Lowest Paid Employee Wage Disclosure Tax Credit

 If consumers knew the wages being paid to the workers who produce the products and services they purchase, many consumers would purchase higher priced items of comparable quality when they can afford to do so. Companies that pay higher wages than their competitor would increase their share of the market and companies who try to maximize profit by minimizing labor expenses would increase compensation to remain competitive if employee wages were disclosed to the consumer.


Lowest paid employee wage disclosure is a label printed on the packaging of products to inform consumers how the companies that manufacture their products compensate their employees. Imagine walking into a store and the products have an LPE label that denotes the hourly wage of the lowest paid employee of the product. For items of comparable quality and value most people will decide to purchase the product that affords the workers that produce it a higher quality of life. The lowest paid employee will apply to those who are involved in the manufacture, assembly, or processing of materials to produce the product or packaging at the facility where the product is completed for sale. A company who participates in lowest paid employee marketing disclosure will include employees who have been with the company at least 1 year. A company's starting wage to try out new employees who may not be a good fit should negatively impact the company's LPE rating.


The lowest paid employee is the standard for labeling because averages can be skewed or inflated by the few who earn substantially more than the rest and would harm newer companies who have fewer employees with seniority that earn more based on their tenure with the company. A median wage labeling system could lead to manipulation and be uninformative where the bottom half of employees earn substantially less than the median. Using an index that takes into account the wages of the employees and the cost of living where manufacturing takes place is not necessary. If a company manufactures goods in an area where the labor market is advantageous for the business, they should already benefit from a price advantage over their competitors. Additionally, their competitors have remained competitive despite higher manufacturing cost and the company in the area with the lower cost of living can probably afford to pay their employees more but do not, because it is not demanded by the market.


Companies who already pay their employees higher wages than their competitors should want to participate in LPE labeling for the marketing purpose it will serve to their product. If one brand of products participates and the others do not then the consumer knows the other company has something to hide. Socially conscious consumers will choose accordingly which will encourage companies that manufacture products using low wage labor to increase wages and participate in LPE labeling. To encourage the beginning LPE labeling we want to offer a 3% payroll tax credit to companies that display the lowest paid employees hourly wage on their products.

Lowest Paid Employee Wage Disclosure Tax Credit