So, yesterday things changed. In 20 of these United States, the minimum wage rate has changed- plus in the District of Columbia. Now, some (9, to be precise) states will be changing the future minimum wage rates automatically. But, the other 11- plus DC- are reacting to legislative mandates. (OK, New York changed its wage laws on 31 December.)

What is critical is that it means 29 states, plus DC, are exceeding the Federal minimum wage rules. The highest minimum wage in the US will be the one prevailing in the state of Washington ($9.37). And, five (plus DC) have passed laws that will automatically adjust future minimum wages to the inflation rate- which means that 15 (including DC)  are now so legislated.

I have stated my opinion about this raising of minimum wages. Which obviously is not (yet) the law of the land. But, I fear that without my changes, we will just be making cosmetic changes- and retarding the ability of small companies to grow- and hire more employees.

In a nutshell, whether the minimum wage is $ 7.25 or $ 8.00 or even $ 9.00 doesn’t make too much difference. But, for now, let’s assume that it remained at $ 7.25. That wage rate means a new business can feel secure it can hire a new employee without spending more than $ 17,000 a year. (A simple calculation: Minimum wage for 50 weeks with 2 weeks’ vacation means the gross wages would be $ 15,080; add in the matching (employer portion) of social security and Medicare, as well as unemployment insurance, to bring the total to a little less than $ 16,500.)

Now, can an employee really make ends meet at this wage? Not if he or she is the sole breadwinner for a family of 2 or more. But, then again, the odds are this employee probably needs whatever money s/he can get.

And, this employee will be a valuable component of the new company’s business. Which means, assuming the business grows, higher wages and better chances for the future.

But, here’s the other portion of my rule. Bigger firms (not BIG firms, just bigger ones)- the ones who already employ 50 people or gross $ 2.5 million (these numbers are not set in stone)- well, these firms can’t be allowed to keep paying their employees basic wages. Because they are bigger and can afford to pay more.

They actually should pay more- especially if their employees are draining our tax dollars. There is no reason for a company to make a profit by using our tax dollars to garner that advantage. If their staff are not making ends meet, requiring our assistance with AFDC (aid for dependent children), SNAP (supplemental nutrition assistance programs- what used to be called Food Stamps), Welfare, whatever- then these firms need to reimburse the treasury (that’s us) for the costs of subsidizing their employees. Oh, and not dollar for dollar- but with a (non-deductible) 10% penalty to boot. (Penalties are never deductible under the tax code- unless you are a bank that has caused the Great Recession or managed mortgages improperly.)

This way the company can either choose to pay a living wage- and not be required to reimburse the treasury with that 10% penalty to boot- or pay the price for not paying a living wage.

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