Nubs70
Well-Known Member
Just a question. If local minimum wage is $10/hr, what is the hourly cost your minimum wage worker?
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Workers want pay boost
- Thread starter Figaro928
- Start date
englanddg
One Little Spark...
Well, lets go with $10, since it was mentioned. No state has that, and won't unless something changes federally in the next year. California is slated to have a $10 minimum wage effective Jan 2016. Though, there is a chance that Oregon may tap out above $10 before then, as their current min wage is $9.10, and they adjust it annually to the Urban CPI. And, we'll assume California as the state of residence.
Anyhow, moving forward with $10.
$10 + FICA + FUTA + SUTA + Workman's Comp premiums (this varies greatly) + (if over 50 employees) ACA compliance for workers over 29 hours a week
So, using rough estimates...
$10 + $0.77 + $0.06 + $0.04 + $0.50 + $2.24 (according to CBO estimates for ACA) or $1.64 if the employer chooses to pay the fines instead of the mandated healthcare.
So, lets say the employer offers no healthcare.
The real hourly cost for a $10 an hour "minimum wage" employee is 13.01 per hour.
Lets say they do, again using CBO numbers. And the employee has single coverage.
That's $13.61 per hour, or 28,308.80 per annum if working 40 hours per week.
That's not including any sick leave, vacation or holiday pay, but these are not mandatory employee benefits...they are voluntarily offered by the employer.
So, there ya go, the employer costs broken down.
Now, in reverse, here's what the $10 an hour employee earns as REAL income...
$10 - FICA - ACA mandated contributions - Federal Income Tax Withholding - State Income Tax Witholding (in some states) - Local Income Tax Withholding (in some localities)
So, their paycheck is:
$10 - $0.77 - $2.24 - $0.55 - $0.14 = $6.30 per hour, or $13,104 per annum.
Now, think about that for just a moment. The EMPLOYER is paying nearly 28.3k per annum for the employee, yet the employee take home is around 13.1k. Bear in mind, your annual salary at $10 an hour should be $20,800 if working 40 hours a week.
Where is all the money going? Oh...I just showed you.
Now, I did say REAL income...so, lets assume a person with no children or dependants, age 25. Now comes tax time.
Taxable wages would be 20,800 less your ACA contribution, assuming it was pre-tax...but, I'm not going to get into all the pre-tax math for that in this post. Lets just say it's 20,800.
So, you would qualify for a standard deduction of $6,100, and an exemption of $3,900. Your net taxable income would be 10,800 (AGI). Your balance due would be $1,178. However, throughout the year, Federal Income Tax has been withheld from your check by your employer at the rate of $0.55 per hour. So, you've paid in $1,144 already. This means that you'll have a net due to the government of $34. So, your real income for the year (and, I'm not going to even get into state tax) is now $13,070.
Now, if you add in being a student, or having dependents, the math starts to change very quickly.
Take the same scenario, but a single person with one dependent below age 16. To prevent having to adjust the federal and state tax withholdings above, we'll stick with the same withholdings, and just see what happens at the end of the year when you file your 1040 EZ.
1) You gain head of household and dependent deductions, raising your standard deductions by $2,950.
2) Your exemptions double to $7,800.
So, this leaves you with an AGI of 4,050 of taxable income, and a net tax liability of $408. BUT WE ARE NOT DONE!
NOW you qualify for credits such as CTC, AOC, CCC, EITC...etc...etc...etc...
Credits are applied to your net tax liability as if you had paid the money, even if you have not. So, you'd gain approx $3,724 in various credits. This would wash against your $408 liability, and leave you with a net of $3,316.
However, remember the withholdings of $1,144 through the year? Well, those are now not required, as your taxes were covered in full by your credits. The total balance on your personal tax account...the amount the IRS says they owe you back in "refund" is $4,460.
This, added to your real income means that you would earn $17,564 take home annually.
Now, if you think all this is convoluted...this is a very SIMPLE tax example scenario.
Anyhow, I hope all this random information (facts) helps the discussion a bit. Emotional plays are nice, but it's also nice to have real numbers at your disposal so you actually know what the heck you are discussing instead of tossing out your two cents when you haven't analyzed the actual dollars and cents.
