Capitalism, the Never Ending Saga: The Minimum Wage Provision
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The inspiration for this article comes from a friend and fellow hubber, Old Poolman. I call him OP for short. We, in our discourse, are working through the issues of the day to find these common sense solutions outside of traditional ideological and political battle fronts. He, in one of the comments from another well written article from another prolific writer, American View, questions the value of the minimum wage as it is current applied. He graciously asked for my point of view.
We all have learned in school that Capitalism (aka) the free-enterprise system is the predominant one in the American economy. It is responsible for creating more wealth for more people in the shortest period of time than any other. It has made the American economic model the envy of the planet. But as with any system (dynamo), there are cracks and fissures at the boilers where tweaks and adjustments need to be made in the interests of the larger society.
Step, if you please, into my ‘wayback machine and let’s have a look at the world before the minimum wage law was in place. Most of us have seen plenty of pictures of life at the beginning of the Twentieth Century. We had a robust leader in the person of Theodore Roosevelt, who was talking to us all about a “Square Deal” Do you remember the crusaders, known as “Progressives” who spoke of the squalid living conditions of so many people on the margins. These were the filthy slums and tenement houses. People would work for whatever the market would bear and whatever the employer wanted to pay. What we end up with were the pictures of children working in factories. Without a living wage, entire families, including children had to work in order to survive. In the underground economy today, I am sure that is the case for many migrant workers that pick the nation’s harvests. Well some of the do-gooders realized that too often child labor was child exploitation and that children should be in school. Capitalism by its very nature is a constant push for the ever more efficient. The owner is only profitable when he cuts labor costs and prices the product at the highest levels the market will allow with the goal of ever greater profits for him and shareholders. With today’s migrant worker you can see what happens.
Capitalism has booms and busts, “panics’ as they were known during the 19th and early 20th century. The Great Depression showed us all that going along with the market’s boom and bust cycles without mechanisms in place to ameliorate the extremes was not a viable approach. Government had to intervene to prevent the entire society from coming undone. Thus, a part of FDR’s New Deal reforms was the introduction of the Minimum Wage Law in 1938. You can no longer use market forces as an excuse to exploit labor.
If the market makes it possible for you to hire cheap labor at $3.00/hr, why not? If we did not have mechanisms in place to prevent it we could revert back to the early Twentieth Century economic model. That would be inconsistent with citizenship in a responsible society that has needs that go beyond the bottom line of American business owners. If corporate America won’t provide a living wage, then it is we the taxpayers that must bear the burden. We pay with higher crime rates, delinquency of the young, etc. There is the Dickensian vision of homeless waifs in the street. It only follows that the costs of welfare and entitlements to supplement inadequate wages are going to increase. When I was asked one time about paying more for my vegetables and produce in exchange for ridding ourselves of the underground economy and paying agricultural workers the standard minimum wage, I said ‘yes’.
In regards to the corporations, I have to ask that out of their great profitability in recent times, that they recognize that paying a fair wage is the part of the cost of doing business, so as the burden of that shortfall is not passed on to the rest of us in the form of higher taxes. The minimum wage is part of the rules of play for industry. In recognition of those small business owners, I do not have much sympathy for corporations in regards to this issue. It is not unreasonable to negotiate with workers over wages and salaries taking into consideration the economic climate. As for where that minimum wage should be is something that should be taken up with economists, people far more qualified than I to find this happy median. I just say that some reasonable floor will always be necessary. The corporation is much like the Arnold Swartzenegger character,” The Terminator”, an amoral entity with a single minded focus. In the case of the corporation, it is profit and everything else amounts to a mere distraction. I am not saying that the corporations are ogres; we just need to understand their motivation and make legislative and fiscal policy decisions that reflect that reality.
As President Obama said in a recent address, we are not here just to fend for ourselves. A successful society has to take more into account than the profitability of its business people. Wasn’t that the appeal of Walmart, all the low prices? What were the Chinese laborers being paid to produce the products that we are so quick to take from the shelves? What is to keep this pattern from happening planet wide? There has to be clear rules and balance between the desires of labor and that of capital. When I look at the profitability of the upper economic groups relative to working and middle class, it is evident that the vast majority of us do not share in the bounty. This is to be expected, but it so extreme today; that we have to ask how much buying power is being taken away so that it shows up on the profit line of big business balance sheets. Resentment with a lack of economic parity as perceived by the many can sink entire civilizations. The moral of not killing the goose that lays the golden eggs is a good analogy. That golden goose is the American laborer and if you get too greedy you could well end up with nothing. Without government intervention there is nothing to prevent us from revisiting the concepts of lords and serfs, slaves and masters. The middle class, its ability to buy goods and services based on a fair wage, not exclusively determined by buffeting market forces, will be the key to their survival and subsequently that of every other American, as well.
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Thanks for ringing in, GA
It is interesting to note that 90% of the worlds nations employ a minimum wage or salary that apply to workers within their respective countries. I could probably be confident that most of them are aware of the arguments put forth by the right discrediting such provisions referring to the global competition argument. Could the 90% have a valid point, or is it American exceptionalism that the right harps about all the time that nullifies all this overwhelming world opinion and policy? From Afghanistan to Zimbabwe. Ninety percent, China, included, GA, so whose zoomin’ who?
Your point about global competitions and markets are well received. I am pretty confident that American business is not going global over labor services that are only worth the minimum wage or an approximation thereof. I can hardly see it as cost effective to import or export such labor by anyone seriously in business. The Indian on the telephone, and yes, I have had the irritating experience of calling them for technical support, is not a minimum wage person, but a highly skilled technician that would draw considerably more than the U.S. minimum wage for his skills and abilities. These people are hardly mere receptionists or ‘girl Fridays’
Your market paradyne is acceptable in the more highly paid and competitive industries, but that hardly justifies not having a basic floor for wages for the reasons I state in the article. We are in global market and we have to compete globally. But 90% of the world understands that this cannot include its lowest paid labor. I am painfully aware of what has happened to the American brand and the examples you provide are good ones. But again the workers displaced were unionized or otherwise highly skilled and commanded wages far in excess of minimum wage.
It is also interesting to note that Conservatives, that does not include you as a traditionalist, of course, have been whining about the minimum wage law since its inception back in 1938. The GOP fought tooth and nail with images of gloom and doom for the American economy each time the minimum was raised, all this long before problems of global competition were before us. The conservatives always loathe the basic rights of labor, and wanted to create the master/slave relationship as a form of power and control. Well, such is not the case. So, is it any wonder that I am going to look upon their point of view as disingenuous? I never believed that the few pennies added to minimum wage was going to put MCDonalds out of business, or make my ‘big mac’ prohibit ably expensive.
Can’t go to China because they have a minimum wage law as well. I hear that American business have recently discovered that China is not going to be the economic goldmine that they all hoped. Capitalists are finding that finding labor sources that they can exploit on the world scene will be becoming all the scarcer in the face of demands that these societies and their laborers will eventually make for fair compensation for their work. As for small business, do we not anticipate that everything goes up? The cost of material and labor, it is a cost of doing business. Those costs are passed on to the American consumer in the price of the product. Your consolation is that your domestic competition is up against similar restraints. It will be up to the Government to correct trade policies that put our businesses at a distinct disadvantage, on the global stage. What do the small businesses do in the world of the 90%, perhaps they have to accept such realities as well?
You wrote a nice hub with humanitarian thoughts. But is the minimum wage issue really important?
You may argue that giving people self esteem, helping them to have sufficient income is elementary. And i will support you, but again, is that economically of any impact?
Recently i read that about half of the US population is under the poverty level, certainly a very sad fact. That gives an estimated 40 million potential clients for a minimum wage bill. Lets assume most low wage work is part time, some 100 hours/month. How much would their current wage increase with an appropriate bill? 1,5 bucks/hour?
Lets do some math on this: 12 months * 40 million * 100 hours/month * 1,5 USD = 72 billion/year. That is some 0,5% of the GDP. It takes an administration of these days in good spending mood 2 weeks to icrease the budget deficit by said number. Do you think that matters? Do you think that fuels economy?
Hello, Chris thanks for your comment. The minimum wage may well not be the boon to the economy, but removing it will certainly not help and will open the door to exploiting the labor of those on the margins.
I am certainly not advocating that the minimum wage fuels the economy, but it certainly is not going to be a benifit for most of us, if it is removed. While all the upbuilding side effects are one thing, it does come down to arithmetic, someone has to pay the difference between a fair wage and what could well be paid by those that advocate that the minimum wage should be abolished. That person or persons would be the tax payer,or we live with peoples labor having no more value than say that of a concentration camp or gulag, with their living standards reflecting the same.
Thanks for taking the time to read and comment.
Credence2 - Nicely done my friend. I run a small business, but I pay my employees far above the minimum wage. They get paid on a piecework basis, so the more work they produce the more money they earn. My employees actually earn more per service account than I end up with as profit, and I pay all of the expenses and take all the risk. So my business is run more as a profit sharing system than most small business's operate.
To start this reply, I have no problem at all with a minimum wage, and think we should have one. Like I said, I pay far above that amount. There is disparity even with this law in place based on the differing costs of living in different places throughout this country. What might be a living wage in one area of the country would be starvation wages in some other location. Now lets say I did pay only minimum wage and this amount was raised $1.00 per hour by some new legislation. For most employees this would raise their gross pay $40 per week. I have 10 full time employees so this would raise my costs $400 per week. This $400 would come straight out of my profits, the money left after all the expenses are paid. With stiff competition, I can't just raise the price of service to all of my customers to cover this additional expense or I risk losing many of my customers. Most people will only pay up to a certain amount for any service, regardless of how good the service is. Then gas goes up $.25 per gallon and with 10 trucks on the road this increases my gas bill by another $600 per month. Insurance keeps going up, supplies keep going up, and soon my employees are still getting paid, but I am working for nothing or taking a loss every month. The obvious solution now would be to close the business and lay off all the employees. While wages are a major expense, they are just a part of the money required to keep a small business up and running. Most small business owners only pay themselves a paycheck, sometimes less than their top employees earn, and the rest of the so called profits go back into the business to pay for maintenance on the vehicles, tool repairs and replacement, advertising, telephones, insurance, and so forth. Most small business owners are not getting rich, they, like their employees, are just earning a living.
No, the minimum wage should not be abolished, but constantly rising expenses can force any business to close, then nobody has a job. I can only speak to the service industry, but new customers are getting harder to find because most everyone has less disposable income than in days past. Holding on to the existing customers has become a real challenge. Our service is not one they can't do themselves in most cases, but one they prefer not to do, or just don't have time to do. As budgets get tighter, more customers will decide they can do it themselves, and our customer base will shrink. As we lose customers, I need fewer employees.
I would guess that every increase in Minimum wage is the breaking point for companies operating right on the edge of the cliff. It is not just wages, it could be price increases for gas, utilities, rent, insurance and many other things that could put a business over the edge.
Again, I only addressed small business. Large corporations are a completely different topic, and I am not really qualified to speak for them. In most cases, they have the ability to just pass added costs on to we consumers, so they aren't as vulnerable as we small business owners.
The biggest problem with the minimum wage is that it has been convoluted over the years as to just what it is supposed to do.
I come from a farming family and we employed a lot of migrant workers. They were paid minimum plus piece work. A good fast worker could earn a pretty good amount and the slower workers still made well above minimum if they tried.
But when the minimum was raised they still expected to get the same piece price and we had to let go all of the slower workers.
Minimum wage was also a killer for people like high school kids trying to make some money in their free time. It was fine to hire a few to do menial things like sweeping floors, stacking crates, helping clean machinery, etc. But with higher minimum wages it becomes cheaper to drop all of that and find other ways to get things done.
