Jobs coming back home? Don’t count on it…

14 02 2011

One of the thing that has taken a lot of the blame for jobs leaving the country is the high cost of Union labor. Some people see that as a false flag issue and want to blame NAFTA, lack of corporate loyalty, outright greed, or some other issue as the primary cause. I tend to place a lot of the blame on the Unions myself.

Here in America one problem that I’ve noticed over the years is that union wages outrace traditional wages and will put a lot of pressure on the job market that the markets can’t handle. When you take that even further out into the world market it’s effects are multiplied greatly.

Here’s an example: I have a friend that went to work for X (a US car company) about 25 years ago and he started out at about $16 per hour. This was a time when minimum wages where what, $3.50?

 Everybody and anybody that could get a job there did so, which hurt a lot of places that couldn’t pay nearly that as they saw their trained and even long time good employees leave for those jobs. The people that replaced those lost employees wanted better than what had been starting wages beforehand because the ‘market’ demanded it. In order to survive many businesses had to cut employees making even bad jobs harder to get.

I don’t begrudge anybody making good money, but where has that $16 per hour wage gone to in the 25 years since? It’s far outpaced regular wages and you ended up having a larger and larger disparity between entry level no skilled wages and the high dollar Union wage worker. Goods became more expensive to pay the union wage but the average man on the street has less ability to pay for those expensive good. What’s a person to do? Bargain hunt. Shop cheap.

 The company my friend worked for had a choice to make between paying him $16 (on up) per hour as opposed to paying someone elsewhere the then $2 per hour. The plant, now closed, had over 2000 employees so do the math. That company has a specific loyalty it MUST cater to and that would be to the stockholders of that company. It’s hard to justify expending an extra $14 per hour per employee to a room full of stockholders that might just be from all over the world that your doing it to keep jobs in America.

With the plant closing came the layoffs and with the layoffs came the lack of good paying jobs for the laid off workers… They literally priced themselves out of the market, not to mention the jobs. And as trickle down theories tend to work more and more lower skilled low wage jobs went to people with more skills and that left the entry level unskilled worked home sitting on their hands and supporting themselves with government handouts.

At one time corporations prided themselves on number of plants and number of employees they had, but now it’s a leaner meaner world where managers look to cut to the bone to maximize profits… even to the point of giving up market share. I think it was JC Penny that just announced that they are going to do away with their catalog sales because it only accounts for 9% of their profits. I’d have thought something making up 9% of your PROFITS would have been considered a moneymaker but I guess they don’t look at it that way any more for some reason. They will give away 9% of their profits to be a leaner meaner company.

People often look at corporations as being greedy. It’s not. It’s STOCKHOLDERS that are greedy. It’s the institutionalized belief that profits must be maximized or the stockholder isn’t being served that is the problem. There is no such concept as “a fair profit” anymore, it’s maximum return on investment that is the thing.

And about that “tax” thing we‘re always hearing about, corporations (and ‘the rich’) don’t pay taxes, consumers do. Every dollar the government charges a rich person or some “wealthy” corporation will be passed right on back to the consumer of whatever it is that made them rich and wealthy in the first place as an expense. The ONLY result is a rise in the price of the goods and the services… which cause less goods and services to be sold or performed, which in turn means less taxes going to the treasury. Vicious cycle that it is…

How do you fix it? Is a conundrum. We need to do something to make these companies want to stay here in America and provide good jobs for our people. Companies don’t seem very loyal anymore because, well, they wouldn’t really know who to be loyal to? The stock market is world wide and ownership of many or these corporations are held by stockholders from everywhere now. Can we do anything about it? Well…

You can’t very well restrict the sale of shares BUT you CAN make it tax advantageous to locate and hire here in America. A company may pay no taxes by locating offshore but their workers will, that is if their workers are working here in America. It’s better to give a company a tax break than have no company at all…

A lot of people don’t understand that NAFTA and CAFTA were meant to level the playing field for our companies to compete on a level playing field as far as tariffs and such go but the actual bite from them comes on the wage scale issues involved. Open markets can only do so much when you aren’t competitive on labor costs, so short of adding tariffs and restrictions, well, it’s a damned if you do, damned if you don’t proposition.

The hope has always been that foreign markets would see wages rise as employment went up there, and to some extent that has been the case, but meanwhile OUR wages have skyrocketed ahead and are out of sight by comparison. Much of that is do to unions. Very little to corporate greed.

It’s easy for a corporation to relocate nowadays. We saw Halliburton do it just because of the politics involved. Others do it to take advantage of tax loopholes and easing of regulations. Which brings up another sore subject of our regulating many of our companies out of either being competitive or completely unable to do business altogether.

It can be burdensome to comply with regulations covering manufacturing, wastewater, and disposal of hazardous wastes from a cost standpoint alone, and that’s on top of labor costs. Other countries aren’t as restrictive as we are. Surely we want clean air and water, but with a population of 300 million to support we may have to make a hard choice of just how clean a air and water do we have to have?

We want our jobs staying at home but when you start layering and layering more and more costs loyalty can only take you so far and expect to realize a profit from a consumer that expects cheap prices. My dad used to have a sign in his store that said “There is nothing that someone somewhere can’t make a little bit cheaper and those that only look at the price are this mans fair game”.

That true, somebody can always make stuff cheaper. We are used to a disposable world. Example: They used to make TV’s that would last for 15 – 20+ years on average. Those televisions were comparably expensive. They started making them cheaper and the life expectancy of a television fell accordingly. Now we will go out and by a huge big screen television and pay less for it by comparison than “back then” and if it only lasts 6 or 8 years we say “oh well” and go out and get another.

Part (but only part) of that is because we are a fad driven society nowadays, always wanting the newest, biggest, best of everything. We really don’t want our televisions (or cars, or…) lasting too long because we want to be able to justify going out and getting a newer bigger better one. To make all this happen it has to be cheap. You can’t pay somebody $20+ per hour, comply with untold government regulations, run the liability risks, pay the mandated costs (union benefits/insurance/taxes) and make things cheap here in America anymore.

We are between a rock and a hard spot now. Are those lost jobs coming back home? Some might, but the rest, no. Well, not anytime soon.

-Al
 
 
 

 

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2 responses

14 02 2011
paul mitchell

Abolish minimum wage. Do it. Do it now.

17 02 2011
Kris DeKock

profoundly true

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