Right now, the U.S. Congress is working to rapidly advance new legislation that is intended to create new jobs, in part driven by the failure of last year's "stimulus package" to achieve that result. As part of this new effort to actually stimulate job creation, a bipartisan proposal in the U.S. Senate to provide a tax break to employers hiring new employees by eliminating the employer's portion of Social Security payroll taxes is being considered. This proposal would reduce the cost to employers by 6.2% of their new employee's pay.
That might sound like quite a bit, but as we'll show you, it will have a minimal effect upon hiring activity.
Let's start by considering the least expensive employees that can be hired: those earning the federal minimum wage of $7.25 per hour. Let's next look at the employers most likely to hire them: small businesses, or rather, businesses with fewer than 100 employees.
We next used our tool to estimate the total hourly employment cost for employing a new worker at the federal minimum wage for small businesses ranging in size from two to 100 employees. By definition, the first employee of a small business is the boss, so we're looking purely at the cost for an existing business to hire an additional worker.
The following charts show what we found. The first chart shows the total hourly cost, including typical overhead expenses, of employing a new worker for small businesses ranging in size from two to 100 employees:
Our second chart reveals how much additional business revenue that employee has to generate annually to justify their hiring by the small businesses:
What we see is that the proposed tax break will do little to justify the hiring of an additional employee at the federal minimum wage. In looking at the difference between the annual revenue amounts that must be generated by the minimum wager earner to justify their hiring, the employer's annual tax break of $936 represents just a drop in the bucket. Even for the largest of small businesses, which would see the greatest benefit from the proposal given their lower overhead costs per employee, the minimum wage earner must generate at least $18,907 annually to justify their hiring with the proposed tax break. And we also confirm that the smaller the business, the higher the amount of revenue that must be generated.
That's significant because the smallest businesses are the biggest employers in the United States. The following two charts, which we found in Register.com's Web Business Monthly newsletter, show just how big U.S. small businesses are:
For what it's worth, the federal government could avoid incurring the higher deficits that such proposals would entail and deliver the same marginal benefits for employers by simply reducing the federal minimum wage from $7.25 per hour to $6.85 per hour. Or perhaps if we went by President Barack Obama's tax credit proposal of $5,000 per newly-hired employee, achieving the same benefit as that proposal might be realized by reducing the minimum wage further to $4.85 per hour.
Politicians sure have a funny way of admitting they jacked up the federal minimum wage by way too much. It's just a shame they can't come out and say so without also jacking up the national debt!
Labels: jobs, minimum wage, politics
- posted by Ironman at 10:22 AM | Permalink | var addthis_pub = 'politicalcalcs'; | << Home Unexpectedly Intriguing!
About Political Calculations
blog advertising is good for you Welcome to the blogosphere's toolchest! Here, unlike other blogs dedicated to analyzing current events, we create easy-to-use, simple tools to do the math related to them so you can get in on the action too! If you would like to learn more about these tools, or if you would like to contribute ideas to develop for this blog, please e-mail us at: ironman at politicalcalculations.com Thanks in advance!
Most Popular PostsThe S&P 500 at Your Fingertips Mapping S&P 500 Performance, Since 1871 Should You Trade In Your Gas Guzzler? What Are the Chances Your Marriage Will Last? Reckoning the Odds of Recession Your 2009 Paycheck Tipping Around the World Revisiting the Lottery Estimating Your Life Expectancy Connecting the Dots for Personal Income Taxes
Quick IndexFirst Time Visitor to Political Calculations? On the Moneyed Midways A Lot, But Not All, of Our Tools
Recent Posts How Science Is Supposed To Work On the Moneyed Midways - February 13, 2010 Men: Are You Old Enough to Propose Yet? Solving Homelessness 2.15 Million Federal Employees Mapping Alcohol-related Death Rates: US vs Europe Some Unemployment Snarkiness On the Moneyed Midways - February 5, 2010 Projecting GDP in 2010 The Wrong Priorities U.S. GDP Temperature GaugePolitical Calculations' U.S. GDP Temperature Gauge provides a means to quickly evaluate the growth rate of the U.S. economy against the backdrop of how the economy has performed since 1980, with the "temperature" color spectrum ranging from a recessionary "cold" (purple) through an expansionary "hot" (red).
The GDP Temperature Gauge presents both the annualized GDP growth rate as reported by the U.S. Bureau of Economic Analysis reports for a one-quarter period and also as averaged over a two quarter period, which smooths out the volatility seen in the one-quarter data and provides a better indication of the relative strength of the U.S. economy over time.