(PS @Nubs70, the first part of my response was directed in response to your proposed scenario, the last paragraph was directed to no one in particular)
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Nubs70
Well-Known Member
Wow, that is a wonderful response. I was just looking to see if slappy understood that a $10/hr wage costs the employer much more than the simple hourly rate. Thanks for the detail.
PS - could you field a question on HSA account and the 1040 long form?
englanddg
One Little Spark...
GoofGoof
Premium Member
Wow!!! Look at the big brain on @englanddg !!! (Said in you best Samuel L Jackson from Pulp Fiction voice). I love this post. It's like you were possessed by @ParentsOf4 and started spitting out all these numbers
I know this is totally a tax the rich solution, but there was a proposal on the table some time ago where they would eliminate the upper limit on social security tax (I think it's around $110K) and then make your first $15K to $25K of earnings exempt. In essence you would be reducing both the employee and employer Social Security portion of FICA taxes to zero for lower income earners and increasing it for employees who make over $110K a year. You would have to make the SS taxes lost from introducing the lower exemption limit equal to the taxes gained from eliminating the upper limit. The whole thing has to be budget neutral to Social Security. This plan would save the employers (large and small) enough money to compensate for the $2/hr minimum wage increase and would give the employee both an increase in hourly wages of $2 plus a decrease in FICA taxes which probably amounts to the equivalent of an additional $1 per hour. If you want to get more complicated you could even require larger employers (maybe over 50 employees) to still pay the employer portion to SS. This would keep large corporations like WalMart and Disney paying the same taxes but give relief to small businesses who employ minimum wage workers.
The big losers in all of this = upper middle class. The 1%ers aren't typically earning the bulk of their income from wages so they aren't as impacted. A bunch of Middle management level people at large corporations making $110K plus a year would be footing the bill. Someone has to pay.
flynnibus
Premium Member
Depending on the range of benefits... Saying 30-50% more are reasonable rules of thumb.
If all withholdings were used for quaified expenses.... It is pretty inert.
Cesar R M
Well-Known Member
Let me get the graph straight:
that means 7.25 USD minimum wage as the "real" purchasing power value of 4.87USD of 1996 dollars? (aka less value)?
englanddg
One Little Spark...
Correct. It means that $7.50 in today's market has the same purchasing power as 4.87 did in 1996.
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Nubs70
Well-Known Member
When building business plans, I typically use a 40% estimation
englanddg
One Little Spark...
I am going to post this for anyone who doesn't know what my abbreviations above meant.
Here are employer mandated liabilities.
1). Agreed wage (e.g. $10 per hour) as long as the agreed wage equals no less than the minimum wage required by the state or federal laws. For "tipped wage" employees (commonly called "waitress wage") the employer is required to still make up the difference to minimum wage unless they can prove that tips have supplemented or exceeded this requirement. This is one of two reasons why restaurants will require wait staff to report tips. The other is to comply with the employer tax withholding and reporting mandates. It is a myth that tipped employees do not make at least minimum wage. However, this total accounting is done per pay period (as I recall...mind a bit foggy on those requirements, but I know it isn't annual).
2). FICA stands for Federal Insurance Contribution Act. This refers to Social Security and Medicare contributions. Somewhere in e past decade this term has morphed into being called "payroll taxes". So, when you hear a politician talk about "Payroll Taxes", this is what they are referring to. As of 2013, the rates for this is 6.2% for Social Security and 1.45% for Medicare, for a combined rate of 7.65%. This is a mandated employer contribution, but only applies to W-2 employees. The employee will also contribute a combined 7.65% for a combined total contribution of 16.2%.
3). FUTA is Federal Unemployment Tax. This is a mandated EMPLOYER contribution. While it is a part of payroll expense, the common myth is that "you paid for your unemployment". You didn't. It did not come out of your hourly wage or salary. Rather, it is paid wholly by your employer on top of your hourly wage or salary.
4). SUTA is State Unemployment Tax. Same provisions as item 3, except that the exact amounts are subject to state law and the contributions are paid to the state unemployment fund. Again, this is wholly paid by the employer, not the employee.
