Monday, February 23, 2015

Wages, the Unleveled Playing Field

I was watching the news the other night, and they reported that Walmart is going to raise wages to $9 per hour. Later in the program they covered labor unrest in the S.E. Asian country of Myanmar with protestors complaining about being paid 17 cents an hour. I wondered how many times 17 cents went into 9 dollars. Hmm about 53 times.

That prompted me to research what the wages were in China for building cell phones. It looks like it is around $70 per week but the number of hours had to be more than 40 but less than 67 depending on what you read (6 days a week 11 hours a day). Figure a 66 hour week,labor costs about $1.06 an hour. It takes about 7 hours to assemble a cell phone in China by one estimate and another suggests that in cost terms figure about $12 in Chinese labor per phone. So somewhere between 7 to 12 hours to assemble each unit. US labor at $9 per hour with employer costs of $6 we get $15 per hour. At those rates cell phone labor here in the US would run about $150 per phone. And if you take into effect the quality of work provided by the minimum wage worker, cell phone productions costs would probably be closer to $350 per unit Stateside.

Suppose you are sewing shirts in Myanmar at 17 cents an hour, 53 employees is a hell of a workforce at 9 dollars and hour. Can you imagine having to supply Obama health care to them? Worker Comp or Social Security? Nah, no worry there. I’m tempted to buy 25 sewing machines and set up a shirt factory in Bangladesh.

Labor is cheap in the rest of the world and we enjoy its benefit. The trouble is, it is affecting our employment rates in the US. 16 million people are unemployed (9 million full and 6 million with part time jobs). For the price of a Walmart greeter, you can have 53 people sewing shirts for you 11/6 in Myanmar. I can meet that payroll. These used to be American jobs.

And if that isn’t bad enough, from the Associated Press: "More than half of America's recent college graduates are either unemployed or working in a job that doesn't require a bachelor's degree." That doesn’t bode well for the government student loan program. A college education does not guarantee a well-paying job. But, to keep the ball rolling, Obama might probably offer College grads on the student loan program, a nothing down Fanny Mae home loan as a bonus. Give them more “free” stuff--let them sell their souls to the company store.

Then there is the growing underground economy. It’s called, "Businesses without addresses.“ If you don’t have a business location, the government can’t tax or regulate you. A lawn or pool cleaning business is invisible. The Uber cabs are under the tax radar, as is every business running out of a garage. With the advent of cell phone and the internet, many more services exist without a taxpaying address --part of our hidden economy. The net effect; as government controls increase, taxes collected will decrease, with more people appearing to be in need of government help.

Single and make 40K cutting lawns? - - figure you save 12k in taxes and Social Security not paid, you qualify for food stamps and free health care. And for God’s sake don’t get married if you plan to have kids, your partner will lose her welfare benefits. And if you are here illegally, what are they going to do to you if they catch you? They’re certainly not going to deport you.

The pitiful hourly wage in Myanmar suggest that religion could be the only escape people have, from the economic shackles of slave like poverty. Christianity held the world together during the dark ages, with the promise of a better life in the "Hereafter." For the “I want it now generation” the promise 70 virgins and heaven tomorrow (if you’re in a hurry) sure beats the reality of working for 17 cents an hour.

So here we are with people making 17 cents an hour in one country and college graduates in another that can’t find a decent job. If a couple in Myanmar find true love, they’ll be making 34 cents an hour together. If two college grads find true love, they’ll have a baby just looking at their combined monthly student loan payment.


Joseph Oppenheim said...

Interesting the kind of people who can't see an economic boom, maybe the greatest ever.

The US has transformed every industry, and with the world's greatest consumer economic engine, enough power to bring along most of the world.

Progress is always disrupting. Most benefit.

AIM said...

In the private sector people and entities evolve. They become wiser and more sophisticated. In the public sector, the US government gets bigger, more stupid and more corrupt as time goes by. The US government is retarded. Dysfunctional. An enemy of the people (public enemy #1 in my estimate).

It is such a terrible shame that we the people have allowed our "leaders" and politicians to move us so far off from the great and wonderful principles that our country was founded upon.

We have a Marxist destroyer in the White House who despises America and it's Constitution. (He was also awarded the Nobel Peace Prize. Wow!) The Capital Building is a snake's den composed of reptiles slithering around in its offices and hallways. And scampering around the perimeter are disease infested rats (lobbyists).
Oppenheim looks at our country through rose colored glasses. I have a different take.

The corporations and the banksters have infiltrated the government and are successfully accomplishing their special agendas.

There is no journalism or reform to be expected by the media. They are owned and controlled by the corporatists and government.

We are soooooo far from a ideal country where honest, hard working people can prosper, save and build wealth, maintain their privacy and pursue happiness. Soooo far away from a free market capitalist environment that levels the playing field for all industrious, hard working people. Soooo far away from a small government that truly represents and serves the people, maintains the country's infrastructure and defense and doesn't interfere in our lives, our market places and our personal choices.

I guess "we the people" deserve whatever we wind up with.

Jim in San Marcos said...

Hi Joseph

We may have a technology boom but there is no economic boom.

In an economic sense, we are in a depression worse than the Great Depression. Zero interest rates.

Your right,America is the greatest consumption engine right now, the rest of the world wants to sell us something because they are broke. Our government is the only thing stimulating the economy.

If you look back to 1929 we had the telephone, radio, electricity, electric lights, automobiles, commercial aviation, indoor plumbing all come on line. A tremendous rise in our standard of living. And it didn't stop the Great Depression. We don't have soup kitchens today, we have food stamps.

You're right, I don't see an economic boom. In our area, there are four or five cars in front of each house, and these homes have double and triple garages.

Your acidic first sentence leads me to wonder if you graduated from high school with all of your front teeth intact.

Jim in San Marcos said...


Your not far off the mark, if you want to read something eerie, Pick up a copy of "Democracy in America" by Alexis de Tocquerville.

It was written in 1835 by a Frenchman visiting the US. It's a road map to where we are going.

Everybody and his brother have stolen a quote from the book.

AIM said...

Yes, I'm aware of the book and author, and have read a few excerpts from it.

I wish there were more unknown and unchartered continents on this planet.

We'd have the chance to found new countries and governments and maybe eventually get it right.

Jim in San Marcos said...


Australia is the place. I'm too old to give it a try. Its as big as the US and it has hardly been scratched.

dearieme said...

Thought this might interest you, Jim.