In most industry minimum wage was also for trainees who really don’t produce enough to be worth a higher wage until they have some skills. I don’t know any business that didn’t raise wages as higher skills were acquired. If you did your employees will soon find someone else who wants skilled workers.
So, all of those starting positions left the market as well. Trained workers just had to pick up the slack. Instead of hiring someone to sweep & clean the trained workers were just assigned a short time to police their station.
The problem is that some believe that minimum wage is supposed to support a family. It wasn’t, it was supposed to provide an in to gain talents and training in order to matriculate.
Yes many countries have minimum wage, we have it down here in Colombia it equals about $200 per month. China has one and it is also extremely low I don’t remember what it was when I was there.
But the minimum wage has proven to be a double edge sword employers use it to say “This is how much the government says you are worth, so this is how much we pay.” you will find few who pay much more.
Of course in America the very freedom we prize allows businesses to ship most work offshore and it has been doing just that since WWII.
The other factor to jobs leaving sits squarely on the shoulders of the consuming public. Americans will buy the cheapest toaster on the shelf 9 times out of 10. If you try to build a high quality American made toaster very few will buy one and you will be out of business in a hurry.
I thank you for reading and providing a thoughtful comment. Your profit sharing idea is great, as the standard for employees well exceed the minimum wage. It is not unreasonable to ask employees to show a little flexibility as part of your arrangement in the face of sluggish demand and rising costs.
The minimum wage as it is provides a base of guaranteed subsistence level of compensation to those that barter their labor. The wage was never designed to support a family as the poverty level is at a rate that is twice the income level that one living on minimum wage could earn over a year. You point about differing locations is correct. Many states have MW higher than the national requirement.
But to take your point further on the pressure put upon business, I wanted to offer the fact that the MW was 25 cents an hour in 1938, if it had been never raised acknowledging inflation and rising costs, it could no longer be the subsistence floor for those at the bottom rungs of the work force as it was intended in 1938, On the other side are the costs that employees have to bear, rising costs of food, fuel, lodging etc. So when they get their increase to keep them at subsistence level, the rate has to rise. Minimum wage workers are making less and have less buying power in proportion to buying power that wage represented in say, 1974. There was period from 1997 to 2006 when there was no increase in the wage, those earning had to absorb the full brunt of inflation over those years without relief. Business interests were able to keep these increases from being passed by Congress, but there is always a victim. When working poor cannot earn enough to live at subsidence levels, we all have to step in to prevent disaster (taxpayer). There is no way that an enlightened society can separate itself from the resulting systemic and wide spread poverty, it will bring us all down. I also told, GA Anderson in an earlier comment, that 90% of the world’s nations have a national minimum wage, perhaps so many may well understand why this is necessary.
The businessman is put upon by the nature of his or her endeavor, but I propose that Minimum wage, just as periodic public health inspections ,if you were a restaurant, is part of the game and is a cost doing business. You cannot afford to provide a service under such conditions without raising the price and your competition under similar restraints have no other choice as well. We need to boost demand of consumers which will put more money in everybody’s pocket.
I save most of my ire for corporations, however. I don’t want to speak from my hat as I have not owned a business of my own with the accompanying challenges you must face. The nature of small business today is dynamic and precarious, That is why not many people are independent business owners. But I don’t believe abolishing the minimum wage is going help in the long term and may well increase costs for us all. We are all victims of the slumping economy whether we are on one side of the MW debate or the other.
My question for you is that is it not true that your stiff competition have to operate under the same restraints as you, rising labor costs, materials, fuel etc? There is no advantage as all have to play under the same rules.
Thanks again for reading and commenting OP, Feliz Navidad!
Borsia, you said
"I come from a farming family and we employed a lot of migrant workers. They were paid minimum plus piece work. A good fast worker could earn a pretty good amount and the slower workers still made well above minimum if they tried".
The compensation arrangement you laid out was certainly reasonable and I wished others were as ethical and we would not have as many problems as we seem to have. As long as you complied with the minimum wage, of course you need to make business decisions as to the relative productivity of workers and you are within your authority to do so.
I can live with a teen/training wage applicable to those under 18 who has a parent or guardian, to apply to certain kinds of work. Not interested in problems with abuse through child labor.
You said, " I don’t know any business that didn’t raise wages as higher skills were acquired. If you did your employees will soon find someone else who wants skilled workers."
I don't want to allow the possibility that waqes were not raised, the only way to insure that they won't is when they legally cannot. Do you know anything about the atrocious business of bussing tables and how many times people are screwed out of just wages. I will usually err on the side of the worker, but that is just me.
I get nervous about having the value of human labor exclusely determined by the person that would have me work. Why not exploit my labor to fatten his or her bottom line, particularly if it can done with impunity?
There are a lot of people and industries that have the minimum as a standard an not just a training wage and those that do increase do not by a great deal. If we leave it to the market, why not hire people for 2bucks an hour? I don't want these people resorting to the drastic forcing the public to pay the difference from an employer that would not pay that appropriate wage.
You said:
"But the minimum wage has proven to be a double edge sword employers use it to say “This is how much the government says you are worth, so this is how much we pay.” you will find few who pay much more"
I am afraid that without government intervention you would get less, a lot less. Thurston Howell does not stay in business by be gracious to the hired help.
"The other factor to jobs leaving sits squarely on the shoulders of the consuming public. Americans will buy the cheapest toaster on the shelf 9 times out of 10. If you try to build a high quality American made toaster very few will buy one and you will be out of business in a hurry"
Thats a big 10-4, I agree completely, the enemy is often times ourselves and our consuming habits.
Thanks as always for reading and providing a considered comment.. Best regards, Cred2
Part of the fallacy I read here is about all these other countries having a minimum wage law in place, specifically China. Technically true, when a minimum wage equates to a slave wage then the hypothesis goes to hell in a hand basket.
I'm like OP. I own a small business and when I pay I pay well for work done well, not for just showing up and going through the motions.
The Frog
Credence2 - You have started something here that just keeps getting more interesting. There are so many different sets of circumstances regarding business and minimum wage. To be honest with you I have no idea what the minimum wage is here in Arizona, because I always pay more.
Someone above pointed out that most of those making MW are those hiring on for an entry level position, and not having any job skills to bring with them. The theory here being that as the new employee learns new skills, he is of more value to the company and will receive regular pay increases. That of course depends on the individuals ability to learn, and the employers willingness to pay more.
Then of course we would have to consider relatively unskilled jobs that take only a few hours to learn, but provide no revenue for the employer. For example, a dish washer in a restaurant. A highly necessary job for the operation, but pure overhead to the owner. This job will most likely never pay more than the mandated MW. I'm not picking on dishwashers, there are many unskilled jobs such as this where the MW laws are necessary. Skilled labor would most likely always pay more than minimum wage, so the MW laws really don't make any difference. So if my thinking is correct, MW laws only apply to those just entering the workforce for the first time, and for most unskilled labor jobs. It is intended to be a starting point, not a lifetime sentence for most people. It is a fact that the more one knows how to do, the more one is worth. Unfortunately, due to the economy many skilled workers are having to take unskilled jobs, and working for far less money than they are accustomed to earning.
Keep going with this hub, I find it interesting and educational.
The dishwasher example from OP makes me ask the question about competition in low qualification jobs.
As soon as a MW law is enforced, another "competitor" steps into the picture: The "machine", the "automat", the "robot".
While this may sound like a SciFi issue, it is a moral question. Why employ someone below MW, if a machine can do the job technically? Is it ok to make a human being do the job of a machine?
There is also a macro economic side of the coin. If MW is applied, this may lead to increased demand for automation equipment. You don´t need the stop and go girl at a road construction site if you put up remote traffic lights. And the traffic lights are most certainly not designed or assembled by MW job keepers.
The stimulus for economy would be much beyond the 1 or 2 bucks of wage increase. That in return would put more people in work. Of course that would also raise the demand for qualification.
Chris57 brings up some great points. At what point in time do we just eliminate the need for unskilled employees entirely? Would this just be a shift where skilled labor would be needed to build the machines that would be used to replace unskilled labor? We would also need more skilled people to repair these machines when they break down, which they will. The same number of jobs would still need to be done, whether by people or machines. If training were provided to prepare the unskilled to assume the role of skilled labor, several problems would be solved, and the need for a minimum wage law would be reduced. I can see this as both a positive and a negative. Interesting concept.
Thanks for reading and commenting, FP
Even in what was once known as a "command economy", Communist China, somebody recognizes that there had to be some 'floor' minimum. A minimum wage is never designed to pay much, but little is better than nothing. I am not confident having that "little", slave wage exclusively determined by employers and the ebb and flow of the market.
You said,
"I'm like OP. I own a small business and when I pay I pay well for work done well, not for just showing up and going through the motions"
There is nothing in my article that detracts from your premise here. If an employee is not productive, then obviously you know what to do.
Hi Cred,
Good discussion...I think OP has said it best with his analogy.
A mandated min wage increase usually does not improve the conditions of poor Americans, but it does put a strain on Owners, who by nature of busines has to be sensible to maintain a profit...which ususally impacts the poor Americans.
OP, I am glad that we able to have this discussion
The national minimum wage is $7.25/hour that is true in Arizona and, alas, in Hawaii as well.
I propose that the minimum wage is that "starter wage". Eight dollars is not very much money, when we consider that 'time' for each and every one of us has value. Ben Franklin said time is the stuff that life is made of. But as for how much and to what extent is best left to the philosophers and economists. I have been after supplemental work in this area, my background, combined with available work in the area precludes finding work in any thing close to what I was doing. Basic labor is compensated at minimum wage, here, that is a gallon of gas and a carton of milk. Life at this rate of compensation is difficult for even a single person. I am grateful that I am not in a situation where I have to rely on this rate of payment to live.
Washing dishes is a low skilled job, but a tendious and labor intensive one all the same. Yes it is overhead, but it is necessary cost and a part of your being able to do business, therefore it would have a value to you, some of that being passed on to your employee. There is an example of someone whose prospects of earning much more than the minimum is not good. The law was designed to make certain that labor of the desparate is not exploited, that was and is oftentimes the case for the piece worker and what occurs within the illicit underground industries, garments was among that. And if people were smart they would properly prepare themselves so as their economic value rises above that floor or foundation provided by the MW.
The tragedy of the latest economic downturn is that many are finding that being unemployed and not a good fit for much else outside work they were once doing, are left with basic labor jobs, paying minimum wage. It is a stark and unpleasant realization, bringing thoughts of going backwards in life, but this is where we are at present. Thanks for stimulating conversation, Cred2
Thanks for dropping by, Chris Yes, over the past century, automation has rendered many manual labor jobs obsolete. I accept that as an inevitable part of progress. For our labor force to remain viable will require ever greater skills in the face of that.
But having people work for 2 dollars an hour to preclude the possibility of their jobs being automated is not the answer.
You said:
"While this may sound like a SciFi issue, it is a moral question. Why employ someone below MW, if a machine can do the job technically? Is it ok to make a human being do the job of a machine"
Well Chris, they probably won't but the advantages of automation over people are great enough that saving a dollar or two an hour on wages is not enough to justify the advantages of automation. As a human being, for obvious reasons, my time has value. Machines are never presented with those kinds of considerations, as a result for the factory owner they have overwhelming advantage over people.
Most minimum wage scenarios relatively pay so little, as it is for work that is basically menial where there probable isn't a good automated counterpart, janitorial work for example. We are all affected by automation, I just don't believe that eliminating the MW is going to make a great deal of difference in a trend that cannot really be stopped.
OP, you said
"Chris57 brings up some great points. At what point in time do we just eliminate the need for unskilled employees entirely?"
