State Minimum Wage Hike Would Raise Taxes, Study Finds
A ballot initiative to raise the minimum wage would not help the working poor as touted and would force all California families to pay an average of $107 more per year in taxes, according to a Stanford University study.
The study, released this week by Stanford’s Hoover Institution, suggests that raising the hourly minimum wage to $5.75 would drive taxes on goods up $1.1 billion a year.
The minimum wage would be raised from $4.75 an hour to $5 by March 1997, and to $5.75 by March 1998 if California voters approve Proposition 210 next month.
The study, written by Stanford economics professor Thomas E. MaCurdy and economics doctoral candidate Margaret O’Brien-Strain, says an increase would be costly for Californians while benefiting only the poorest of the poor.
Small businesses would be forced to cut jobs, take a profit loss and raise prices if labor costs go up, the report said.
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