From: russ@alliant.com (Russell McFatter)
Subject: Minimum wage and utopia
Organization: Alliant Computer Systems
Date: Mon, 25 Jan 1993 22:03:03 GMT

Minimum Wage requirements aren't the only disincentive to employment, but
they certainly are one.  A few aspects of this issue are perpetually
missed by those people debating the issue.

Even employers who pay more than the minimum wage get zapped for all sorts
of taxes, fees, regulations, and other expenses related to employment.
The more obvious and more expensive ones include the employer-side 
Social Security and disability/employment taxes:  These are taxes which are
based on the employee's wages.  These are both "hidden" from employees--
such that someone who "earns" $30,000 and "gets" $20,000 does not know
that their employer is kicking in another $5,000-$10,000 on their behalf.
Essentially, the employee "earns" $40,000 but "gets" $20,000-- the tax is
"divided" between employer and employee, essentially, because the citizens
would most likely revolt if they knew how much of their money went to
taxes.  (The same "divide and conquer" attack is used by states who have
a consumer-side and retailer-side sales tax.)

It is generally in the government's disinterest for the public to know
exactly how much tax they are paying.  Thus the Reagan "tax cut", which
merely shifted tax burden from individuals to businesses.  How many
companies would have survived the recession-- how many people would still
be employed today-- if it wasn't for this burden?

A typical "small business" faces situations like this:

o	Verifying the employability of a particular person (employers
	are held liable for accepting false or forged identification).

o	Spending $250-$550 to "file" a "Hazardous Materials Disclosure
	Form", even when there are no hazardous materials to disclose.

o	Responsibility for accurate and detailed hours recording for
	non-exempt employees

o	Mandated benefits packages

o	EEO and Affirmative Action compliance

o	Employee Assistance and other "social" programs.

Expect to see a trend towards businesses disclosing these costs to
employees as time goes on-- they're already doing so with health care
costs in many places.

The real expense to a small business, however, is usually that of hiring
yet another employee merely to read the ever-changing requirements and
handle the voluminous paperwork that results.  These kinds of regulations
spawned an entire business of their own: "Human Resources".

Effects: The forgotten effects of Minumum Wage laws, and employment
restrictions, are also the most ominous: complete elimination of job
positions.  Businesses across the country are continuing to experiment
with ways to permanently eliminate job positions as the "penalty" for
employing people is increased.  In some ways, we don't even notice the
slow evolution-- we're used to waiting in line for the single "self-serve"
cashier at the gas station-- and are now being taught to use credit card
terminals instead.  We use automated telephone systems to get information
on our bank accounts, order products and services of all sorts.  I've
even used an experimental order-taking "ATM" at a fast-food restaurant--
it takes your order (including special orders) and your money, gives
change and a receipt-- and the food appears at the counter shortly
thereafter ("Touch 'N Go Self Service Ordering," which has been touring
various Burger King restaurants).  At Service Merchandise's catalog
showrooms, we no longer just enter order numbers on the Silent Sam
terminals, but we even authorize our own credit card transaction-- the
person at the pick-up counter merely moves our purchase from the conveyor
behind her to the counter where we wait.

If you're like me, you'd be asking one powerful question at this point:
Is there anything fundamentally wrong with a future where machines do all
of the drudgery of which they are possible?  Why should a human life be
"wasted" doing something that technology can do as well-- or better
(especially in the case of Service Merchandise or self-serve cashiers!)?

The answer, of course, is... no.  The employment restrictions-- even
minimum wage laws-- serve, more than anything else, to hasten both
inflation, and the installation of technology to replace human workers.
The human workers would have been replaced anyway, once the maturity
technology and acceptance of the public made the replacement feasible.
There will be, simply, less of the kind of work that we do now-- and a
trend towards creative effort-- research, development, arts, and, of
course, service.

If this is the ultimate goal of technology-- more reward for less work--
why are there homeless?  Why are people starving?

The answer is that, while the cost of luxuries such as consumer electronics
and such has dropped, the basic cost of living-- food, clothing, and
shelter, has gone through the roof in comparison.  Consider the telephone--
one would think that, with all of the advanced reliability and
configurability of the dial network, with electronics operating nearly
every aspect of the system and even diagnosing itself, that the cost of
operation, per subscriber, would be practically zero.  Basic service rates,
however, are higher than they've ever been, and show no sign of
decelerating.  Anybody who's bought a bag of groceries knows that neither
technology nor the recession has put a dent in those prices-- and many
of the stores themselves are losing money, too.  By the time that the
farmers, processors, packagers, truckers, and retailers all get their
"cut" and pay all of the taxes, nearly the entire value of the product has
been siphoned away (did you know?  Of $1.00 spent in the supermarket, less
than $0.05 represents the contribution of the farmer who grew the food in
the first place).

As for shelter-- even if you're not renting a house, paying condominium
fees, or paying a mortgage-- you need plenty of cash just to keep what
land/house you've got.  Essentially, the government is the ultimate
landlord-- one which charges rent based on the assessed value of your
property, year after year.  Consider this:  If your property tax is
"$25 per $1000", the government will have "taken" your property (the entire
value of it) in just 40 years.  At "$40 per $1000", it takes just 25
years.  By the end of a 30-year mortgage, it means you have paid more in
taxes for the privilege of keeping your own house than the house itself is
worth-- as if, every 25-40 years, the tax collector simply came along and
took your property, forcing you to buy another home with your own money.
(If you think this doesn't happen, check your newspaper for the amazing
number of FDIC, bank-owned and IRS properties for sale every day.
Consider: most of these properties were taken from a person who was
unable to afford the basic "food, clothing, shelter" expenses.)

The cruellest form of taxation is taxation on necessities-- those things
whose purchase cannot be avoided, if one wishes to remain alive.
Theoretically, the "standard deduction" and "personal exemptions" of the
US income tax are designed to "protect" the part of one's income used for
these necessities.  It can be argued that the amount doesn't come close--
but, despite this, the truth is that these necessities ARE taxed many
times, but the tax is "hidden" from the purchaser much as the employer-side
taxes are "hidden" from employees.  You may not pay sales tax on a bag of
flour, but the farmer paid taxes on the land, the truckers paid taxes on
the truck, fuel, and income-- the store paid taxes on its property, and you
paid, indirectly, for taxes on the wages of the person who slid that bag
of flour through the UPC scanner-- thus the government earns far more on
this transaction than the flour was worth.

Now, of course, you "swipe" the credit card yourself.


What needs to be changed:

1:	Eliminate taxation on non-income such as property, excise, and
	inheritance taxes.

2:	Eliminate meaningless "hidden" taxation, so individuals really
	know how much of their money is being taxed.

3:	Eliminate "secondary" taxes on necessities such as food,
	transportation, clothing, and shelter, in order to bring the
	prices down to an affordable level.

4:	Support advances in technology which brings down the cost of
	basic needs, rather than other technologies.

5:	Support population control efforts.



--- Russell McFatter [russ@alliant.COM]
    std. disclaimers apply.

Newsgroups: alt.politics.libertarian