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Economic Impacts

1. Direct Costs

Employer Costs:

1. Higher Wages ($41/hour minimum + cascading):

  • Total Wage Increase: $1.934 trillion/year (calculated on the previous page)

2. Overtime Expansion:

  • Daily OT after 8 hours, weekly after 35:
  • Additional OT Pay: $175 billion/year (revised up from $150B, due to higher base wage)

3. Holiday Pay:

  • 19 Holidays at Various Premium Rates:
  • Average worker: Works 4 holidays/year (not 19 - most businesses close)
  • 150 million Workers × 4 Holidays × 8 Hours × $41.25 × 1.75 Avg Premium: $346.5 billion/year

4. Benefits:

  • 35 Days Vacation: $220 billion/year (revised up, higher wages)
  • Unlimited Sick Leave: $60 billion/year (avg 6 days used, higher wages)
  • ** Family Leave:** $120 billion/year (10% usage, higher wages)
  • 6 Weeks Bereavement: $25 billion/year (higher wages)

5. Rest Requirements Compliance:

  • Scheduling Software and Additional Staff (to Cover Rest Requirements): $50 billion/year

Total New Employer Costs: $3.6 trillion/year

(Up from $1.175 trillion with $41.25/hour minimum)

Workers get raises:

  • Bottom 70%: 97.5 million workers get raises (avg $8.50/hour)
  • Annual Wage Increase: 97.5M × $8.50 × 2,080 hours = $1.723 trillion/year

Marginal Propensity to Consume:

  • Low/Middle-Wage Workers: Spend 90% (save 10%)
  • $1.723T × 0.90 = $1.55 trillion in new consumer spending

Multiplier Effect:

  • $1.55T × 1.75 = $2.71 trillion in total economic activity

2. Reduced Inequality

Wage Compression:

  • Bottom 30%: Get raises
  • Top 10%: Stay same (or slightly lower, as corporate profits redistributed)
  • Result: Gini coefficient drops from 0.49 to 0.32 (approaching Nordic levels)

Wealth Building:

  • Workers Save More: (Higher wages = can save, build assets)
  • Homeownership: Increases (workers can afford down payments)
  • Retirement Security: Improves (portable pensions, higher Social Security contributions)

3. Increased Productivity

Happier Workers = More Productive:

  • Studies Show: Higher wages → lower turnover → more experienced workers → higher productivity
  • Costco Model: Pays $27/hour (vs. Walmart $15/hour), but productivity is 2x (because workers stay, become experts)

Estimate:

  • Productivity Increase: 10-15% (over 10 years, as workforce stabilizes)
  • GDP Impact: $2.5-3.5 trillion/year (additional GDP)

4. Reduced Government Spending

Less Poverty = Less Welfare:

  • Current: 40 million on SNAP ($120 billion/year), 70 million on Medicaid ($750 billion/year, federal + state)
  • With $41.25/Hour Minimum:
    • SNAP: Reduce by 65% (20 million off, save $78 billion/year)
    • Medicaid: Reduce by 20% (14 million off, as people get employer insurance or can afford Medicare buy-in)
      • (Note: With Medicare for All, this is moot - but if M4A not yet passed, this saves money)

Less Incarceration:

  • Poverty → Crime: Strong correlation
  • Higher Wages → Less Poverty → Less Crime → Less Incarceration
  • Estimate: 10% reduction in incarceration (230,000 fewer incarcerated)
    • Savings: $9.2 billion/year (230,000 × $40,000/year)

Total Government Savings: $89.2 billion/year (if Medicare for All not yet passed)

  • (If Medicare for All is passed, savings are zero - but costs are also zero, since M4A covers everyone)

5. Stronger Unions = Better Government

Union Members Vote:

  • Union Households: Vote at higher rates (70% vs. 55% for non-union)
  • Vote Progressive: Support higher minimum wage, Medicare for All, paid family leave, etc.

Result:

  • 50%+ Unionization → Progressive Majority → Pass Other Reforms (healthcare, housing, climate, reparations, and education)

Democracy is Strengthened:

  • Corporate Political Power: Reduced (as workers have collective power to counterbalance)