Retrophisch

The problem with the information you're citing -- on corporate income taxes and on minimum wages -- is that it pays a great deal of attention to what's happened to wages as a whole, without paying attention to what's happening to wages at differing levels of the income scale.

Now, I know that's not an idea that is in vogue right now. But consider: The minimum wage has been held at $5.15 where it is for 9 years now. In that time, most wages have kept up with inflation (barely), and salaries for workers in the top 5% of the income scale have actually beaten inflation. But if it had been adjusted for inflation, $5.15 in 1997 would be $6.07 in 2005. A minimum-wage earner will make nearly 20 percent less in 2006 than he did in 2005.

So the real question is, where is that 20 percent savings going? It's sure not creating jobs, or we'd have more jobs today than we had in 2001.

An example from an employer with a lot of minimum-wage employees: McDonalds. If 30% of their 1.6 million U.S. employes are working minimum-wage for 35 hours a week, McDonalds has saved $742 million on payroll. Now, there are approximately 165 million shares of McDonald's that have been issued. So assuming 5% growth or so in stock issues since 1997, and relying on the return in my portfolio as a McDonald's shareholder, 156 million shares have paid out approximately $385 million in dividends alone since 1997. Their executive corps was paid approximately $75 million in compensation during that period, as well.

If the minimum wage were higher, McDonald's probably would cut employees, or not hire new employees. And McDonald's isn't even the most profitable of companies.

The problem with raising the minimum wage is that it assumes the existence of model companies, companies which would rather have well-paid happy employees (along the lines of Henry Ford's) than happy shareholders. These companies don't exist.

But the fact remains that it need not have been anywhere near as painful as we're told it would be for McDonald's to have spent $742 million more on its employees than it did, in the last ten years.

Suffice it to say, the real problem is that a handful of big shareholders and CEOs receive the vast majority of a company's profits, without thinking of sharing it with their employees. Most employees' salaries are just barely holding the line on inflation, and minimum-wage earners' salaries are losing. (A certain unnamed media publishing company is doing the same thing, right now, with potentially disastrous results.)

Quite surprisingly, libertarian economist Steve Landsburg argues quite convincingly that the minimum wage is not the big job killer that most other economists believe it to be. Nonetheless, if your objective is to help the working poor, an expansion of the Earned Income Tax Credit (EITC) would be much more effective and equitable than raising the minimum wage.