Because, in the end, every employer looks at the total cost of an employee...and to get good help, pays what the market demands. My assumption is that my employer would have paid me a slightly higher salary if the employer side of the Medicare tax did not exist. Your ( assumption) mileage may vary.I hear that argument from time to time and it makes very little sense to me. I agree that compensation is mostly set by supply and demand. I've never heard of wages being set by the employer's available cash. Bonuses sometimes, but not wages. Wal-Mart is one of the most profitable companies in the world, and four of the ten richest people in America are named Walton. Yet most people at Wal-Mart make minimum wage. Wal-Mart is also the largest private employer in the county. IIRC, McDonald's is number two private employer, and same thing there. See also:http://tcf.org/blog/detail/graph-corporate-profits-rise-to-n...andhttp://econographics.wordpress.com/2013/03/05/corporate-prof...I've simply never heard of employers overpaying employees if the company has extra money. There might be isolated incidents where it has happened, but it is certainly not standard practice.