave those that are mentally ill, injured, and children who lose both parents a source of income. You said it correct that our government needs to stop raiding the fund and it will be able to work.

Our government has been failing us in that they our still in the pocket of big business. We need representatives that are out for our agenda not business. Again if we could just get more people to look past political affiliation and talk about the issues in detail instead of spending the energy to discredit the other we will be a lot better off.

Hope all is well with the family talk to you later.