Recession Probability TrackPolitical Calculations' Recession Probability Track shows the probability that the U.S. economy will be in recession 12 months from the indicated date (shown in red) while revealing the probability trend over the past four years.
Previously, the probability of recession peaked at 50% on 4 April 2007, which means that March-April 2008 was the most likely period in which the NBER would have found the U.S. to be in recession.
As it happens, they almost did. The NBER instead chose December 2007 as the beginning month of the most recent recession (we had found a 46% probability for a recession beginning in that month!)
On the Moneyed MidwaysPolitical Calculations is also the online home of On the Moneyed Midways (aka OMM), a review of the best posts contributed to the week's best business and money-related blog carnivals. More than that, we also name one post in each edition as being The Best Post of the Week, Anywhere! and at the end of each year, we name The Best Post of the Year, Anywhere! as well as identifying the best blogs we found during the course of the year!
The link below will take you to the running index containing our most recent back issues (you can easily navigate the index to find older editions.)
OMM's Most Recent Editions - with links to our older editions!
Site DataThis site is primarily powered by:
Visitors since December 6, 2004:
var site="sm7politicalcalculations"
TTLB EcosystemCSS Validation
RSS Site Feed
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The tools on this site are built using JavaScript. If you would like to learn more, one of the best free resources on the web is available at W3Schools.com.
Other Cool ResourcesZunZun - Exceptional regression analysis tool. Wolfram Integrator - Solve integrals. Do calculus! Create a Graph - Easy-to-use basic graph-making tool. Many Eyes - Data visualization extraordinaire!
Archives December 2004 January 2005 February 2005 March 2005 April 2005 May 2005 June 2005 July 2005 August 2005 September 2005 October 2005 November 2005 December 2005 January 2006 February 2006 March 2006 April 2006 May 2006 June 2006 July 2006 August 2006 September 2006 October 2006 November 2006 December 2006 January 2007 February 2007 March 2007 April 2007 May 2007 June 2007 July 2007 August 2007 September 2007 October 2007 November 2007 December 2007 January 2008 February 2008 March 2008 April 2008 May 2008 June 2008 July 2008 August 2008 September 2008 October 2008 November 2008 December 2008 January 2009 February 2009 March 2009 April 2009 May 2009 June 2009 July 2009 August 2009 September 2009 October 2009 November 2009 December 2009 January 2010 February 2010 if (location.href.indexOf("archive")!=-1) document.write("Current Posts"); Bloodhoundblog Budgets Are Sexy Cafe Hayek Carpe Diem Cheap, Healthy, Good Copywriting Tips Core77 Coyote Blog Craig Harper Darwin's Finance Digerati Life, The Division of Labour Dough Roller, The Eclectecon Econlog Economics Roundtable EconomicsUK Entrepreneurial Mind Environmental Economics Escape from Cubicle Nation Execupundit FiscalGeek Fortify Your Oasis Get Rich Slowly Gongol Good Financial Cents HR Bartender Hot Air i4cp Productivity Innovation and Growth Instapundit Intangible Economy I've Paid Twice for This Already Joanne Jacobs Kaus Files Len Penzo dot Com Mahalanobis Making Ripples Market Power Mechonomics Mighty Bargain Hunter Monevator Money Blue Book My Dollar Plan New Economist Newmark's Door Nina Simosko Physorg Private Sector Development Radio Equalizer Real Clear Politics Richard Fernandez Roger L. Simon SCSU Scholars Science and Money Skeptical Optimist Sound Politics SOX First Speculist, The Sports Economist, The squawkfox Three Star Leadership Tim Worstall Tough Money Love Townhall Trusted Advisor voluntaryXchange WILLisms Winterspeak Market LinksBig Picture, The College Analysts CXO Advisory Group Disciplined Approach to Investing Dividend Guy, The Doug Short Fat Pitch Financials FX Investment Strategies
What We're ReadingGardner's Art Through the Ages
Investment Disclosure Statement: Ironman owns stock. Specifically, Ironman owns five shares of Boeing stock. Other than that, Ironman primarily invests through retirement accounts, in an index fund that closely tracks the performance of the S&P 500 and, from time to time, an ETF that is inversely-correlated with the S&P 500 (an anti-S&P 500 fund!). Details of any positions taken may be found through the chronological links in the Archives beginning with April 2009.
About Political Calculations
blog advertising is good for you Welcome to the blogosphere's toolchest! Here, unlike other blogs dedicated to analyzing current events, we create easy-to-use, simple tools to do the math related to them so you can get in on the action too! If you would like to learn more about these tools, or if you would like to contribute ideas to develop for this blog, please e-mail us at: ironman at politicalcalculations.com Thanks in advance!