5). ACA is the Affordable Care Act. Commonly known as Obamacare. This required that employers of more than 50 employees not only offer compliant group healthcare benefits, but contribute half of the premiums (in general...it's more complicated than that...but then again, all these laws have loopholes and provisions...I am talking general rule as that is best for general discussion). If the employer chooses not to do this, then the employer will pay a fine...er, I am sorry...not a "fine" according to SCOTUS. An additional "tax" per employee. This is what people refer to as the "employer mandate".
6). Workers or Workmans Compensation Insurance is intended to pay for work related illness or injuries. I mentioned the rates vary greatly, and this is true, because the actual premiums will vary depending on the risk factors entailed in the jobs. So, an employer of office staff will generally pay much less than an employer of factory or restaurant workers due to the fact the latter are far more likely to incur workplace injuries. This insurance premium is mandated by law, and is paid wholly by the employer.
Here are employer mandated liabilities.
1). Agreed wage (e.g. $10 per hour) as long as the agreed wage equals no less than the minimum wage required by the state or federal laws. For "tipped wage" employees (commonly called "waitress wage") the employer is required to still make up the difference to minimum wage unless they can prove that tips have supplemented or exceeded this requirement. This is one of two reasons why restaurants will require wait staff to report tips. The other is to comply with the employer tax withholding and reporting mandates. It is a myth that tipped employees do not make at least minimum wage. However, this total accounting is done per pay period (as I recall...mind a bit foggy on those requirements, but I know it isn't annual).
2). FICA stands for Federal Insurance Contribution Act. This refers to Social Security and Medicare contributions. Somewhere in e past decade this term has morphed into being called "payroll taxes". So, when you hear a politician talk about "Payroll Taxes", this is what they are referring to. As of 2013, the rates for this is 6.2% for Social Security and 1.45% for Medicare, for a combined rate of 7.65%. This is a mandated employer contribution, but only applies to W-2 employees. The employee will also contribute a combined 7.65% for a combined total contribution of 16.2%.
3). FUTA is Federal Unemployment Tax. This is a mandated EMPLOYER contribution. While it is a part of payroll expense, the common myth is that "you paid for your unemployment". You didn't. It did not come out of your hourly wage or salary. Rather, it is paid wholly by your employer on top of your hourly wage or salary.
4). SUTA is State Unemployment Tax. Same provisions as item 3, except that the exact amounts are subject to state law and the contributions are paid to the state unemployment fund. Again, this is wholly paid by the employer, not the employee.
5). ACA is the Affordable Care Act. Commonly known as Obamacare. This required that employers of more than 50 employees not only offer compliant group healthcare benefits, but contribute half of the premiums (in general...it's more complicated than that...but then again, all these laws have loopholes and provisions...I am talking general rule as that is best for general discussion). If the employer chooses not to do this, then the employer will pay a fine...er, I am sorry...not a "fine" according to SCOTUS. An additional "tax" per employee. This is what people refer to as the "employer mandate".
6). Workers or Workmans Compensation Insurance is intended to pay for work related illness or injuries. I mentioned the rates vary greatly, and this is true, because the actual premiums will vary depending on the risk factors entailed in the jobs. So, an employer of office staff will generally pay much less than an employer of factory or restaurant workers due to the fact the latter are far more likely to incur workplace injuries. This insurance premium is mandated by law, and is paid wholly by the employer.
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englanddg
One Little Spark...
Continuing this explanation, since it is rather common that people only understand take home pay and not the lines on their check stub...here are the employee mandated liabilities.
1). FICA. Same as above. This is 7.65% of your wage and salary. This is a "payroll deduction"...meaning, this is money that you personally owe, by law, to the federal government. Since the federal government has decided that they do not wish to trust that you will actually pay this to them, they have mandated that employers must collect it, with or without your consent, from your paycheck. This is deducted from your wage, salary, by your employer on behalf of the federal government, and paid by your employer directly to the federal government.
2). ACA (Obamacare). This is your portion of your contribution to your health insurance premiums as mandated by federal law. If you choose to participate in employer provided healthcare, then this will likely fall under a "pre-tax deduction". Meaning, these funds are deducted from your salary / wage before the federal income and state income tax rates are applied for withholdings (as I will explain in point 3 and 4). If you opt out of employer provided coverage, or your employer has chosen not to provide healthcare benefits, then you must obtain your own compliant health insurance or pay a fine...er...tax. You will be required to submit proof to the IRS that you have obtained coverage. This is what people refer to when they say the "individual mandate".
