Taxes Are Killing The Labor Market
A Dilemma Faced by Both Workers and Company Owners
Have you ever struggled to find workers even after posting job offers. Or, as a worker, have you noticed that most jobs seem to offer roughly the same net wage after taxes?
The longer I play WarEra, the more I feel that this issue is not simply about company owners being stingy or workers being too demanding.
There is another factor quietly shaping the labor market:
TAXES
Everyone Wants Higher Wages
Let's be honest. If given the choice, every worker would prefer a higher salary. No worker wakes up and says:
"I hope I get paid less today."
The same applies to company owners. No owner wants to spend more on wages than necessary. Both sides want something completely reasonable:
- Workers want higher income.
- Owners want profitable businesses.
The problem is that these two goals do not always align.
Where the Problem Begins
What workers receive is not the wage that companies pay.
What workers receive is:
Gross Wage - Income Tax
This is where things become complicated.
Let's use a simple example.
Gross Wage : 0.139 / PP
Income Tax : 12%
Worker receives: 0.122 / PP
Difference : 0.017 / PP
The company pays 0.139. The worker receives 0.122. That difference is tax.
That gap may seem small at first, but across thousands of PP every day, it becomes a significant cost for employers and a significant reduction in income for workers.
Tax rates vary significantly between countries. Some nations maintain very low taxes, while others impose much higher rates. However, many countries sit somewhere around the 10% to 12% range.
Interestingly, countries with strong production bonuses for manufacturing industries often fall into that higher-tax category.
Industries such as:
- Steel
- Concrete
- Paper
- Other manufactured goods
often enjoy attractive production bonuses, but those benefits frequently come with relatively high income taxes.
As a result, companies must offer increasingly higher gross wages just to keep workers competitive with offers elsewhere.
From a Worker's Perspective
Workers care about one thing above all else:
"How much money actually reaches my wallet?"
They don't necessarily care how much the company is spending.
If two jobs require the same effort, most workers will naturally choose the one that provides the highest net wage.
And honestly, that makes perfect sense.
From a Company's Perspective
Company owners face a completely different reality.
They have to worry about:
- Raw material costs
- Product prices
- Employee wages
- Company profits
When wages increase, profits shrink.
When wages stay low, workers go elsewhere.
Owners often find themselves stuck between two uncomfortable options.
Option 1: Keep Wages Low
Pros:
- Healthy profit margins
Cons:
- Difficulty attracting workers
Option 2: Raise Wages
Pros:
- Easier recruitment
Cons:
- Lower profits
- Higher financial risk
- Potential losses
A Real Example
Steak Factory (Equatorial Guinea)
Wage : 0.124 / PP
Tax : 2.5%
Net Wage : 0.121 / PP
Profit : +26 Coins/day
Workers receive a competitive wage, and the company remains profitable.
Steel Factory (South Africa)
Wage : 0.124 / PP
Tax : 12%
Net Wage : 0.109 / PP
Profit : Slightly positive
The company still makes money, but the wage is far less attractive to workers.
To match the market average net wage (~0.122/PP), the Steel Factory would need to increase wages to roughly:
0.139 / PP
At that point, workers are happy.
The company is not.
A Pattern I've Seen Repeatedly
From time to time, I come across companies offering wages far above the market average.
These jobs attract workers almost immediately. I've worked for several companies like that myself. But there is one pattern that keeps repeating.
At first:
- Wages are high
- Workers flood in
- Everything looks promising
Then, a few days later:
- The company runs out of money
- The owner goes bankrupt
- The job offers disappear
Workers move on and start looking for new jobs.
Seeing this happen again and again made me wonder:
If everyone wants higher wages, why does the labor market always seem to settle around the same range?
The Invisible Ceiling
Interestingly, the labor market itself seems to reflect this reality.
While workers would naturally prefer higher wages, most available jobs tend to cluster around net wages of roughly 0.122 Coins/PP after taxes.
Higher-paying jobs do appear from time to time.
However, many of those companies struggle to sustain those wages for long periods and often disappear after a few days due to financial losses.
This suggests that the market may have found a natural equilibrium where workers are willing to accept jobs and companies are still able to survive.
So Who Is to Blame?
In my opinion, nobody.
Workers aren't wrong for wanting higher wages.
Owners aren't wrong for wanting sustainable profits.
Both sides are simply reacting to the same economic system.
That is why I don't see this as a conflict between workers and employers.
I see it as a market trying to find balance.
Final Thoughts
The title of this article is intentionally provocative.
I don't hate taxes, and I don't believe taxes are inherently bad.
Taxes serve important purposes within a country's economy, including in WarEra.
This article is simply my personal observation as someone who has spent time on both sides of the labor market: as a worker and as a company owner.
The longer I play, the more I feel that the hardest part of hiring workers is not finding people willing to work.
The real challenge is finding a wage that satisfies both sides:
- High enough for workers to accept.
- Low enough for companies to remain profitable.
The larger the gap between what companies pay and what workers actually receive, the harder it becomes to find that balance.
And when that balance becomes harder to achieve, the labor market itself begins to suffer.
~maddd