after-tax effects of minimum wage
The primary case against minimum wage legislation is well known, even if many choose to ignore it: raising wages for unskilled workers discourages employers from hiring and therefore tends to destroy jobs.
But here’s an interesting observation from the folks at AEI. According to their calculations, if the minimum wage goes up to $10.10 per hour, the federal government actually takes more from that $2.85/hour raise than the minimum wage worker herself gets!
So let’s say you want government to adopt policies that help people climb out of poverty (as most of us do). And let’s say that, for some reason, you just don’t believe that employers will hire fewer people if the cost of hiring people goes up. Wouldn’t it be a lot better for governments to reduce the amount they skim off the top for programs that are ineffective (or worse) and help the poor by letting them keep more of what they earn?