3). Federal Income Tax withholding. Your employer is required to withhold a contribution based on what your estimated tax liability will be and submit this to the federal government. Your withholdings are a function of your projected exemptions (form W-4 that you filled out when you were hired...remember that form with questions asking you to answer questions and tally up numbers?) and your projected marginal income tax rate based on each paycheck (which is why, for those who get bonus checks, you may note the bonus check withholding is at a higher rate than your normal paycheck). This is paid wholly out of your wage / salary.
4). State / Local Income Tax withholding. The same provisions as above, however they apply to state and local income tax. Florida does not have a state income tax (neither does TX or TN offhand), so this doesn't apply. However, most states do. In addition, many municipalities and localities (New York City, Detroit, full list here http://taxes.about.com/od/statetaxes/a/City-Income-Taxes.htm impose local income taxes which may be payroll deducted depending on local laws.
I should note, there is another employer cost that I have not mentioned. That is the cost of compliance. All this stuff I have mentioned requires that the employer not only pay, at their own expense, to have someone on staff or through contract who is aware of these rules, but also pay to ensure they are compliant with them. Failure to do so is not only illegal, but carries heavy penalties for the employer.
This is why many small to mid sized employers will pay a third party payroll service, and larger employers will have a payroll department. This is known as the "cost of compliance", and should rightfully be allocated to the payroll / labor expense lines. Since these costs can vary greatly, it really isn't worth calculating for a general discussion, but is worth mentioning, as it is wholly paid by the employer.
1). FICA. Same as above. This is 7.65% of your wage and salary. This is a "payroll deduction"...meaning, this is money that you personally owe, by law, to the federal government. Since the federal government has decided that they do not wish to trust that you will actually pay this to them, they have mandated that employers must collect it, with or without your consent, from your paycheck. This is deducted from your wage, salary, by your employer on behalf of the federal government, and paid by your employer directly to the federal government.
2). ACA (Obamacare). This is your portion of your contribution to your health insurance premiums as mandated by federal law. If you choose to participate in employer provided healthcare, then this will likely fall under a "pre-tax deduction". Meaning, these funds are deducted from your salary / wage before the federal income and state income tax rates are applied for withholdings (as I will explain in point 3 and 4). If you opt out of employer provided coverage, or your employer has chosen not to provide healthcare benefits, then you must obtain your own compliant health insurance or pay a fine...er...tax. You will be required to submit proof to the IRS that you have obtained coverage. This is what people refer to when they say the "individual mandate".
3). Federal Income Tax withholding. Your employer is required to withhold a contribution based on what your estimated tax liability will be and submit this to the federal government. Your withholdings are a function of your projected exemptions (form W-4 that you filled out when you were hired...remember that form with questions asking you to answer questions and tally up numbers?) and your projected marginal income tax rate based on each paycheck (which is why, for those who get bonus checks, you may note the bonus check withholding is at a higher rate than your normal paycheck). This is paid wholly out of your wage / salary.
4). State / Local Income Tax withholding. The same provisions as above, however they apply to state and local income tax. Florida does not have a state income tax (neither does TX or TN offhand), so this doesn't apply. However, most states do. In addition, many municipalities and localities (New York City, Detroit, full list here http://taxes.about.com/od/statetaxes/a/City-Income-Taxes.htm impose local income taxes which may be payroll deducted depending on local laws.
I should note, there is another employer cost that I have not mentioned. That is the cost of compliance. All this stuff I have mentioned requires that the employer not only pay, at their own expense, to have someone on staff or through contract who is aware of these rules, but also pay to ensure they are compliant with them. Failure to do so is not only illegal, but carries heavy penalties for the employer.
This is why many small to mid sized employers will pay a third party payroll service, and larger employers will have a payroll department. This is known as the "cost of compliance", and should rightfully be allocated to the payroll / labor expense lines. Since these costs can vary greatly, it really isn't worth calculating for a general discussion, but is worth mentioning, as it is wholly paid by the employer.
The Crafty Veteran
Active Member
I have been reading this thread for the past couple days and I would like to make a comment.