Most Popular PostsThe S&P 500 at Your Fingertips Mapping S&P 500 Performance, Since 1871 Should You Trade In Your Gas Guzzler? What Are the Chances Your Marriage Will Last? Reckoning the Odds of Recession Your 2009 Paycheck Tipping Around the World Revisiting the Lottery Estimating Your Life Expectancy Connecting the Dots for Personal Income Taxes
Quick IndexFirst Time Visitor to Political Calculations? On the Moneyed Midways A Lot, But Not All, of Our Tools
Recent Posts How Science Is Supposed To Work On the Moneyed Midways - February 13, 2010 Men: Are You Old Enough to Propose Yet? Solving Homelessness 2.15 Million Federal Employees Mapping Alcohol-related Death Rates: US vs Europe Some Unemployment Snarkiness On the Moneyed Midways - February 5, 2010 Projecting GDP in 2010 The Wrong Priorities U.S. GDP Temperature GaugePolitical Calculations' U.S. GDP Temperature Gauge provides a means to quickly evaluate the growth rate of the U.S. economy against the backdrop of how the economy has performed since 1980, with the "temperature" color spectrum ranging from a recessionary "cold" (purple) through an expansionary "hot" (red).
The GDP Temperature Gauge presents both the annualized GDP growth rate as reported by the U.S. Bureau of Economic Analysis reports for a one-quarter period and also as averaged over a two quarter period, which smooths out the volatility seen in the one-quarter data and provides a better indication of the relative strength of the U.S. economy over time.
Recession Probability TrackPolitical Calculations' Recession Probability Track shows the probability that the U.S. economy will be in recession 12 months from the indicated date (shown in red) while revealing the probability trend over the past four years.
Previously, the probability of recession peaked at 50% on 4 April 2007, which means that March-April 2008 was the most likely period in which the NBER would have found the U.S. to be in recession.
As it happens, they almost did. The NBER instead chose December 2007 as the beginning month of the most recent recession (we had found a 46% probability for a recession beginning in that month!)
On the Moneyed MidwaysPolitical Calculations is also the online home of On the Moneyed Midways (aka OMM), a review of the best posts contributed to the week's best business and money-related blog carnivals. More than that, we also name one post in each edition as being The Best Post of the Week, Anywhere! and at the end of each year, we name The Best Post of the Year, Anywhere! as well as identifying the best blogs we found during the course of the year!
The link below will take you to the running index containing our most recent back issues (you can easily navigate the index to find older editions.)
OMM's Most Recent Editions - with links to our older editions!
Site DataThis site is primarily powered by:
Visitors since December 6, 2004:
var site="sm7politicalcalculations"
TTLB EcosystemCSS Validation
RSS Site Feed
JavaScript
The tools on this site are built using JavaScript. If you would like to learn more, one of the best free resources on the web is available at W3Schools.com.
Other Cool ResourcesZunZun - Exceptional regression analysis tool. Wolfram Integrator - Solve integrals. Do calculus! Create a Graph - Easy-to-use basic graph-making tool. Many Eyes - Data visualization extraordinaire!
Archives December 2004 January 2005 February 2005 March 2005 April 2005 May 2005 June 2005 July 2005 August 2005 September 2005 October 2005 November 2005 December 2005 January 2006 February 2006 March 2006 April 2006 May 2006 June 2006 July 2006 August 2006 September 2006 October 2006 November 2006 December 2006 January 2007 February 2007 March 2007 April 2007 May 2007 June 2007 July 2007 August 2007 September 2007 October 2007 November 2007 December 2007 January 2008 February 2008 March 2008 April 2008 May 2008 June 2008 July 2008 August 2008 September 2008 October 2008 November 2008 December 2008 January 2009 February 2009 March 2009 April 2009 May 2009 June 2009 July 2009 August 2009 September 2009 October 2009 November 2009 December 2009 January 2010 February 2010 if (location.href.indexOf("archive")!