I think that it will still be a while as there are some jobs that cannot be automated in a practical way for many reasons. I do get nervous and feel bad for the unprepared. This voice recognition software stuff is getting better by the day.Within a handful of years you may well be on the telephone speaking to a robot acting as a receptionist, and would in almost everysense be just like talking to a person. How many jobs would that eliminate in a flash? All of this stuff is coming and it is as certain as a sunrise. We as a society will need to invest more in training and education, to include R&D, or most of the young people we are churning out of highschool will not be prepared to compete in the new world that awaits them.
You bet, the soylent green world is coming and if you are not highly skilled there is increasingly the possiblity of being left in the cold. But for many, there are still no robots that will mop floors and clean toilets, but I figure the egg-heads are working on that too.
There always needs to be a floor or minimum wage for labor, for the people that still do the jobs that require little skill or training. You have the service economy and such where you really cannot automate everything. There are always going to be these kinds of jobs, they just may well be less plentiful. This is plenty of motivation to work hard so one does not find oneself on the bottom of the economic ladder. But at least, there is a floor, or bottom, the MW
Thanks, Cred2
CM, thanks for dropping by and participating.
Sorry, I do not trust people to do the "right thing". There is nothing for me to believe that the conditions that existed for the desparate and their compensation prior to the New Deal would not repeat itself, today. The reason that business and employers cannot exploit labor by paying less than the MW is simply because they are not allowed to. Just as it was in the world of the Jacob Riis photos, people are ever so quick to exploit others to their economic benifit. But that is what capitalism is all about and why certain restraints need to remain in place.
Cred2 - I would never want to see us go back to the days of the sweat shops which were cruel and inhumane. There will always be jobs that can't be replaced by machines, because they must be done on-site at a customers home, and require thinking ability that most machines can't do.
I hope you don't think I was picking on diswashers, because I wasn't. If the restuarant could come up with affordable throw away dishes, this would be one of the first jobs that he would cut, but right now he can't. Many highly skilled people have been forced to take unskilled jobs to put food on their tables. A raise in Minimum Wage would only force more business's to close, resulting in more unemployment.
I wish I had some answers my friend, but I don't. I guess like most Americans, I never thought we would find ourselves in the position we are now. I am not blaming Obama for this, it has been a long line of adminstrations who have put us in this position. A few really dumb moves that looked good at the time have backfired and put us where we are today. No one individual has caused this, but collectively, our elected representavies have not done their job.
When the last fish has been caught, we don't need fishermen anymore.
Cred2 - Another thought. The upfront costs for a company to go automated must be tremendously high, but they must feel the payback in saved wages will be fairly rapid. It isn't just the wages either. Robots don't call in sick, get benefits, vacations, and don't unionize. Now one would think that by eliminating all these added costs and wages they could provide their products far cheaper, but I sure don't see any prices coming down in the stores. Could greed be involved? Surely not. We will always have jobs that machines alone can't do, but we will have thousands trying to get one of these jobs.
OP, don't worry, I have never washed dishes in a commercial setting, I was just following on your example. The problems we go into the future with relates to productivity and educating the workforce to fit in with what happening around us.
I am relieved that you do not place the blame solely on Obama because much of what we are experiencing is the accumulation of many errors over the last 30 years over several administrations as to how the economy has been mismanaged, it just all came to head within the last 3 years. I cannot expect that so much error over so long is going to be corrected overnight, but with the right policies, we can begin.
Another thought. The upfront costs for a company to go automated must be tremendously high, but they must feel the payback in saved wages will be fairly rapid.
OP,
Thats exactly right, the upfront costs will be made up for and the company will reap the benefits of higher productivity at lower costs in the future. Thats why the scenario is so popular. As you pointed out, the savings may or may not be in the cost of goods and services, but could and in my opinion, more likely is showing up as greater profits for the owners. Why else would American firms incur the expense of going to Thailand to make tennis shoes, selling them here at $100/pair? The money they save in labor is going into the company's profit, not reducing the price of the shoes. I would certainly entertain the idea that greed has the predominant place in all of this as most of us will naturally try to get more for less.
My only point is that min wage laws has NOT been a tool to help those in poverty. It hurts them more than it helps them.
That is why it is so important to creating a strong enviroment........letting a free enterprise dictate the market. It is a solid principal that works. We have labor laws to protect us from 'sweat shops' and unfair labor practices...we need to get back to basics, with less government interference into the private entreprenurial world.
Cred2 - I absolutely agree with you. Our situation today is like a person being bald or overweight, it didn't happen overnight. The big problem is we were not paying attention to what was going on. I understand we had economists telling us we were headed for big trouble, but we didn't want to hear this. After all, most of us were doing just fine, why change a good thing. So, here we are today just hoping it is not too late to fix it. We definetly need some really smart people free from politics to help us with this. If you are really sick, you hope you get to see a specialist who is an expert at curing your particular illness. We have left major decisions and planning in the hands of those who were far from experts, and had to play to the voters while making these decisions. Not all changes are popular, but necessary. Let's hope our leadership can swallow their pride and ask for some professional help. To hire someone as an adviser because he or she is an old friend and usually agrees with you is not a wise move, yet that is what our Presidents have done.
We may have to agree to disagree on this CM, I would never allow the invisible hand of the free market to slap me across the face. It is the conservatives that complain about government regulation, "labor laws" as excessive government intervention into the private economy. I will never trust the fox to guard the chikcen house, per se. I don't see a 7.25/hour wage as one that stiffles the economy. As I said earlier, 90% of the worlds nations accept the need for this provision in some form, why? How is that all these thoughtful people are wrong and the conservatives are right? I would be more fearful for the poor if their economic circumstances are determined by those that have every economic incentive to exploit them. Thanks for sharing your point, CM
I see the government as the fox guarding the henhouse...I think that is the big difference between you and I.
Cred, I think OP's last comments are something you and both can and will agree on though.....OP, is ONE wise mand.
Chris
Op, that is most true,we have contributed to many of our own problems, the Walmarts that we purchase from instead of buying American. The greed that drives the system is always going to have unpleasant consequences later. Who sat around and allowed our country to get into this kind of debt with China? As LBJ once said "they got your pickle in their pocket". Are we all so short sighted to be pigs during the boom times not recognizing that all that rises must eventually fall? How many of us make the mistake of living on credit, the system encourages us to consume without thought and to borrow withoug a thought as to how we are going to pay when the bill is due. Well, OP, it looks like the chickens have come home to roost. In my opinion, the only folks that have made out like bandits are the banks.
Chris,
"I think OP's last comments are something you and both can and will agree on though.....OP, is ONE wise mand".
On that point, I certainly agree most wholeheatedly
Cred2
The name of the game is called "productivity". What productive contribution to economy does a "stop and go" girl achieve? I would say: almost none.
Productivity is value created divided by working hours. The value created in this case is drivers safety, keeping cars out of accidents. Because this is a very statistical thing, little probability of accident and even smaller probability of accident avoiding because of a stop and go girl, the value created is very small. Divide that by working hours and you get productivity close to nil.
Put up an automatic traffic light and there will be no working hours, except the time to set up the automat. Do the same calculation and you will find out the productivity is much higher (accident avoidance probability / set up hours).
So here we get closer to the real problem of American economy and it is related to Minimum wage. If wages are so low (for the stop and go girl), that it is more expensive to invest into a traffic light, then - no business case for automation, consequently no productivity.
Of course people may say, if the girl earns money, she will spend it and consume and fuel economy. I would say that is wrong. All the girl does is channel some revenue of the road construction work (that is productive) through to her wage. So the values created are simply distributed. By doing so, productivity is lowered.
The bad thing is that if you extrapolate poor stop and go girl to the American economy, then productivity is kept at low level, too little incentive to mechanize, to automate. This is a downward spiral: To maintain competitive cost at low productivity there are even lower wage jobs necessary. Low wage jobs are not qualified so they require an extra shot of management to get at least something productive out of the job. That again costs extra...and so on..
Cred2 - Please don't get me started on banks and credit. I often hear the expression "I have a little room on one of my Credit Cards." What the hell does that mean? It means they are paying the monthly minimum but have paid that card down to the point they can charge a few more bucks worth of crap on it.
I have a daughter who has long been a fan of EZcredit, and put herself in a position where she was forced to declare bankruptcy. Days after the bankruptcy was done with, her mail box was stuffed with, you guessed it, credit card applications. I asked my accountant about this and he said in their eyes she is a good risk because she doesn't owe anyone money. She beat all of her creditors out of what she owed them, except student loans and the IRS which I paid off. But now she is a good credit prospect again? Give me a break.
The credit card companies hate me because I pay mine off every month, they are pure convienience for me. But when I accept credit card payments from my customers, the hit me for a percentage of the payment for "processing?" So they collect interest from the card holder, and processing fees from the merchants. How can they lose?
Told you not to get me started.
Hi, Chris, no she is not manufacturing anything but she does provides a service without which something essential does not get done. There are many such 'support jobs" in the American economy
Overhead are valid costs, costs for accountants, lawyers, janitors that are not directly related to production but without them the business cannot survive, this constitutes staff rather than line personnel. Every serious business requires both.
It is a lot like insurance, while the odds of an accident may be small, if one occurs it would be devastating to the business in litigation costs.
You said:
Put up an automatic traffic light and there will be no working hours, except the time to set up the automat. Do the same calculation and you will find out the productivity is much higher (accident avoidance probability / set up hours).
No, argument here, Chris, of course an automatic stop light would be ultimately cheaper in the long term if not in the short run. Their accuracy and consistency far exceeds that of any human being that is why the planet is covered with them today.
If you saying that if wages for the girl is low enough there is no incentive to automate, you are probably correct. But as what was mentioned in a earlier comment by OP, there are many advantages to automating that exceed the obvious advantage of no longer paying wages for the work. I believe that even if the girl were paid a dollar an hour, the efficiency of automation is such that the company would still come out ahead in the long run by automating
The girl would probably be less productive than an automated device. The girl is going to take her meager wages and buy food, shelter and clothing, that in turns puts money in the pockets of the merchants that provide these things, which assists the overall economy. Every company of business has to measure overall productivity taking into account those aspects of labor that are not directly associated with producing the goods or service, but as I said before, are necessary all the same.
In my opinion, there is always an incentive to mechanize and the company desire to make this capital expense will be determined by many factors that may include the wages of the girl, but I would suspect there are more important things to be gained, removal of the girl would be collatoral damage. The lower the company is allowed to pay an employee the more society has to pay to make up the difference between what this employee is being paid and the subsistence level of compensation so that this person is not a burden on taxpayer funded entitlements. There are other points to ponder and diverse interests that have to be balanced to make all of this work. I found in my experience that there is "no free lunch", if you take from Peter, you have to pay Paul.
Please let me know if I have properly address you question and issue. Let us carry on in the search for answers.
Thanks, Cred2
You know, OP, they say that there is no devil but on the contrary. No mortal man could have come up with so diabolical a scheme, such as the credit/debt cycle.
This could well be another hub. I think that the average American consumer has long lost the ability to acquire most of the baubles dangled before our eyes via high definition TV. So to get you to buy, you can either get money through mortgaging your house or let the loan sharks of the banking industry let you borrow their money at extortionist rates. I mean how long has it been when a head of household could bring in enough money to support a family? The credit card was design to make up for the shortfall to disguise the fact the real value of of wages has gone down over time and all the while, the big shots have been becoming disproportionatly wealthy as a result.
We are retired and on a fixed income, so we dispensed with the credit cards and even though our pension is just over the "median" of wages earned by the average U.S. worker, it is always tight. Living within your means is always a challenge and the system is not designed to make that easy. I have had to "sit" on my wife in regards to her tendency to impulse shop. She says we are going into poverty, I say that in the long run we are going to be better off. When you are in debt, you are a slave. This system is designed to produce slaves in guilded cages. I hope that this situation that your daughter ran into is a good lesson. She can take it from me, IT IS NOT WORTH IT.