I'm 70 years old, I have 3 beautiful daughters I raised by myself because my wife died young and I chose not to remarry out of my love for her. I worked many jobs in my youth to support my family. I worked in a coal mine, door to door sales, you name it chances are I did it. And I didn't worry about a minimum wage or health insurance or any of the thing people in this thread feel entitled to, I had to keep a roof over my children's head and I didn't care what hours my employer said I had to work, I made due with what I could, even at my personal expense where i could only sleep 3 or 4 hours a night. We didn't have public assistance in my day, and I would be damned to ask for a hand out. I guess I'm from a different generation where we asked for nothing but a chance and worked hard to live up to the privilege that having a job really is. A far cry from today apparently.
I don't mean to come off as harsh, but this world was built by the hands of people pursuing the American Dream and while I never became rich, I helped build this nation and still had time to raise 3 daughters. I ask people to stop making excuses and pushing the blame to others, ultimately you have to decide what to make of your life and what you become.
I'm 70 years old, I have 3 beautiful daughters I raised by myself because my wife died young and I chose not to remarry out of my love for her. I worked many jobs in my youth to support my family. I worked in a coal mine, door to door sales, you name it chances are I did it. And I didn't worry about a minimum wage or health insurance or any of the thing people in this thread feel entitled to, I had to keep a roof over my children's head and I didn't care what hours my employer said I had to work, I made due with what I could, even at my personal expense where i could only sleep 3 or 4 hours a night. We didn't have public assistance in my day, and I would be damned to ask for a hand out. I guess I'm from a different generation where we asked for nothing but a chance and worked hard to live up to the privilege that having a job really is. A far cry from today apparently.
I don't mean to come off as harsh, but this world was built by the hands of people pursuing the American Dream and while I never became rich, I helped build this nation and still had time to raise 3 daughters. I ask people to stop making excuses and pushing the blame to others, ultimately you have to decide what to make of your life and what you become.
flynnibus
Premium Member
It's a balance for sure... companies can abuse the workers... but by far the issue is large swaths of our society thinking a comfortable life is OWED to them.
The Crafty Veteran
Active Member
In my day companies abused their workers, people now have no clue how good they have it. Nothing is owed to anyone, go out and earn what's yours. If people have time and breath to complain, they have time to get another job.
Stop the excuses.
Cesar R M
Well-Known Member
except when there are barely any job due of economy contraction?
pretty sure that during the great crash many people were out of job and were desperate to get food.
today seems more civilized when the gob helps people when "sh*t hits the fan" so to speak.
But yeah, people who are smart will always have a small savings for rainy day..and not depend on a third party.
copcarguyp71
Well-Known Member
I would counterpoint that this thread is more about the fact that Disney should pay more to people who they want to bring their best to the table. Yes, they can go elsewhere but my take is that they should not have to. Disney makes enough money that they really should (IMO) be able to pay to keep quality employees and that all they do is dangle sour carrots in front of disgruntled people who will only work hard enough to not get yelled at instead of striving to share the magic. There are exceptions to every rule and we have certainly had our share of experiences with cast members who "get it" but I would say that the larger majority are just working hard enough to stay off the radar of low level management.
BuddyThomas
Well-Known Member
Were you born in a one room apartment in a ghetto or were you born in a delightful four bedroom home in suburbia with white picket fences as far as the eye can see? Sometimes where you come from impacts where you end up. Try having a bit of empathy for your fellow human beings on this planet.
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GoofGoof
Premium Member
You are entitled to your opinion and if you feel that the government shouldn't have regulations in place that help anyone I'm not going to try to change your mind, but just because others don't agree with that opinion doesn't mean they are acting entitled or looking for a personal hand out. Minimum wage doesn't personally impact me much either, I'm not benefiting from a raise in minimum wage but I still think its necessary and would be a good thing. There is enough wealth to go around in this country.
There are times when it's necessary for people to rely on the government for help. It's not automatically a sign of weakness or laziness. Some times it is, but everyone's situation is different and it's not fair to judge all of these people and lump them into a category without knowing their situation. It's not about blame or excuses or politics; IMHO people in this country should have a minimum standard of living that at least includes access to medical treatment, food and shelter. I'd much rather see them working a full time job to pay for those things (at a minimum wage) than see them just receive handouts from the government.
Starting with his age....
copcarguyp71
Well-Known Member
Your profile says 76 years old...which is it please?