Friday, July 20, 2012

US Labor Costs Are the Key to More Jobs

We took a small trip to Crater Lake last week. Its a real pretty place. If you are over 62 a lifetime National Park pass is $10 and it covers everyone in the car.

I went to the gift shop and thought the little beaver with a park ranger hat (below right) was neat. I almost didn't buy it, it had a "made in China" tag. Plus it seemed kind of phony as a souvenir from Crater Lake, it was made a half a world away (as was almost everything else in the store). The bag on the left, I picked up later. It's recyclable and made in the USA! WOW!!! Politically correct, but how many college grads does it take to load a roll of paper onto a bag making machine?

As an entrepreneur, you want inexpensive souvenirs to sell to the tourist and China is where you shop. Why make it in the USA, where labor laws and employment taxes eat you alive? How can we blame the retailer for using common sense?

The picture below is also from Crater Lake. It's an outhouse (no longer in use), that kind of reflects how Congress solves our problems. The solution to one problem creates another. Tax the employer and bring in more revenue.

What is the real issue, jobs or the cost of labor? Why employ an American when you can pay someone in China at 1/10th our wages. Remember Ross Perot and the "Giant sucking sound" from our free trade agreements? He lost the election, but he was spot on!

Maybe if the Chinese were saddled with Obamacare instead of us, it would be cheaper to make things here instead of over there. Jobs are all about the cost of doing business. The American public is the ultimate employer. We want it cheap and to hell with employee benefits. How can we expect to create more jobs if we can't compete realistically with China?

We have set the tone for consumption in the US, "Low costs" and that kind of answers the question of, "Where are the good paying jobs?"

Here I sit with my cute little souvenir from Crater Lake made in China and a paper bag made in the USA. It comforting to know that whoever wins the next election is going to provide more jobs for unemployed Americans, Mexicans, Chinese and other third world countries. You'll need a passport to apply, if you're from here.

Copyright 2012 by Jim Brubaker

Sunday, July 08, 2012

Living Paycheck to Paycheck With Obamacare

Probably half of the population lives from paycheck to paycheck. And even if that isn’t the case, everyone’s priorities on what bills get paid are different. A large majority of people never saved for retirement. Social Security changed that. So now what’s left of the paycheck is spendable. The major spending decisions revolve around the rent/mortgage payment, food, auto payment, car insurance etc. The car and home are the two bills that have to be covered, no matter what (unless your home is in foreclosure, in that case you don’t have to worry about house payments, only about eviction).

In the event the wage earner’s income gets squeezed, decisions are made on what is necessary for day to day living. Is it diapers or a 12 pack of beer and cigarettes? Do you really need car insurance? Can we get the kids on the free school lunch program? Cut out day care for the kids and instruct them not to answer the door.

With government programs like food stamps, cable TV and cell phones suddenly become affordable. Notice that the family decides on what expenses are necessary. Health insurance is not on the top of the list. Why pay for it, go to the emergency room if you really need to, otherwise forget it. These are the 50 million people that Obama wants to insure. In the past they have made the decisions on where they spent their income; now one of these financial decisions is no longer optional. In the lower income households, this will become visibly obvious, as a tax. A yearly income of $36,000 drops to $34,000 with health insurance. Their paycheck will be 50 dollars a week smaller. So the single woman with 2 kids gets a $200 dollar a month loss of income and wow, paid health care. No Cable TV for the kids and Mom has no car insurance. Mom and the kids are one car accident away from real trouble.

We know what happened when Congress tried to make home ownership affordable for everyone. It was the American Dream turned into a nightmare for many home owners. This health care insurance for everyone is an undefined bottomless pit. The neat thing about it, when it goes bust, nobody will be scratching their heads wondering why. The question you have to ask is, "How can this new government program promise the moon for no charge?" Doctors right now are refusing Medicare patients because of the paltry government reimbursement rates. And we are not even talking health insurance here.

The Supreme Court has ruled Social Security and Obamacare are taxes. In other words, the government cannot be held accountable as to what they spend the collected money on. The benefits are not guaranteed, only promised. This law will change how each house hold spends its weekly pay check. Rent, car payments/repairs, gasoline, cigarettes, booze and lottery tickets are the bare necessities. Food for the kids and day care are now optional. The family budget is a little like a balloon, squeeze it with your hand and it moves out between your fingers. Those 50 million people will probably now qualify for food stamps. Hmmm take away $50 a week with one government program and get it back with another.

Car insurance will become optional for the Hoi Polloi and sadly, the emergency room can't be used for auto repairs. The road to hell is paved with good intentions. Why do I get the idea that Obamacare is not going to work quite as planned?

Copyright 2012 by Jim Brubaker