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.