OP, youre not playing by the rules they set, if you want good credit, you need to show that you can balance all of their induced indebteness on the head of pin. People that avoid the trap are considered not as desirable or credit worthy. This is all such a God awful snare, and if people would look at the big picture they would see the sinister nature behind its design. This is a sharecropping operation where you never get the store paid and they will take the last gold filling from your teeth before you are consigned to the ground. Most unsettling. Is it no wonder that the left has had such a time trying to get these "to big to fail" people to accept meaningful reforms. Give up their cash cow? That is like asking one of my goldens to use the toilet. Thanks Cred2
Cred2 - First off, let me tell you what a pleasure it is to be able to discuss a controversial issue such as this without it becoming a name calling left/right battle.
There is much to be learned by reading the input from others who comment. They come up with things I had never thought of, and contribute a great deal to a discussion like this. I would hope this trend can continue because it truly increases the value of a website like Hub Pages. I can do without all the other hubs that are nothing but verbal altercations.
You should be very proud of what you have started here Crede2. You and I got off to a rather rocky start, but I have come to have a great deal of respect for your ideas and things you have to say. I have learned a few things, and hate to admit this but have changed a couple of my opinions because of you. I wish you were a little closer to Arizona so we could have an occasional fireside chat. But then you live in paradise, so maybe we should do it at your house.
There are a lot of comments I still have to check but I will offer this insight.
When union’s high demands put a big enough cost factor into the US automotive industry they turned to robots. They eliminated huge numbers of workers and cut costs.
It really would be pretty easy to build a robot that could wash dishes or do other similar jobs. It hasn’t happened yet because the cost / installation hasn’t tilted enough. A robot is expensive to install, but once in place they can usually out perform people by considerable.
A robot doesn’t care how hot the water or dishes are. Can’t cut a finger or get a burn and it doesn’t need a break or a lunchtime.
They can work overtime and holidays and pull 24 hour shifts without complaint of fatigue.
One service tech can service the robots of 20 or more customers replacing 40 or more human workers. That service tech isn’t on your payroll beyond the time required, a couple of hours a month.
When you look at paying workers from the other side, paying someone $7.75 will cost you $10-12 depending on where you are. Those added costs are taxes and matching Social Security, etc.
It may be more than that these days it has been 6 years since I left the scene.
So what have we seen happen so far?
Many employees have been cut from 40 hours to 35, making them part time workers and subject to different labor laws. Those people are now underemployed but their bills didn’t take that pay cut.
JFK didn’t like the high unemployment number during his time in office. But his answer wasn’t tackling unemployment it was changing math. He instituted the current system where people who are unemployed for a longer time, I believe it is still 6 months, are dropped as well as underemployed workers.
Today Obama claims that unemployment is down (9.1-8.6%) but if you look at jobs created vs jobs lost that claim is bogus.
The real unemployment rate today is somewhere between 20-22%.
That is almost equal to the great depression.
The pleasure of the discourse is all mine, OP, rest assured. It is not a left right battle, but as you can see, my point of view and that of CMMerritt, for example, are quite different. Can we find a common middle" The idea of these kinds of articles is the hope that it is possible.
Well, I am all for seeing what other areas currently in contention can find a common sense middle ground. One side is simply not going to overwhelm the other, compromise is the only way.
Well, Op, like I said at the start, your pertinent question was the inspiration for the article and hopefully we might learn more about the positions people take and more importantly, why, and see what areas opposing sides can agree on vs the areas where we have to split the difference. Thanks for the compliment and your participation and I welcome you back at your earliest opportunity. Let us reason through these things together, as a result of our conversations, I have had to take some of the flowers out my hair LOL...Cred2
When we get our financial house in a bit better order, I certainly wouldn't mind coming to visit and sharing a brew or two! I am the one to contact if you are coming out this way, for the special aloha we got reserved for you.
.
Hi, Borsia, thanks for you continued participation in this debate. In the face of global competition, union labor priced itself out the market, that is certainly true. That is the nature of the beast, cut costs and make more efficient to boost profitablilty or even to just survive.
We already have that robot for the dishes, it is called a dishwasher. I have seen this little gismo that goes around the house and removes dust and lint from the floor. You just set it and let it run around to its heart's content. You confirm what I was telling Chris57 that automation has so many advantages that any business that can afford it is crazy not to do it for the benefits to be reaped down the road. The trend is quite clear, automation and computer software virtual voices and images may well become the receptionists of the future, freeing companies to devote precious resources to activity that presently only people can do. It may be a while before a robot can give me my Burger King Whopper, my way, right away. But, I know better than to rule out things. When there is economic incentive the impossible becomes the possible then becomes the probable and then becomes reality.
It is a fact that the value of unskilled labor is decreasing relative to the overall costs of living. Woe to those that come along that fail to recognize this reality, the pickings are going to get slimmer.
I would not say that this is coming from Obama but from agencies tasked with providing this information. As you say, this way of determining the numbers has been around since JFK. Were the numbers any more credible when Ronald Reagan was speaking of progress in pulling us from the dreadful downturn of the early 1980"s. They all fudge the numbers to serve political purposes, Obama is not unique in this regard.
What I fear, Borsia, is that this time the problem is not part of a cycle, but more structural in nature, we are going to have to lift the bonnet of this car to do major repairs rather than just fill the tank with gas or put air in the tires. This has been coming for years, while everybody has been in denial, well, now here it is!
Again, thanks and happy holidays!
Cred2 - Anytime you can make it to Arizona you would be most welcome. Jim AKA "The Man With No Pants" lives right up the road from my house. I can actually see his house from my house. We could have some great chats over a cold one out in my Cabana, and might even solve a few of the worlds problems in the process. Please don't come during the summer months, you would hate it. But the Spring and Fall are great.
Have a great Holiday Season over there in Paradise.
Happy Holidays to everyone.
I would say drop by for a drink but it is a long way to drop.
It had been raining everyday for the last few months, not normal down here, but the last 3 days have been fantastic, normal.
It seems like the weather around the world has been wacky for the last 3 years.
I hope it will behave and give everyone what they want.
Well; maybe not everyone; I have heard “let it snow” and other snow related songs playing here and there,,,, this is the tropics, it never goes below 65 on the coldest night in a rain storm!
Cred2 you certainly know how to start a discussion. I wasn't able to look at every comment but I do have this to share. I think that minimum wage is a must..that being said I think our current economic status has something to do with the inappropriate increments of the wage. Minimum wage is for minimum work and when the bottom is too high it forces business owners like I was to cut back..even when we paid higher than minimum to begin with. Someone brought up foreign trade and I'd say that is why we have tariffs, if only we could remember they are designed to keep our economy safe, not our neighbors happy. Finally, I am all for capitalism but lately I'm really tired of corporations. They are supposed to be treated like an in individual but they are put on a pedestal because of the potential for jobs. I often wish those corporations had a special tariff of their own so people who don't want to be owned by the company store had a chance to compete with them. If you have a choice to buy something from your local dressmaker or from Walmart in the year 2012, please choose the little guy. It would make me feel good:) Merry Christmas to you and your chicks.
Hi, OP, I dunno, I kind of like the heat, don't you live in Southern Arizona? I wrote a hub entitled "Sweet Spot" alternate places to live in retirement and I touched on Sierra Vista. If it wasn't for my Hawaiian spouse and her desire to return here, I probably would have look seriously at moving in. After all, it is a dry heat, you could do worse. Cred2
Hello, Borsia, no way I am going to give you all the braggin rights. We here have had raining cats in dogs over the first three days of this week. But it has cleared up and is quite lovely now. This time of year, the coldest nights are in the low 60's. Life in the tropics and sub tropics do have its advantages. I have to admit that I am a fair weather friend! All the best, Cred2
Hi, FF, as a business owner, it is great to have your take on this.
"I think that minimum wage is a must..that being said I think our current economic status has something to do with the inappropriate increments of the wage"
I am glad that we agree on the concept of MW. Recognizing the economic straights we are in, of course any increase in the MW would be inappropriate at this time. It needs to risein response to inflation and the increasing cost of living periodically. Without that what was once subsistance becomes far less. We have to find that balance of subsistence verses labor costs that intimidate the small business owner.
As I said in earlier comments, generally those on the bottom have been losing ground against inflation and rising costs for what it takes to live. Problems arising from unfair trade practices on the international stage needs to be addressed frankly with trade partners that take advantage. I also think that much of American commerce is being taken advantage of by those having economic systems that include far greater government intervention, giving them the competitive advantage. Our diplomats need to figure how we are to level the playing field, cutting the floor for our lowest paid workers is not the answer. No one here can live on the wages that the Chinese worker receives.
My sympathies and desire for protection goes to small business as the engine of the American economy. What breaks are available should be given to them. The corporations are very profitable for the most part and are greedy to get even more at the taxpayers expense.
May you and yours enjoy the holiday and have a prosperous 2012 Cred2
Crede2 - Even with the dry heat, 112 degrees is hot, but not unbearable. A slight breeze and a little shade and you are good to go again. If you like heat, July would be a good month to come. I do have a swimming pool.
Thanks OP, you can bet on it!
Credence2- Excellent Hub, which sparked a vigorous and interesting conversation. Very impressive. With all due respect to all the other commenters, I couldn't agree with you more if I had written the Hub myself.
We do need a minimum wage (and maybe it should be higher, or maybe there should be an under 18 and over 18 min wage) and it is not OK to trust that every business owner is unfailingly fair and reasonable. Look at what has been happening in America this past couple of decades. But I am ranting (preaching) to the choir.
I do not equate, nor did you, the problems for small business owners with the rampant and unethical profits generated by Big Banks and Corporations earned off the backs of average workers. What has occurred in recent years was immoral...and our government let it happen.
There has been far too much mindless reliance upon the patently and provable false assumption that Capitalism, total economic freedom will always result in improving economic conditions for all -- workers and owners. This is not true, nor is the ridiculous and oft quoted statement... "A rising tide (profits, the economy) will raise all boats, little and big, equally." Nice idea, but completely untrue. The shift in wealth in America from the middle to the top of the upper class in the last twenty years is absolute proof.
There is a crucial and necessary role to be played by government. Does the government always do a good job? Absolutely not, as we all know. Does that mean that government should not intervene in the economy?
Of course not, it means we need to elect smarter, tougher, better politicians who aren't in the pocket of Corporations and Big Banks and who will intervene as necessary to provide a more level economic playing field for ALL Americans, not just the top 1% or even the top 10%.
Thanks for a well reasoned and argued Hub and position. And what are we all doing on HubPages? It's Christmas morning!! Hope you a Happy New Year.
Voted up, awesome, useful, and interesting. Very well written Cred2. Sounds to me you should be in Washington. I must admit, I don't follow politics. I do watch CNN and other shows, but you know how the media is. I well respect your case and it is solid. You make great points, intelligent points in your article. I agree, there has to be placed balance between the two. I have never seen Washington so split ever before. I think they need to put all their issues in the back and get some things done. Great article.
Happy Holidays everybody and what a Christmas morning delight to happen upon this hub! I'm new to hubbing and have found this an interesting dialogue among forces who so seldom seem to find a stretch of common ground. It's great to see "libs" and "cons" move a little closer in finding solutions. I'd just read OP's interesting article about entitlements before landing here. Cred2 made a valid point that if corporations won't pay a living wage taxpayers will bear the burden. "Load bearing" taxpayers (who are also consumers) pay to clean up and solve so many problems while funding the entire government it's a great topic in itself. The inescapable middle class tax burden has prompted present public discourse regarding the fading middle class––a proud, hard-working group of American people who've been required to rescue a troubled world and solve its problems for many decades. Cred2, thank you for practical, courteous and insightful journalism. I've enjoyed all the comments! Happy New Year Everybody!
