Economic Impact of Payroll

We live in a wonderous country and we have been given advantages that no other country gives its residents and citizens...   A POWERFUL ECONOMY...

And...  from that powerful economy, we are able to provide:

• the most powerful military in the world
• the most powerful economy in the world
• the best education in the world
• the best healthcare in the world
• the best entertainment in the world
• the best recreation in the world
• the best retirement in the world

However... the reason why we are able to do all these things is not just because the government collects taxes from us but because of the economic impact of payroll which can be seen as paying $1 into to marketplace to purchase goods and services.

This $1 generates $8-$10 in what is called economic impact...  or about 10 million dollars for every million dollars spent.

For example, I earn a dollar and use that dollar to buy gasoline.  The gas station owner uses that dollar to pay their employees.  Their employees must put their children in day care.  The day care worker uses that dollar to buy groceries and the store that sells the groceries must buy them from farmers who in turn buy supplies for their farm...  etc., etc., etc.

It is all rather amazing when one thinks about it...

So, what happens when employees are laid off from work?

Those dollars are not spent in the economy so the economic impact reduces, tax collection reduces, the purchase of supplies reduces...  and the economy stagnants, does not grow, and maybe declines as well as more and more layoffs are necessary.  Business does not want to spend more money than it has to spend to stay in business.

So, when businesses are faced with higher prices, as a result of inflation for instance, they either raise their prices and lose customers, or layoff workers...  It is all just that simple.