Pay Raise vs Tax Cut

Louis W. Neiger - Till Next Time!
-

A blanket minimum pay raise increase to $15.00 or more an hour was being pushed around some cities in the country. At first glance it appeared to be a good idea. Getting a pay raise is usually awarded for working through a probation time the employer/employee agrees upon usually 30 to 90 days. The employee is either granted a pay raise, benefits or both. Further pay raises are granted most of the time after a period of time called the curve, which means he/she has mastered the task assigned or promoted for a job well done.

A few months ago, I was sitting in a local big lot store asking myself a question, if ALL employees were increased to $15.00, or more, an hour without being merit based what would happen?

Looking at a ream of computer paper, I thought that paper cost would have to go up. Then as I looked at all the food, clothes, electronics etc. being hauled out in baskets, all the items cost must go up to cover the cost of the pay increase. I then thought through to the vendors that manufacturer or process and deliver these items, they must increase their cost even before hitting the big lot store shelves.

The big result would be HYPER INFLATION! A pay raise ‘ONLY’ would be moot.

With Recent Federal TAX Cuts, what have we seen.? Business taxes lowered, which allow some to give bonus to employees and many have given pay increases. We have watched as businesses have been hiring for the last year in anticipation of the tax cuts. Production is increasing in the United States. My wife has noticed, prices are starting to decrease at the big lot store. Most employees have gotten a cut in their federal taxes resulting in more take home pay, and many have gotten pay raises.

Non-merit, straight across pay raises causes inflation, higher cost to manufacturing/production, delivery and retail price increases. Less goods would be produced as demand would be lower. The only entity that would benefit would be the federal tax, Social Security, Medicare, as more money would be put in. Price of goods increasing (INFLATION) would ELIMINATE any benefit to the worker/employee with straight across the board minimum wage increase to $15.00

Federal Tax cuts have allowed businesses to reevaluate priorities, many have hired more people, production is going up and gives pay raises to many that deserve that merit base pay raise. Most individuals have more money coming in their paychecks. More money allows people to buy more goods. Businesses have and are hiring more employees. More hiring benefits, by having MORE money going into federal coffers with new hires. It helps funds and shore up Social Security and Medicare. More people working will buy more goods which will increase demand.

The GREATEST BENEFIT than is ‘TAX CUTS!’ Pay raises should be merit based!

https://www.newberryobserver.com/wp-content/uploads/2018/02/web1_DSC_1136-1.jpg

Louis W. Neiger

Till Next Time!

Louis W. Neiger, CLU, is retired from insurance & security planning, he lives in Newberry. He can be reached at lwneiger@juno.com.

Louis W. Neiger, CLU, is retired from insurance & security planning, he lives in Newberry. He can be reached at lwneiger@juno.com.