Thanks, phdast7, praise from a master is most gratifying.
"We do need a minimum wage (and maybe it should be higher, or maybe there should be an under 18 and over 18 min wage)"
In one of my comments, I certainly said that I could live with a lesser wage for teens, I am with you on that.
If we just allowed the 'market forces' to prevail, those that have taken so much will be emboldened to simply take it all. They, with the help of their GOP co conspirators are well on the way to doing just that. When they are through, you would see working in a gulag as a perk, in comparison. Greed is always unsustainable in the long term and can well bring the entire house down.
I agree with you that small business really is not the culprit, and are in fact the heart of the economy. It is a slight of hand that has people believing that the GOP pretends to care about small anything. They have always been the mouth piece for the big boys, the bourgeosie, if you will.
Yes, most of us have been slapped in the face by the 'invisible hand' of the free market that according to conservatives make all these natural corrections in the economy. As long as there is some parity we all have a chance at surviving as a nation. We took our eye off of the ball and now we have "too big to fail".
The rising tide seems to lift only the yachts while our dingies remain stuck in the sand bar.
In modern times it is always necessary for government to intervene in the economy as I pointed out in the article. None of us want it to be excessives, but the times are showing us that we need to ratchet things up rather than the other way around. With the nature of money and politics in Washington, the special interests seem to prevail over all the rest of us. The banks and the corps are only interested in accumulating more at the expense of the rest of us.
Thanks for dropping by, reading and sharing your thoughts. When evferybody can recognize the enemy despite its myriad of diguises, then there is hope that we can get control of things. Merry Christmas, Cred2
Thanks, TLW, I had considered entering politics here on Gilligan's Island, but to get the attention of those that make it possible, one has to be so political. Opposing sides are loathe to the idea of compromise and negotiation. The people's business has been put on the back burner, to the detriment of us all. Except for the referee there is nothing to prevent the killing of the golden goose, so they are going to try to remove the referee. We are in troubling times, lets hope that we find a little light for 2012. Thanks for your insight Happy Holidays, Cred2
Cred2 - Happy Holidays my friend. I sincerely hope the sun is shining brightly over there in Paradise. Is it true you guys serve "Spam" instead of ham or turkey on Holidays? I happen to like spam, so it wouldn't matter to me. Just kidding by the way.
Being on vacation gives me a little more time to think about some of these issues. One thing that bothers me is we let these Corporations move offshore, taking their jobs with them, but we imposed no penalties on them for doing so. They now produce their goods at 1/3 of the cost, and send them back here for sale at regular prices. They keep a little tiny office open here in this country which makes them a multinational corporation, then they declare their profits in the low tax country, and declare all of their losses here in the US. Thus they pay little or no taxes, but still sell their products over here. The mistake was not closing and locking the door behind them when they left. We should make them decide if they want to be a foreign corporation or a US corporation, but not allow them to be both. I know laws were written to protect this very situation, but it would sure make them think a little harder before moving their operations off shore. Now they get the best of both worlds, and we pay the price.
We all know the banks and Wall street own most of our politicians. How do we fix that? We can't just tell them "stop it" and suddenly the problem is fixed. Nope, we have to catch our politicians in the act and fire them. We need to tell their replacement "don't even try it" or you will also get fired.
In truth it is our own fault. We went to sleep and quit keeping an eye on what they were doing, and now we are paying for it. The good news is many of us are waking up, taking a look, and letting them know we don't like what we see. It may take awhile, but if we keep the pressure on our politicians we can at least make things better. Citizens arguing with other citizens will never resolve anything. That is what they like us to do so we aren't paying attention to them.
Have a great New Years my friend.
Thank you, Michabelle for the compliment, it is not always easy as there are fundamental differences in how the blue and red see things, Hopefully, purple will be the solution for everybody and we can move the ball forward. OP is a great guy and is sincere about finding a workable solution to the standoff between ideologies. Who wants to see the wages that the employer should be paying being paid by you or I? Who do you think benefits under such a scenario? The health of middle class is what will make us or break us. Thanks for you compliments and I certainly look forward to hearing from you again Cred2
Hi, OP, Happy Holidays to you. We are cruising here with partly cloudy skies and a temp of 71 degrees. Santa is out here with his 'boogie board' catching the waves. It always rains here at least once a day during winter. Spam is big business around here, but it is an acquired taste. You would be surprised how many different Spam varieties there actually are.
OP, unfortunately, it is seems to be human nature that when you offer an inch, they take a mile. There is no patriotism or concern about our country, it is just milking the cow for whatever it can get. They will take advantage if they can and it is against our interest to allow them to do so. I touched on this issue in a couple of articles, if you have a minute check out:
http://credence2.hubpages.com/hub/One-Progressives
http://credence2.hubpages.com/hub/DONT-REWARD-OUTS
Yeah, OP, they don't get to have their cake and eat it too, they want the benefits of being an "American corporation" without living up to the obligations as to what that means. The way the companies are conducting business is part and parcel of the capitalist ideal, but we as citizens have to put regulatory provisions in place to keep them from running off with the store. There is no incentive for them to consider our point of view unless we create one for them.
Like the line that Bufford Pusser made to to his deputized police force in the film "Walking Tall" there were two things that got you into trouble, he said that you will enforce the law equally and that anyone taking a bribe will have their heads knocked off. This allowing so much lobbying, cash exchanging hands and the like needs to be curbed and both parties do it. Oh yes, OP, the system dangles trinkets before your eyes, while their hands are in your pocket. We are all too busy chasing after ghosts to acknowledge the elephant in the room. That is the way the power brokers want it, distract and confuse. People need to get educated as to what is going on and the man in the street needs to speak in one loud and resounding voice that the parlour games must end, as you guys in Congress need to be reminded as to who is holding you are accountable.
As always, thanks for weighin in.... Cred2
Have a great New Years my friend
@Old Poolman, and all - Geesh. I better type slowly - let my blood pressure settle.
All this BIG CORP talk, I have an idea - try a little word substitution.
I frequently advise people that advocate government pay for something to instead say "Let Bob pay for it." After all Bob is a neighbor you can put a face to. Government is not spending its money - because it doesn't have any. It only has taxpayer money. And since your neighbor Bob is a taxpayer - User Bob's name instead of government. "Bob should pay for it."
Try the same thing with BIG CORPS, But this time, substitute "Greedy People" because that is the culprit. Corporations are only the vehicle - it's greedy people that are the issue. And there are those in small businesses too - they just aren't large enough to do it on a scale that gets national attention.
It really is not Big Corps that are the problem - it's greedy people driving them, and bought politicians writing the rule books.
as for complaining about a corp manufacturing overseas and selling in the US - Penalize that??? Really? Why not just put them out of business now, because that will be the end result if you penalize them for it.
When you buy a DVD - The American-made brand is $100 - assuming they have to play by the rules you implied, and the "China-made" brand is $33.33 (again, using your 1/3 overseas production cost analogy), and they are both of equal quality, Which one are you going to buy? A few years back, the unions tried the "Buy made in the USA" program to get people to include patriotism in their buying decisions - didn't seem to catch on.
So we should restrict US companies to US manufacturing?
Make a decision! Foreign or US, well, since corporations are profit vehicles, ta ta!
Any of you folks ever read Asimov's "Foundation" series - it was in a Galactic Empire setting, and since the private economies of the outter planets were more efficient, less taxed, and specialized, than the central home planet, Trantor, and the more Trantor tried to control and tax business, the more business moved to the outer planets - until the only function of the entire home planet was government and bureaucracy. Maybe it's a stretch, or even a silly analogy, but....
Stop complaining about corporations - they are nor the evil entities they are portrayed to be. Scapegoating them is lazy. From little league to life, lemonaide stands to GM - everything has rules. You live your life by the rules - why is it wrong for corporations to play by the rules?
If they are not playing by the rules, then prosecute them. Send their crooked greedy butts to jail. But - if they are - then direct your angst where it belongs - the rule makers.
GA
Credence2,
I will make this as short and sweet as I can.
The installation of "minimum-wage regulations" is one of the worst things that ever happened to America.
All of your talk about the "teeming slums" and so forth of the early 20th Century is nothing but a bunch of socialist and PBS propaganda.
The truth is, there are presently far more "teeming" and dangerous slums in the U.S. than there were decades ago. And if you do not believe that, take off on a nice long road trip that takes you through such places as Watts, Compton, East St. Louis, Chicago, Gary, IN, Detroit, Cleveland, Akron, Buffalo, New York City, the District of Columbia, Philadelphia, Newark, Camden, Paterson and Atlantic City, NJ, Baltimore, Atlanta, New Orleans ...
And "President Obama?" Naw, brother, the correct title is Comrade Obama.
GA - My complaint is not with Corporations themselves, hell I own a small Corporation. My complaint is what they are allowed to get away with because of the huge amounts of money they can lavish on politicians to get loopholes written into laws to further increase their incomes. GE gave huge campaign contributions to Obama. Tax laws are certainly structured in their favor over the small business owner. They being allowed to maintain a rented office with a chair, desk, and typewriter so they can write off losses in the US. They paid dearly for all of these favors. These loopholes are like rewards for them for leaving the country and taking thousands of jobs with them.
So few raw materials are available here in the US that even products manufactured here should really say assembled here. We buy all the parts from foreign manufacturers, glue them or screw them together and proudly say "Made in the USA." We all know, though some won't admit, that rising labor costs and outrageous benefit and retirement plans eventually made it impossible for manufacturers to compete with foreign goods. I guess the only choice they had was to relocate or close the doors. Perhaps I am not being fair when I say they should be penalized for leaving.
Feenix, I would be interested in hearing more about the damage that the Minimum Wage Laws have done. I think I know where you are coming from, but would like to know for sure.
Well, GA, I certainly do not want to have you “vapor lock” on my account.
Nobody is attacking ALL Corporations in principle, but we are attacking the ones that take advantage of the tax code to the detriment of the rest of us. A lot of it has to do with scale, as of course the problem is exacerbated by those that are in a position to rip off in larger sums.
What we need to do is what you suggest, focus on the rule makers, and get those rule makers out of office that are in bed with the greedy people. Is that not your suggested course of action?
While, I may not penalize corps that hide their profits and avert taxes by subterfuge. Why should I subsidize them? We could instead reward corporations within the tax code for keeping jobs and resources in the USA and remove that advantage from the “greedy people”. We CAN start with that.
Your point on the China DVD example is well taken. A lot of what you are speaking of is part of doing business and, alas, domestic workers are not competing well on a global market with such availability of cheap labor. I would suspect that this the real underlying problem behind much of this economic crisis. But, while this reality may never go away, we do not have to encourage it.
I have read some of Issac Asimov’s science fiction, yes. The Trentor example is stark,but working within your analogy, the truth is somewhere in the middle. I may not be able to keepthe private economies from running away but they are not going to benefit with their hands in treasury. If what they do is not having a beneficially effect on the Trentor economy, they just use the name “Trentor”, I would not pay for that.
As a taxpayer, I don’t care if that corporation is efficient or not. Their are only entitled to my tax dollars and subsidies if their effort promotes American jobs and have a net positive contribution the American economy. Othewise the outer planets operations can just remove the “Trentor” name and fend for themselves.
In conclusion, yes, GA, we need to the change the rules and remove those in legislative authority that tend to resist making the needed changes. And most of know who these people are!
cred2
Hello, feenix, thanks for providing comment. Of Course, I disagree with your view about the appropriateness of the minimum wage
I don’t know why rightwingers will discount years of documented history and authoritative sources and always prefer to cling to those persistent delusions that take residence in between their ears? What objective evidence do you have to say that all of this is propaganda, it is not like you were there, now is it?
