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Gogirlgo
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 Posted: 02/08/05 - 11:14 Post subject: rational
Today on NPR there was a story about a legislator in Montana who wants to tax Big Box stores like Wal-mart 1 to 2% of their gross receipts above so many millions of dollars. He proposes this b/c they pay employees so little that many of them are forced to use public services to get by. The state needs to recoup its losses. The way a company could get out of it is to pay the employee at least $22,000 a year, including benefits.
Huh? Including benefits? Usually, total compensation breaks down into 60% salary and 40% benefits. This would mean about $8,800 in benefits, on $22,000. That means the gross income of the employee is $13,200. Most of us pay at least 25% in tax (some more like 30%) but assuming the lower, that's a takehome pay rate of $9,900. And this, according to the story, would be an increase over what Walmarters are currently taking home.
So here's my question. In economics, and tax law, we assume the actor or the taxpayer to be rational. When one factors in things like the cost of commuting and daycare, is it rational to work for $9,900, or is it rational to go on public assistance, which is not taxed, doesn't involve finding daycare, and could (I can't find the numbers for Montana) pay more than that?
Bear in mind that for a family of four, the federal poverty line is $18,850.
What do you all think about this?
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robp
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Posted: 02/08/05 - 11:47 Post subject:
I think instead of throwing a tax on them, which they would go out of their way to avoid through loopholes and legal wrangling, the feds need to get down to the root of the problem. I believe it's fairly well documented that Wal-mart fights ferociously (and illegally) when employees attempt to unionize. They've also been caught deleting hours from employee time cards and working them "off the clock" unpaid overtime. They need to be whacked hard financially for the laws that are currently being broken - not given new laws to learn how to avoid.
And somehow, I'm not sure how, their employees must feel safe enough at work that if they do rebel against illegal labor practices they do not need to fear for their jobs.
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Gogirlgo
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Posted: 02/08/05 - 16:05 Post subject:
I wrote to the state rep in question to ask him if he felt that Montanans could live on $9,900 annually. We'll see if I get a reply.
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runaroundsue
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Posted: 02/08/05 - 16:35 Post subject:
| robp wrote: | I think instead of throwing a tax on them, which they would go out of their way to avoid through loopholes and legal wrangling, the feds need to get down to the root of the problem. I believe it's fairly well documented that Wal-mart fights ferociously (and illegally) when employees attempt to unionize. They've also been caught deleting hours from employee time cards and working them "off the clock" unpaid overtime. They need to be whacked hard financially for the laws that are currently being broken - not given new laws to learn how to avoid.
And somehow, I'm not sure how, their employees must feel safe enough at work that if they do rebel against illegal labor practices they do not need to fear for their jobs. |
.....or what would prevent Walmart from doing the "white-collar" company thing and employees "suddenly" become salaried and not "have" to pay overtime?
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Bill_Sev
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Posted: 02/08/05 - 16:48 Post subject:
Amen Rob! I dont know how many people saw the PBS special on Wal-Mart and their dictation to companies wanting to do business with them, that the companies had to make products in China......What about the average American that this puts out of work? If you really want to get Wal-mart increase the import taxes from China!
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omega lambda
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Posted: 02/08/05 - 18:41 Post subject:
If you really want to get Wal-Mart, don't shop there.
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Bill_Sev
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Posted: 02/08/05 - 19:03 Post subject:
I don't.........Would rather go to Target!
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sonnylax
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Posted: 02/09/05 - 09:49 Post subject:
Walmart doesn't "pay" any taxes. Additional business taxes are passed onto the end consumer or deducted from employee salaries/benefits.
To answer your question - Is it rational? Probably not. But then again people who are working fast food & entry level retail jobs like these probably shouldn't be making a career out of it. These types of positions are designed for high school kids, young people between jobs, retirees, etc. If you are supporting a family on minimum wage long-term, you haven't developed a desirable job skill set and most likely have serious issues. Harsh, but true.
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TOsteve
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Posted: 02/09/05 - 10:08 Post subject:
| sonnylax wrote: | | If you are supporting a family on minimum wage long-term, you haven't developed a desirable job skill set and most likely have serious issues. Harsh, but true. |
Harsh but more short sighted than true.
I live in a city with a large immigrant population (like many of the major population centers in North America). I've known many people who have more education than I do, who are actually qualified to be doctors, teachers or engineers and are working two entry level retail jobs to try to support their families. The time they have to spend to earn enough money to allow them to scrape out a living prevents them (or at least greatly prolongs the process) from taking the equivalency courses required for them to practice in the field they've trained to work in.
You are right about one thing, these people who are being exploited have "serious issues".
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Gogirlgo
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Posted: 02/09/05 - 11:14 Post subject:
I heard from the state representative. He said he was using 18% as the cost of benefits, not 40%. By my calculations, that puts the worker at a take home salary of $13, 530. Not a whole lot better.
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thegman
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Posted: 02/09/05 - 11:24 Post subject:
| Gogirlgo wrote: | | I heard from the state representative. He said he was using 18% as the cost of benefits, not 40%. By my calculations, that puts the worker at a take home salary of $13, 530. Not a whole lot better. |
FWIW, our cost of benefits for our employees is around 20% of overall employee expense. We're probably middle of the road.
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thegman
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Posted: 02/09/05 - 20:40 Post subject:
| robp wrote: | | I believe it's fairly well documented that Wal-mart fights ferociously (and illegally) when employees attempt to unionize. |
Or they'll just close the store.
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