=-1) document.write("Current Posts"); Bloodhoundblog Budgets Are Sexy Cafe Hayek Carpe Diem Cheap, Healthy, Good Copywriting Tips Core77 Coyote Blog Craig Harper Darwin's Finance Digerati Life, The Division of Labour Dough Roller, The Eclectecon Econlog Economics Roundtable EconomicsUK Entrepreneurial Mind Environmental Economics Escape from Cubicle Nation Execupundit FiscalGeek Fortify Your Oasis Get Rich Slowly Gongol Good Financial Cents HR Bartender Hot Air i4cp Productivity Innovation and Growth Instapundit Intangible Economy I've Paid Twice for This Already Joanne Jacobs Kaus Files Len Penzo dot Com Mahalanobis Making Ripples Market Power Mechonomics Mighty Bargain Hunter Monevator Money Blue Book My Dollar Plan New Economist Newmark's Door Nina Simosko Physorg Private Sector Development Radio Equalizer Real Clear Politics Richard Fernandez Roger L. Simon SCSU Scholars Science and Money Skeptical Optimist Sound Politics SOX First Speculist, The Sports Economist, The squawkfox Three Star Leadership Tim Worstall Tough Money Love Townhall Trusted Advisor voluntaryXchange WILLisms Winterspeak Market LinksBig Picture, The College Analysts CXO Advisory Group Disciplined Approach to Investing Dividend Guy, The Doug Short Fat Pitch Financials FX Investment Strategies
What We're ReadingGardner's Art Through the Ages
The S&P 500 at Your Fingertips Mapping S&P 500 Performance, Since 1871 Should You Trade In Your Gas Guzzler? What Are the Chances Your Marriage Will Last? Reckoning the Odds of Recession Your 2009 Paycheck Tipping Around the World Revisiting the Lottery Estimating Your Life Expectancy Connecting the Dots for Personal Income Taxes
First Time Visitor to Political Calculations? On the Moneyed Midways A Lot, But Not All, of Our Tools
Political Calculations' U.S. GDP Temperature Gauge provides a means to quickly evaluate the growth rate of the U.S. economy against the backdrop of how the economy has performed since 1980, with the "temperature" color spectrum ranging from a recessionary "cold" (purple) through an expansionary "hot" (red).
The GDP Temperature Gauge presents both the annualized GDP growth rate as reported by the U.S. Bureau of Economic Analysis reports for a one-quarter period and also as averaged over a two quarter period, which smooths out the volatility seen in the one-quarter data and provides a better indication of the relative strength of the U.S. economy over time.
Political Calculations' Recession Probability Track shows the probability that the U.S. economy will be in recession 12 months from the indicated date (shown in red) while revealing the probability trend over the past four years.
Previously, the probability of recession peaked at 50% on 4 April 2007, which means that March-April 2008 was the most likely period in which the NBER would have found the U.S. to be in recession.
As it happens, they almost did. The NBER instead chose December 2007 as the beginning month of the most recent recession (we had found a 46% probability for a recession beginning in that month!)
Political Calculations is also the online home of On the Moneyed Midways (aka OMM), a review of the best posts contributed to the week's best business and money-related blog carnivals. More than that, we also name one post in each edition as being The Best Post of the Week, Anywhere! and at the end of each year, we name The Best Post of the Year, Anywhere! as well as identifying the best blogs we found during the course of the year!
The link below will take you to the running index containing our most recent back issues (you can easily navigate the index to find older editions.)
OMM's Most Recent Editions - with links to our older editions!
This site is primarily powered by:
Visitors since December 6, 2004:
TTLB Ecosystem
CSS Validation
RSS Site Feed
JavaScript
The tools on this site are built using JavaScript. If you would like to learn more, one of the best free resources on the web is available at W3Schools.com.
Other Cool ResourcesZunZun - Exceptional regression analysis tool. Wolfram Integrator - Solve integrals. Do calculus! Create a Graph - Easy-to-use basic graph-making tool. Many Eyes - Data visualization extraordinaire!