If you knew anything about history you would know that conditions that were prevalent in America’s worse slums a century ago and far and away worse than anything today. What improvements we have seen are the direct result of that progressive movement, which of course, you say is just propaganda.
As for the President, of course, you have your views, but I have mine!
I haven't researched it but it was written in a forum that GE paid little or no taxes last year. One of my issues (being an old grandma) is years ago the media and our parents taught us to fear communism and that we were being threatened by Russia. Communism was our enemy. Now what we're seeing is that our corporations are moving American jobs overseas to communist countries to enhance communist economies while improving their own corporate bottom lines. Of course it's devastating to our own economy but do they care? Being a little confused by it all, and having a rather black/white mode of thinking, I'm wondering where the word "traitor" fits any of this and whether that word is extinct when it comes to corporations and profit. Or, are there plans the media has yet to inform us of that the world in fact under construction in becoming a one world government? If so, huge corporations would be the first to have knowledge of it––and make moves to capitalize on it.
Hi, Michabelle
Thanks for providing your insight on the article and it comments.
What you have heard about GE is most probably more than rumor, as I have heard this, as well. I am going out on a limb here, but I believe that all of this is just another chapter of how one guy is going to get into the pocket of the other with the least resistance. The never ending challenge of our times: You sow, cultivate and harvest the grain, but I eat the bread. We have created boggie men to shroud the true nature of this basic conflict. How else do you get the masses to believe that they fight and struggle for a higher cause and distract them for the real culprit? Look how easily our alliances and associations change, most of it is economic not political. Who was once an enemy become as friend if enough money can change hands. Well, I am not confused anymore, it is an elaborate trick, in the never ending war between the haves verses the have nots. Your idea of the possibility of a one-world government is certainly one to consider. Political boundaries are insignificant in the world of the most powerful, when consolidating wealth and power is the real objective. The titles for political ideologies and such are just for our amusement. Thanks Cred2
Cred, thank you for the insightful topic. It really doesn't matter whether the issue is right or wrong, black or white–– when profit is the bottom line, everything is blended to a shade of gray and compromise. So while 1960 was a time when Communists were bad for America and everything she stood for, now corporate profit and money matters have changed the course and diluted that mode of thinking. Money rules. It's as simple as that.
@michabelle - Greetings - you nailed it with your closing statement.
When all the conversations, tirades, rants, propaganda, and outright lies have exhausted themselves - the bottom line is still the same...
"Money rules. It's as simple as that."
It has been that way since the first caveman traded or bartered for a new club. And it is still that way now. And as long as we remain human it will always be that way.
The real issue is our decision to accept that and work towards controlling its power - which means holding the people we elect to lead and represent us accountable. All the money in the world won't help influence buyers if there is nobody they can "buy" to rig the game in their favor.
GA
On MY! What a Hub and Comments, Credence, I am jealous. So much to comment on, I can ignore my own hubs for a month, lol. Let introduce one topic that I don't think has been mentioned yet regarding labor and business (btw, I am a fan of MW, just for the initial reasons you state), and what sets labor prices; that is supply and demand of labor.
Without a minimum wage, most jobs in which there is a large over supply of labor would be paid a dollar an hour today, or some such absurd low amount, because business could get away with it. The only thing that would interefere with that and keep wages up is unemployment insurance for as long as the government kept that going, which, if the Conservatives were in power, probably wouldn't be too long. As soon as unemployment dried up, then wages would fall again.
Even altruists like OP would drop his wages because his compition would. People are in business to make money, and has been said many times in the comments above, business owners will pay the lowest wages possible. So, in an ecomony like we have today where there are 10 people for every job opening, unconstrained, businesses will pay the lowest possible wage they can get away with, which, over time, will end up being a starvation wage; that is just how capitalism works.
Even when the economy picks up and businesses start hiring and the supply of labor begins to dry up, it will be the skilled labor which will see the the shortages first. The economy will have to be really booming for all of labor to run short of supply and drive up the price of labor at all levels. Consequently, without outside forces acting on it, unskilled wages will remain, as they were in the 18th, 19th and early 20th century, at starvation levels.
BTW, apparently @Feenix has never studied his history or read Charles Dickens.
BTW, I am working on a little simulated world, using a piece of nifty simulation software I picked up sometime back in my analytical days to prove what I just said.
It will have a Farm that produces Corn, a Factory to turn it in to Food, a Market to buy the food and Sell it to the Farm and Factory Owners and Laborers, as well as the Market Owners and assorted Wives. It is a dynamic model so it will figure out how much corn to produce and how many laborers to hire to produce the corn, etc; that part is done.
Next, I need to set up the economy (did I mention I had a lot of fun as an analyst) of my little world and see how the price of a bushel of corn and of corn biscuits (the sole food item) will settle down as well as the profit the farmer, factory owner, and merchant make, as well as the laborer.
I can do this by including a few simple forcing functions such as the survival instinct of the owners. You see if you don't pay the laborers enough, they will starve to death because they can't afford the food to eat, which means they can't plant or process enough corn to feed the owners and their family, which means they will have to increase wages to boost productivity back up; things like that. Fun, fun.,lol.
Also, I am trying to use the same tool to model the cash flow of my business, that is what we INTPs do.
I spoke with a Colombian once years ago in the 1970's and he said it was terrible there with the cocaine production. He said, "the peasants who work the coca fields are so poor and hungry they chew the leaves of the coca plants because the coca curbs their hunger pains." (So who was getting all of the cocaine profit? The criminal drug lords?) And is this just another example of what happens without honest government, laws, and minimum wage?
Cred, thank you for the insightful topic. It really doesn't matter whether the issue is right or wrong, black or white–– when profit is the bottom line, everything is blended to a shade of gray and compromise. So while 1960 was a time when Communists were bad for America and everything she stood for, now corporate profit and money matters have changed the course and diluted that mode of thinking. Money rules. It's as simple as that.
Michabelle, looks like we started something here. Right from the "Randy Newman", "Its the Money that Matters". There were telling us all who are boogie men were and while we stand there with on hands over our hearts singing the Star Spangled Banner, guess who has got their hands in your pockets? As GA Anderson said earlier, patriotism is just a front, as well. The media through the power brokers are telling us all what is 'good and bad", Most of the multinationals would just a soon wipe their rear end with the flag as salute it, if enough money were at stake. They are simply amoral people, having no more chutzpah than you would find in your toaster. Thanks for weighin in, Cred2
Nice to have you return, GA. We all agree on the bottom line, but we must also agree that we must always continue to resist its spread and its full and more complete implementation or society, as we know, it will simply cease to exit. We cannot acquiesce and fold up like lawn chairs in the face of the trend that we all know is the driving force in our economy and that of the world and must ultimately lead to one thing. We just as all prepare to revert back to stone knives and bear skins. The richest guy will be the one with the most swords and clubs at his command. We must constantly resist and remove those from power who are not committed to maintaining the necessary balance between the haves and have-nots.
Cred2
Hello, ME, it is a delight to see you. Please pull up a chair and share your thoughts with us. It does look like I have opened Pandora’s Box here, but again, that is what this is all about.
I am most pleased that you and I see things from the same prospective regarding the topic. The most basic level of barter is human labor, my time is of inestimable value because it is finite. If someone is going to take some, I had better have something of value to show for it. I have to believe this for myself and for every other human being. When I watched the old technocolor biblical epic “The Ten Commandment” with Charleston Heston, I am reminded of how labor was exploited then. Thousands of these slaves were pulling on this stone likeness of Pharaoh’s “snozzola”. None of us want to revisit these kinds of things again. Modern Pharaohs seek to reduce the common man down to a similar status. They cannot stand openly and boldly in what we all like to think is a democratic society; they are much more clever and resourceful today. We used to call a slave that willingly promoted the interests of the master an “Uncle Tom”. Well there are a lot of Uncle Toms running around now mindless parroting the word and advocating the position of the Master in the hopes of gaining his favor and perhaps gathering a few of the choicest scraps from his table of bounty. They are being terribly used, for the first thing that I learned early is that there is no honor amongst thieves.
ME, even in the slavery system, the master had to provide a mininum of subsistence, a floor where he could not go below, as starving slaves produced little and the dead produced nothing at all.
In a closed system your approach will work, but if the labor is interchangeable, much like chattel the owners could care less about their fate, or howthey would live on the wages. You just get more workers to replace the ones that are not productive for any reason. You have a whole pool to choose from, For people to survive they work as a family unit to produce enough at subsubsitance wages to function, sounds a lot like the 18th, 18th and early 20th century economic model scenario, doesn't it?
Hi, Michabelle, your example of the Coca growers was right on. Unfortunately, such is the nature of the human condition, one exploiting the labor of the other. It appears often in illicit trades and if some folks have their way it will appear in perfectly legal ones, as well.
Credence-
Great Hub sparking a great conversation. I agree with your concepts, philosophy, and presentation, but you express it all so much better than I could. My role is to support you and encourage you to continue this good fight (fight is a metaphor for "helpful and greatly needed debate.") :)
Hello, Old Poolman,
I will be glad to express my views about all of the damage caused by minimum-wage regulations. What I will do is write a hub about it, in the near future. And when I do that, I will be sure to give you a heads up.
Cred,
Because you are nearly 10-years younger than I, much of what you know about the way things used to be is based on what you have read, seen on TV and been taught in school. However, much of what I know about the way things used to be is based on what I saw with my own eyes and personally experienced.
All I know is that I grew up in a "teeming slum" during the 1950's. And compared to how terrible things are in that "slum" today, it was a paradise back in days when I was growing up there.
phdast7, thanks for your participation and support!
Hi,Feenix, thanks for the return visit. We are talking about an era that predates either one of us. 1900-1920. Your experience can't serve us here. Yes, I am younger than you, but I have relations that are older than you and none of them ever took your position on these things. I have to defer to the experts and the accounts of credible people who lived during the period and are in a position to know what happened. Cred2
@feenix, that may be true of your neighborhood in the 1950s, but about the "company" towns all over America, 2500 of them at their peak by 1920, and then there was the squalor Credence referred to in the 1850s, or 1750s, which made your neighborhood look like the Taj Mahal, or however you spell it. In all of these cases, there were no contols on business vis-a-vis labor.
The Company Town, for those who don't remember, is where a company, like the Carnagie Steel Company, created a company town, McDonald, OH, in this case, in order to house all of its workers. It provided for the workers needs via company-owned facilities in the town (this was called Corporate Welfare in America or Industrial Paternalism) and sometimes even paid the workers in script, rather than money, which could only be used at the company store; hence the basis for Tennessee Williams song, "Sixteen Tons", the chorus of which is:
"You load sixteen tons, what do you get
Another day older and deeper in debt
Saint Peter don't you call me 'cause I can't go
I owe my soul to the company store"
All of this was to tie the worker to the company in a form of bondage and to avoid that hated term "Unionization". Companies could do this because there were no governmental controls on what businesses could do to its workers; after all, to prevent businesses to have the right to enslave its labor force is simply unAmerican and not what our Founding Fathers had in mind when they wrote the Declaration of Independence and the U.S. Constitution, don't you see.
Agreed feenix?
Mr. Esoteric,
You wrote, "Agreed feenix?"
No, I do not agree with anything you wrote. Obviously, you do not know anything about contemporary "ghettos" and "barrios."
Very true Credence, what I was talking about was a closed system, but, I can model an open system as well. The economy, however, on the largest of scales, is a closed system; it is by its very nature, a zero-sum game. It is only when you look at it from smaller scales does it become an open system with the boundaries of that scale.
