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Employers payroll taxes increased steadily up to 40\% since the creation of Social Security after WWII. Together with a high level of minimum wage called Smic, this lead to high unskilled and youth unemployment. Since 1993, several reforms aimed at reducing the payroll taxes for workers at the minimum wage and around, from 40% to around 5%, lowering the average tax rate but increasing marginal tax rates: the implicit cost of pay raises is to loose the payroll tax cuts for lower wages. In the following decades, governments introduced a set of "tax and transfer" incentives for low income households. This further pushed the implicit marginal tax rates sometimes above 70%. This should generate effort and learning discouragement, promotion refusals and low productivity growth. This paper develops a methodology to assess the disincentives effects on skill investment and labor demand for medium wage workers, and their role on wage compression at the minimum wage and the polarization of the labor force.