Sean Higgins of the Washington Examiner computes labor costs associated with President Obama’s recent proposals.
If President Obama has his way, it will soon become more expensive, by more than $5 an hour, to hire minimum wage workers.
That’s the combined cost of adding the president’s proposals for a higher minimum wage, more paid sick leave and the health coverage mandate of the Affordable Care Act, popularly known as Obamacare, to the bottom line for employers. Free-market economists say spiking labor costs that much will push businesses to hire fewer workers.
Obama has called for raising the federal minimum wage to $10.10 an hour, an increase of $2.85 cents from its current rate of $7.25. That increase that would also result in employers paying more 22 cents more an hour in payroll taxes.
Most minimum wage workers do not have health coverage, and Obamacare will also hit employers who don’t provide coverage with a $2,080 per worker penalty. An analysis by Investor’s Business Daily on Friday calculated that will equate to “about $3,420 in wages for a profit-making employer paying a combined 39.2 percent state and federal tax rate.” That works out to $1.69 per hour, assuming a 40-hour work week. The 39.2 percent figure is the nonpartisan Tax Policy Center’s estimate of the average corporate tax rate in America, which is the highest in the world.
Finally, the administration has called for adding up to seven days of paid sick leave annually, which IBD estimates would cost employers another 30 cents per hour. Along with the other proposals, that works out to an additional labor cost of $5.06 an hour.
That will have an impact on employers, said IBD analyst Jed Graham: “Heaping on mandate after mandate without paying heed to the growing demands that government is putting on low-wage employers comes with a risk that workers will be priced out of some of those jobs.”