If you take the company-store I just described in my comment to Feenix, that is a closed labor system to Carnigie Steel if you assume Carnagie is unable to recruit labor from outside McDonald, OH. If the economy is booming, that may not be an unreasonable assumption.
In any case, I am going to make all sorts of assumptions with my model to show various scanarios. Although I have never tried this, I think I can probably mimic most of the complexity of an economic system with just three commodities, two related and competing and one unrelated, but needed. With a couple of simple interdepency rules, I should be able to generate a random world. (It is this last item that Conservatives don't understand which throws a monkey-wrench into most of their theories.)
I think the results will be surprising, but my greatest hope is that I can keep it understandable to the readers.
Cred,
With all due respect to your elders who are older than I, they are the tree that you fell from.
Anyway, it is futile for you and I to have discussions and exchanges about social, economic and political issues. The gap between us is wider than the Grand Canyon.
OK, @Feenix, let make sure I am not missing something here. This all started with Credence saying that:
" ...the crusaders, known as “Progressives” who spoke of the squalid living conditions of so many people on the margins. These were the *filthy slums and tenement houses*. People would work for whatever the market would bear and whatever the employer wanted to pay. What we end up with were the pictures of children working in factories. Without a living wage, entire families, including children had to work in order to survive..."
to which your responded:
"...The installation of "minimum-wage regulations" is one of the worst things that ever happened to America.
All of your talk about the "teeming slums" and so forth of the early 20th Century is nothing but a bunch of socialist and PBS propaganda.
The truth is, there are presently far more "teeming" and dangerous slums in the U.S. than there were decades ago. And ..."
Now, to be fair, Credence was slightly wrong on his dates, he should have said late Nineteenth Century since he was talking about President Teddy Roosevelt around 1901.
Anyway, Credence replied:
"... What objective evidence do you have to say that all of this is propaganda, it is not like you were there, now is it?
If you knew anything about history you would know that conditions that were prevalent in America’s worse slums a century ago and far and away worse than anything today. What improvements we have seen are the direct result of that progressive movement, which of course, you say is just propaganda ..."
Where I jumped in with:
"BTW, apparently @Feenix has never studied his history or read Charles Dickens."
To which you came back with:
"Because you are nearly 10-years younger than I, much of what you know about the way things used to be is based on what you have read, seen on TV and been taught in school. However, much of what I know about the way things used to be is based on what I saw with my own eyes and personally experienced.
All I know is that I grew up in a "teeming slum" during the 1950's. And compared to how terrible things are in that "slum" today, it was a paradise back in days when I was growing up there." (I had to reproduce this in toto, because it was all relevant.)
Trying once again to draw you back to a time before you were born, which was what Credence was talking about, I replied:
"@feenix, that may be true of your neighborhood in the 1950s, but about the "company" towns all over America, 2500 of them at their peak by 1920, and then there was the squalor Credence referred to in the 1850s, or 1750s, which made your neighborhood look like the Taj Mahal, or ..."
From this string, it would appear that from a Myers-Briggs perspective, you are clearly a Sensor; you only believe what your five senses present to you and nothing more; not even what a history book tells you. Your repeted references to what you saw with your own eyes and the fact that you are ten years older than Credence, thereby nullifying all of Credence's education, is the only thing that matters.
You seem to entirely miss the point that you were not alive in 1899 yourself, so by your standards you have no basis to make the claim that Credences is wrong since you were not alive to see that living conditions were better or worse that your neighborhood in the 1950s.
As Judge Judy would say, do you see where I am going with this? Your logic doesn't hold. You can't apply one standard to Credence or me, for that matter, and then a different standard to yourself; either everybody MUST rely ONLY on what they see with their own two eyes and NOTHING else, or they can rely on written history as well.
Which do you choose?
ME, I had read the accounts regarding Andrew Canergie's steel empire. While he was quite the philantropist, he took advantage of labor and if I recall there were strikes that were put down to the benefit of Carnegie. That industrial paternalism was just another way of exploiting labor. It equivalent in the agricultural world was "Sharecropping"
"after all, to prevent businesses to have the right to enslave its labor force is simply unAmerican and not what our Founding Fathers had in mind when they wrote the Declaration of Independence and the U.S. Constitution, don't you see."
Yes, so says the rightwinger. I am not anxious to be anybody's slave who is?
Hi, ME, in regard to your model you said:
The economy, however, on the largest of scales, is a closed system; it is by its very nature, a zero-sum game.
But the employers can go through a whole lot of warm bodies before they exhaust the resource and are forced to raise wages because of scarcity of labor.
you also said:If you take the company-store I just described in my comment to Feenix, that is a closed labor system to Carnigie Steel if you assume Carnagie is unable to recruit labor from outside McDonald, OH. If the economy is booming, that may not be an unreasonable assumption
Could I presume that Carnegie's employees were free to provide their services elsewhere if they wished. If Carnegie could not recruit from the outside, that would put competitive and upward pressure on the wages the men received if Carnegie wanted to keep them on the job?
I am looking forward to checking into your findings resulting in a pretty good model of what is going on around here today. Thanks, Cred2
Feenix, you have got to be reasonable. How am I going to ignore the Enclyopedia Britannica, Wikipedia, years of scholarly writings by noted contemporaries of the period in question in regards to the subject, but instead, believe you as gospel for a source, who never lived during the period discussed. How would that sound if I asked you to do that? Why are you so credible and all these other sources are wrong? Why don't you just check it out and see for yourself and convince yourself that this isn't all just leftwing hooey.
If you don't mind, I think I will veer off-topic slightly and go down another, but related. path; the difference between large and small business. I would argue that the mindsets of the owners are entirely different.
First, in the interest of full-disclosure, I am CFO-Partner in a small business (if anybody needs drug or alcohol testing, drop me a line ... sorry Credence) of about 32 employees and a couple hundred independent contractors. I am also a twice retired military and federal civil servant and worked with companies large and small; I have been around awhile and will probably die working.
It is my position that much of what Credence rails about is true of what is known as Corporate America; the Coca-Colas, Goldman Sachs, IBMs, United Health Cares, etc of the world. These kinds of companies care only about the bottomline and the senior corporate executives, period.
As companies get smaller, it is my observation that they become more responsible and ethical, as a group; not all of them mind you, I am heading off to small claims court in NJ on Jan 4, to try to recover a couple of thousand dollars from a client who won't pay up.
I don't know for sure why this is but I think it has to do with the owners being closer to the people who work for them and people they service. I know it is that way for my company; it is also simply part of the character of the three owners, sometimes to the detriment of good order of company discipline.
In addition, we are extremely service oriented, not only because that is the way we are, but, and I think this is what drives many small companies, out of necessity.
Small companies generally survive in a field of larger companies because they provide superb service, often at a slightly higher cost. We were fortunate to land part of the largest railroad in the country, via networking, from the outset. Because we provided service like they have never had seen before in our industry, we got their whole system; that was in 2001, we just signed another 5-year contract.
Because we are small, however, it has been difficult picking up new, large clients, even with the success of our first big client, but, what clients we do get, we keep.
Not so for big companies, there is no customer loyalty anymore; we are on our third wireless phone company, for example. There is no question in my mind that my company bank, Bank of America, will screw my company at the first opportunity it can find, if it will make them some money; I am pretty sure my small supplier of instant test kits won't do the same thing, they will notice the loss of our business.
It boils down to incentive, big companies have no incentive to do well by their employees or their customers, except in the very largest sense, small companies do.
Credence, in the era of the company-store, the workers didn't have the luxury of mobility. It was the advent of that ability in the 1920s that killed the company-store and freed labor from the chains that bound them in those situations; it also helped in the unionization movement.
As to your "warm bodies" comment, yes you are correct, but you just reduced the scale in making it. My ultimate "closed" economic system is just theoretical. Even the Comapany-store example is a bit far-fetched because it is unlikely, but still possible, that Carnagie couldn't recruit from outside of McDonald, OH, if need be.
However, could they recruit in sufficient numbers if their wages were at starvation levels? I think supply and demand would take over and they couldn't recruit, so my closed model would still be appropriate in the company-store situation.
BTW, did you notice that Feenix didn't agree with my statement about the Founding Fathers and US Constitution, lol?
Hi Cred, "Man will always find a way to slave Man." It's one of those proverbs you read out here and can never forget. In this country $40 billion (underground) is generated by marijuana production. The profits from cannabis are greater than corn, wheat and other legal crops. And because the substance is illegal, we have a very powerful criminal organization of "middle men" underground who are handling the product. The growers have no minimum wage protection, but will surely lose their farms (or worse) if they should come under the "law," (and that sometimes happens by falling out of the graces of the criminal network.) And in some of these areas people would starve or suffer tremendously if they didn't have the crop to grow. (kind of like Colombia's narco republic) Minimum wage is necessary for those operating lawful businesses but in any situation whether legal or illegal, human greed will always find a way to beat the system.
Wouldn't it be interesting to take a car, and cost out every penny of its production and follow the money? It's probably already been done out here on the internet. I'd like to compare the Union worker salaries for producing one automobile to the manufacturer's CEO and management involved. It would also be interesting to follow the trail to see which companies produced the seats or the radios and find out where that money went, as well.
Just thoughts for your very interesting hub & commentators.
Michabelle, good question, although I am not quite sure where you are going with the last sentence seats and radios. The ratio you are asking about is a national embarrassment and between the CEOs and non-union workers, it is even worse; I will do some research and come up with some numbers unless Credence or others already have them.
The US was in-line with most of the world with the distribution of earnings between labor and management until around the 1960s, or thereabouts. After that, executive pay took off and never looked back while everybody else's basically tread water; see my hub on the Occupy Wallstreet movement for a couple of graphs on it. Today, what CEOs and top executives earn in most big corporations bear zero relationship to their productive worth to the company they run; only to level of greed and ego they possess.
Wow - i made my last comment almost 2 weeks ago and the discussion is still going on. My deep respect to you Credence2 and all fellow commenters. The topic is certainly worth it.
During my professional life in senior management positions i found out it is much easier to lead people by showing them the goal to work for and not the stick to run away from. In other words: incentives are what make things move.
With this explanation (off topic) i want to continue with the headword of my last comment: productivity. To me minimum wage is an incentive to improve productivity. In bookkeeping words it is a fight between recourring and non recourring cost. While non recourring stands for automation, capital investment, recourring cost stands for wages, for continuous labour cost. So with increasing the threshold on RC, you open the business case for NRC driven business operation.
Because most low wage jobs don´t require much qualification or education, there will be put more pressure on education. Say minimum wage and hear the echo: education.
Things are not that simple to be expressed in 2 or 3 sentences, but i am sure that the following topics are closely linked together: Minimum wage - Education - Incentive - Productivity.
All this may sound quite academic, but please be assured i understand that this is related to the personal situation of millions of job seekers and low wage workers. Still - no analysis, no solution. My proposal would be to create adequate minimum wage standards, this fuelling spending and the additional revenues to be transfered to pushing education.
BTW, i fully agree with ME´s evaluation of large and small business.
As a small business owner, I have always paid far over the minimum wage. You might question my sanity when I make that statement, so let me explain. I am in a service business, competing against many other local companies. The majority of my competition operate as "sole proprietors," meaning they have no employees. By having no employees they avoid payroll taxes, workers compensation insurance, unemployment insurance, etc. That makes it very difficult to compete with all these added expenses to my operation. I chose to go another direction and pay my employees on a profit sharing basis, and competing on a quality of service provided basis. I demand high quality and production from my employees and get it because I share the profits with them. Every one of my employees is also a salesman. For every new account they sign up I give them the first months fee the customer pays, if the customer stays with us for at least 3 months. Trust me, my employees make far over minimum wage, and most have been with me for 10 years and over. When we hire a new employee they are told it is a 90 day trial period. They are then trained by my existing employees who then get to vote on if this person stays or goes at the end of the trial. Some new employees don't make it past the second week per recommendation of my other employees.
