Obviously we can easily afford a minimum wage of $15 dollars an hour… Even without sweetening the pot with tax credits like we did on Obamacare, where we phase in a deduction to balance the cost of that extra initial expense, we could still easily afford it.

But if you personally were making $15 dollars an hour after college degrees and years of experience, and then some kid taking your fast food order was making the same as you, you might feel frustrated over how all the past years of your life spent in a Republican economy kept you down, when all you had to do, was strike and demand you should be paid just a little more…

Wage inflation does occur when jumping minimum wage from $8.25 to $15… It starts with those covered under the passage of the law and expands outward through each increase of income level….

This job, requires some math.

The number of America’s full time employees is around 121 million. with another 30 million working part time … 

For our rough calculation we will use 40 hours per full time and 30 hours for part time…

 

So just to see its effect, we will assume a calculated increase from the $8.15 to $15.00 knowing full well the impact will be less than what we predict, since many Americans are currently  already above the $8.25 level

So.  40 hours per week times the increase of $6.75 …is a gain in income per person of: $270 per week… YOW!!  And part time at 30 hours.  $6.75 times 30 equals…$202.50 extra per week.

(These numbers will be big.)
Across one year, full timers would yield $270 X 52 or $14, 040 additional dollars per year. Part timers get an increase of $10,530.

So at 121 million full time workers and 30 million part timers, the gross full timer impact would be $1.7 trillion a year…plus $315 billion for part time workers..to a total of $2.15 trillion a year.

Again, this is assuming the same expansion occurs in every single full time person who is now working, (of an additional $6.75 an hour)… which we all know is quite a stretch. (The actual cost will fall far below these theoreticals we are in the process of determining…)

Point being that if these inflated theoreticals are financially feasible, the actual plan will be as well. There will be no surprises.

So across America employers will have to spit up $2.15 trillion more a year in actual wages. Of course Social Security and Medicare taxed at 7.65 %  each for employee and for employer should also be considered.  Which means that an additional $160 billion should be added on to employer’s costs and deducted from employees benefit when measuring full impacts later   (For the record that would be a total impact of $2.3 trillion to employers and a total net gain of roughly $2 trillion to employees. ..)

Currently the personal income for America is close to $15 trillion dollars.. This expansion would add $2 trillion on top making America’s personal income total  now $17 trillion dollars.

The at-a-glance benefits.

  • $2 trillion into the American retail economy per year.
  • Boost of $260 billion into Social Security per year extending its life.
  • Boost of $61 billion into Medicare per year.
  • At an average income tax rate of 15%, boost of $315 billion with no rate changes

And next.

At what price.?

Across $6.160 trillion in Corporate profits per last four quarters we have data…. The price for this is that they lose 2 T’s, and get to keep 4….

united-states-corporate-profits

At 4 trillion per four quarters, they would need to hold at the 1000 (billion) level or 1 Trillion per quarter.   We first reached that level in 2005. We dropped below in one quarter of the recession.

For most of our history, we have been underneath $4 trillion.. US Corporations only making $4 trillion isn’t going to hurt anyone. And as anyone can see from this chart, when corporate profits are lower, the middle class does better.  When they rise, the middle class does poorer.

Some may bring up the argument that with less profit there is less investment… The math discounts this… While profits were at 6 trillion per year, physical capital investment lagged at 3.1 billion. That can continue unabated at a level of 4 trillion.

Before discounting the loss of $2 trillion in profit, it is important to remember what profit is.  Profit is simply the money left over after all expenses have been paid. Profit is then divided into shares and goes out as dividends to all those who own shares of the corporation.  It is quite possible for a company to run well without making a profit.  Losing profit is not the same as going in the red. Losing profit just means you have less money after your expenses have all been met.. Going in the red means you can’t meet your expenses.

So in a nutshell, America can readily absorb raising minimum wage to 15 dollars an hour. It can even afford giving every American a $6.25 dollar an hour raise for doing what they do.

As for the gloom and doom prognostications of what this would do to the economy, the truth is it would only take us back to level existing as of 2005.

That is how much money that used to come to us…. now isn’t…  Which is why a lot of angry people are supporting Donald Trump …. If they knew enough about economics, they’s switch to Bernie Sanders.

I wish I could predict how much higher those corporate profits go when that $2 trillion hits the economic market place… but there is no precedent, so I can’t…. But in my option,  since we run with much lower profits whenever a depression or big recession hits, it makes greater sense to do it sometime before that moment, and therefore head it off by creating an explosion of real growth.
So not only is Bernies plan affordable, it is very much desired.

 

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