Business Costs
Connecticut is considering a law that would charge firms with 500 or more employees a $1.00 fee for each hour a worker making $15 per hour or less works each quarter. We want to assess the costs and benefits of this policy. We have from ACS PUMS the wage and hour distribution by industry and from CT DoL the distribution of firms larger than 500 employees by industry. Is there a way to model increased business costs in IMPLAN? This fee is similar to an excise tax and it will not induce any firm to increase wages we believe. So we cannot look at employment changes due to a higher min wage. I regard these fees as non-wage labor costs.
Any insights are appreciated.
Thank you.
Stan McMillen
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Hi Stan, Unfortunately IMPLAN isn't really designed to look at that type of economic change because it isn't necessarily associated to a change in production and the Model is a fixed price Model. There would be only three potential things to Model in this Scenario: 1. If the change affected production of businesses, you could model the anticipated change in production 2. If there would be a change in Employment or income (such as changing wages or eliminating workers) 3. If you knew how much money was collected and how and the government will spend it. It sounds like the first two don't seem likely to you, and these assumptions are filled with caveats- especially since most businesses unless the charge is astronomical will either see just a small reduction in profits (which are leakages) or will raise costs of their product to cover the fee. The caveats to government spending is that there isn't always a direct connection between a governments intake of funds and it's expenditures. Please let us know if you have any additional questions. IMPLAN Support Team
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