I have found over the years that when it comes to employees, most often you get what you pay for. All of my employees are proud of what they do, and love seeing the business grow to what it is today. Even with the slowing economy, they feel secure in their jobs.
This concept will work with most any non-union business, and in my opinion is far better than holding them to a minimum wage. My employees feel like part owners in the company rather than employees.
I know I could start a new business tomorrow under a profit sharing plan, and kick butt on most or all of the competition.
Hi,ME, "I am also a twice retired military and federal civil servant and worked with companies large and small; I have been around awhile and will probably die working."
Think nothing of it, delighted to help
As for the virtue of small business, I completely agree. But if you notice, the GOP has not been too keen on supporting this group of the actual'job creators' in order to bring down the current administration.
My experiences as a contracting officer and with your background you are aware of Small Business Set Aside. If our agency purchased from other than small business, there had damn better be a good reason or there was hell to pay. It is just as you say for SB, the world is more competitive and you aren't going to do well treating customers like so many sacks of potatoes.
Believe me when I say, I certainly know who is behind the current economic crisis and the role small business plays in helping us get out of it.
Cred2
Hello, ME, you said: However, could they recruit in sufficient numbers if their wages were at starvation levels? I think supply and demand would take over and they couldn't recruit, so my closed model would still be appropriate in the company-store situation.
Nah, you are right if people are getting a dollar an hour working for Carnegie, and the prevailing wages are higher on the outside supply and demand says Carnegie is going to have a hard time recruiting. In spite of a lack of mobility the pressure to leave would be in direct proportion with the difference between Carnegie's wage and the wages outside. If labor is boxed in logisticdally or otherwise there is no compelling reason to increase wages as the workers have no alternative and all parties are aware of that. A flood of available labor cheapens the wages for everybody and as we both agree without outside restraint, supply and demand operating without modification could drive those wages down far below subsistence levels. There are many areas of unskilled labor where this might be true as we speak.
Michabelle, quite right human greed will always try to beat the system. Because we are aware of that, efforts have to be taken to counter this unfortunate tendency. If we let that human nature go without any restraint, slaves will be made of us all. But, I bet the MJ growers get a larger percent of this sale price, because without their efforts there is nothing to distribute, and the middle man has to pay something for the risks that the growers take. Otherwise, they just as well grow lima beans and tomatoes and get by.
Such a breakdown as you propose for the cost of a something like a car verses it price would be interesting to evaluate. How is the profit distributed?
Thanks again for dropping by and providing insight to this most interesting issue. Cred 2
Chris57, Thanks for coming by. Your gracious complement is appreciated. I don't know but it seems to me that work requiring little or no skill sets are to be the first to be automated. Education in a massive way is necessary in this society to raise the bar. America has fallen dangerously behind in this area and we will all pay for it later. Automation will make these poorly educated individuals irrelevant in the future and those working on the bottom may very well not have a place at all in the years to come. Best wishes, Cred2
Hi, OP, you are a novel employer. Profit sharing makes it so that everybody has "some skin in the game". It is not us verses them, but we. The best employers that I read about inspire the best from their employees with this kind of attitude and approach to doing business.
This article is not about people like you. If that spirit could be spread across America's workplaces, I would not need to write such an article.
I have a question for you though, you said:
The majority of my competition operate as "sole proprietors," meaning they have no employees. By having no employees they avoid payroll taxes, workers compensation insurance, unemployment insurance, etc. That makes it very difficult to compete with all these added expenses to my operation
Can you not compete more successfully simply because you have more employees and can serve more customers than anyone with a sole proprietorship, doing it alone?
Have a happy, Cred2
Hello Cred2. The answer to your question is no. The added cost of having employees makes competing far more difficult. Payroll taxes alone add approximately 50% to whatever wage the employee is being paid. The cost of workers compensation insurance has gone out of sight, yet no employer can operate without this insurance. The amount paid for workers comp is strictly payroll based. So the more you pay the employees, the more expensive the insurance. Every employer in Arizona was recently assessed a fee for money the State of Arizona had to borrow from the Federal Government to pay for extended unemployment benefits. My assessment was several hundred dollars even though none of my employees collected any unemployment benefits. The Sole Proprietor is exempt from workers compensation, payroll taxes, unemployment insurance, and many other costs involved with having employees. I could net far more profit by downsizing the business, doing the work myself, and this is how I started out. The Sole Proprietor can offer his or her services to the customers at a reduced rate because of the reduced operating expense.
I now have eight employees and their families dependent on me for support of their families. We have to charge more than the Sole Proprietor, so we must provide the highest quality of service possible to keep the business operating. If I were to put my employees strictly on hourly wage, this business would fold quickly. They now feel like part owners, and take a great deal of pride in their work. I would not do it any other way.
I do agree with OP in that a sole proprietorship has several benefits, but it has just as many downsides, the two biggest being liability and a limitation on growth before you start incuring all of those other costs you say you don't have to pay. A sole proprietor, if I am not mistaken, even has to pay a SE (self-employment) tax, equal to their personal social security plus Medicare rates, if their earnings exceed a certain amount.
No question you can earn more profit doing it all yourself, but then, it would seem to me that is all you would be doing with your life, trying to earn the same net income you are currently earning from eight employees plus yourself.
OP is also right about the 50% increase in pay, but that is made up of a lot of things. Probably about 20% of ny payroll goes toward my company's portion of various federal or state mandated taxes. The remaining 30% is comprised of my company's contributions toward our employee's medical and IRA benefits, plus sick, vacation, and holiday pay.
OP and ME, OP gosh it sounds like you are just in business to keep you staff gainfully employed.If there are so many cost associated with having employees, there is no real advantage in not just doing it all yourself. Maybe instead of getting after the minimum wage so many of these other 'costs' associated with having and maintaining a small business could be looked with an eye to reduction. OP and ME, your explaining this shows that there is tremedous burden placed on anyone who wants to be an independent business person. Is there anything to be grateful about at the end of the day? Gosh, if you can't make more money with eight employees than you would working by yourself, that would be a point of great concern to me. Thank you both for the enlightenment.
Cred2, ME is 100% correct, and speaks with a great deal of wisdom. This is actually a two part answer. Part one is that I am just too darn old to do all the work by myself anymore. I could not keep up the pace in the 110 degree summer days, nor in the early morning cold in the winter. But I can use my knowledge and experience to keep the business operating efficiently with the help of my employees. Most of them have been with me so long they are more like family than employees. I know their wives and all of their children.
The second part is in today's economy, where in the heck would they find another job that pays as well as this job. They couldn't. I earn enough to pay the expenses and take a small salary for myself. I can also focus my efforts on growing the business. When doing all of the work by yourself, there is little or no time to do that. It is a personal choice I guess, and I chose to do it with employees so I seldom complain about the costs, and I couldn't do it by myself anyhow. So my only choices are to keep it going with employees, sell it, or just close it.
Hi, OP, I understand now. Geez, you have got a lot on your plate. Well at least you have some advantage, sole proprietors must also have to spend time seeking out and enhancing business opportunities, which they must not have because they have to do all the work.
What you do is a highwire act everyday. I hope that you can retire at some point and give that balancing rod to someone else. Thanks for sharing a bit of your world, as I learn the most from the guy that is in actually in the trenches. Best regards, Cred2
Cred2 - A "highwire act." I never thought of it in those words but that is an excellent description of what small business owners go through everyday. Arizona just passed a minimum wage increase to $7.75 per hour, which means nothing to me, but has many business people terrified.
Since you have started this discussion,I have been giving more thought to the minimum wage issue. As always, there are two sides to any issue. Some employers view minimum wage laws as the minimum they must pay. Other employers view minimum wage laws as the maximum they have to pay. So this law may be viewed as a positive or a negative, depending on the employer. On one side, it eliminates employers paying only slave wages. However, with transportation costs and childcare costs, very few could work very long on minimum wage and survive. Yet her this very law, no employer is required to pay more than the minimum amount. A very mixed bag here.
If you still plan to visit Arizona in the summer,the beer will be cold and the pool will be warm.
Mike
Hi, Mike, I guess Arizona is one of those states that implement new laws on January 1. Yes, you are right $7.75 an hour is not very much money and is far from comfortable. But is is not designed to be. However, without a floor all of the issues that make the minimum wage difficult to live on will be exacerbated, changed from the difficult to the impossible. The pressure of people not surviving are costs imposed upon society through greater theft/law enforcement, vagrants, homelessness and the basic unraveling of any vestige of civilized living. In effect the taxpayer pays part of the employees wage that they should be getting from the employer. Ultimately, society has to pay the costs for people that have no chance of supporting themselves at the subsistence level. Of course, that has to be balanced with the need for business people to keep personnel costs for unskilled labor within a range where they can afford to operate. Thus the minimum wage.
Thanks again for the invitation.... Cred2
It's easy to forget that the consumer, upon whom all business and profit depends, is also the tax payer. When the consumer can no longer afford to purchase, business declines. When there are no jobs those who were once thriving, tax paying citizens are reduced to food stamp lists and the cycle continues to diminish the working classes.
A minimum wage is necessary to set a ground rule because if there wasn't a rule, then there would be rampant abuse.
More power to Old Poolman, who apparently cares more about people than profit. He's one of those who breaks the mold.
We have a wonderful country. We should figure out how to pick up the pieces after the corporate exodus and rebuild our country back on American principles and quality.
We've become a nation of king makers and we've given the extremely wealthy control of our government and election processes. Change has to happen.
Michabelle, my point exactly, without a standard there would be rampant abuse, taking advantage of the desparate. Greed is the foundation of all of our problems and that is as old the pyramids. Yet,we cannot resign ourselves to just live with it, but to put forth resistance against the forces that can and will result in our undoing. It is a constant, endless battle with the very existence of a harmonious, peaceful society in the balance. The minimum wage is one of the tools in the box to keep the unscrupulous from running off with the store at the expense of all the rest of us.
The whole den of vipers in Washington and Wall Street need a good scrubbing! Thanks again, Cred2
GA Anderson 5 months ago
@credence2 - nice well-spoken piece - from the unrealistic "progressive" point of view.
Admirable goals, and logical logic, for the national market,
But what about the global market?
Overseas manufacturers do not have "social betterment" goals or mandates. So a minimum "living wage" will work fine, as long as we accept that everything we buy will now be made by foreign manufacturers.
It used to be that manufacturing was the only economic sector affected by this. So if we accepted the inevitability of losing that sector, then your "living wage" model would work for service industry jobs that would remain, because logistically they couldn't be handled by overseas agents. But that is no longer the case. At this point in time - we are even losing that sector to overseas labor. ie. call centers and telephone support sectors - It is not intended as a slur, but have you ever had a customer support call answered by an Indian that you could not understand?
As a business, any business with competition, the market will tell you what you can pay for the costs of running your business. You cannot just raise prices because your labor costs increase, and stay in business - unless your competitors have to do the same. look what happened to our TV manufacturers - name two American ones still in business. Auto industry? GM's recent travails illustrated the pitfalls of mandated labor scales.
move to small businesses - they usually aren't raking in excessive profits, a required wage increase isn't going to just reduce their profits by a few dollars - it is probably going to force them to reduce the size of their workforce - or go out of business.
I should stop now, like your hub, this is a topic that can't be fully addressed in a single comment section.
Well written, but as progressive folks like to point out - we are living in a globally connected economy now, so for this to work, you folks need to get China to pass a proportionally equitable "living wage" law too.
GA