Archives December 2004 January 2005 February 2005 March 2005 April 2005 May 2005 June 2005 July 2005 August 2005 September 2005 October 2005 November 2005 December 2005 January 2006 February 2006 March 2006 April 2006 May 2006 June 2006 July 2006 August 2006 September 2006 October 2006 November 2006 December 2006 January 2007 February 2007 March 2007 April 2007 May 2007 June 2007 July 2007 August 2007 September 2007 October 2007 November 2007 December 2007 January 2008 February 2008 March 2008 April 2008 May 2008 June 2008 July 2008 August 2008 September 2008 October 2008 November 2008 December 2008 January 2009 February 2009 March 2009 April 2009 May 2009 June 2009 July 2009 August 2009 September 2009 October 2009 November 2009 December 2009 January 2010 February 2010 if (location.href.indexOf("archive")!=-1) document.write("Current Posts"); Bloodhoundblog Budgets Are Sexy Cafe Hayek Carpe Diem Cheap, Healthy, Good Copywriting Tips Core77 Coyote Blog Craig Harper Darwin's Finance Digerati Life, The Division of Labour Dough Roller, The Eclectecon Econlog Economics Roundtable EconomicsUK Entrepreneurial Mind Environmental Economics Escape from Cubicle Nation Execupundit FiscalGeek Fortify Your Oasis Get Rich Slowly Gongol Good Financial Cents HR Bartender Hot Air i4cp Productivity Innovation and Growth Instapundit Intangible Economy I've Paid Twice for This Already Joanne Jacobs Kaus Files Len Penzo dot Com Mahalanobis Making Ripples Market Power Mechonomics Mighty Bargain Hunter Monevator Money Blue Book My Dollar Plan New Economist Newmark's Door Nina Simosko Physorg Private Sector Development Radio Equalizer Real Clear Politics Richard Fernandez Roger L. Simon SCSU Scholars Science and Money Skeptical Optimist Sound Politics SOX First Speculist, The Sports Economist, The squawkfox Three Star Leadership Tim Worstall Tough Money Love Townhall Trusted Advisor voluntaryXchange WILLisms Winterspeak Market LinksBig Picture, The College Analysts CXO Advisory Group Disciplined Approach to Investing Dividend Guy, The Doug Short Fat Pitch Financials FX Investment Strategies
What We're ReadingGardner's Art Through the Ages
CSS Validation
RSS Site Feed
JavaScript
The tools on this site are built using JavaScript. If you would like to learn more, one of the best free resources on the web is available at W3Schools.com.
Other Cool ResourcesZunZun - Exceptional regression analysis tool. Wolfram Integrator - Solve integrals. Do calculus! Create a Graph - Easy-to-use basic graph-making tool. Many Eyes - Data visualization extraordinaire!
Archives December 2004 January 2005 February 2005 March 2005 April 2005 May 2005 June 2005 July 2005 August 2005 September 2005 October 2005 November 2005 December 2005 January 2006 February 2006 March 2006 April 2006 May 2006 June 2006 July 2006 August 2006 September 2006 October 2006 November 2006 December 2006 January 2007 February 2007 March 2007 April 2007 May 2007 June 2007 July 2007 August 2007 September 2007 October 2007 November 2007 December 2007 January 2008 February 2008 March 2008 April 2008 May 2008 June 2008 July 2008 August 2008 September 2008 October 2008 November 2008 December 2008 January 2009 February 2009 March 2009 April 2009 May 2009 June 2009 July 2009 August 2009 September 2009 October 2009 November 2009 December 2009 January 2010 February 2010 if (location.href.indexOf("archive")!=-1) document.write("Current Posts"); Bloodhoundblog Budgets Are Sexy Cafe Hayek Carpe Diem Cheap, Healthy, Good Copywriting Tips Core77 Coyote Blog Craig Harper Darwin's Finance Digerati Life, The Division of Labour Dough Roller, The Eclectecon Econlog Economics Roundtable EconomicsUK Entrepreneurial Mind Environmental Economics Escape from Cubicle Nation Execupundit FiscalGeek Fortify Your Oasis Get Rich Slowly Gongol Good Financial Cents HR Bartender Hot Air i4cp Productivity Innovation and Growth Instapundit Intangible Economy I've Paid Twice for This Already Joanne Jacobs Kaus Files Len Penzo dot Com Mahalanobis Making Ripples Market Power Mechonomics Mighty Bargain Hunter Monevator Money Blue Book My Dollar Plan New Economist Newmark's Door Nina Simosko Physorg Private Sector Development Radio Equalizer Real Clear Politics Richard Fernandez Roger L. Simon SCSU Scholars Science and Money Skeptical Optimist Sound Politics SOX First Speculist, The Sports Economist, The squawkfox Three Star Leadership Tim Worstall Tough Money Love Townhall Trusted Advisor voluntaryXchange WILLisms Winterspeak Market LinksBig Picture, The College Analysts CXO Advisory Group Disciplined Approach to Investing Dividend Guy, The Doug Short Fat Pitch Financials FX Investment Strategies
What We're ReadingGardner's Art Through the Ages
The tools on this site are built using JavaScript. If you would like to learn more, one of the best free resources on the web is available at W3Schools.com.
ZunZun - Exceptional regression analysis tool. Wolfram Integrator - Solve integrals. Do calculus! Create a Graph - Easy-to-use basic graph-making tool. Many Eyes - Data visualization extraordinaire!
Big Picture, The College Analysts CXO Advisory Group Disciplined Approach to Investing Dividend Guy, The Doug Short Fat Pitch Financials FX Investment Strategies
Gardner's Art Through the Ages
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