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Monday, July 29, 2013

Pretend Job Creation & How Employers Really Think

We start today's posting with a joke or sorts:

A very ill guy goes to see his doctor..

He says, "Doc, I know I'm not doing too well but whatever you do, please don't tell me I am dying because I am only in the mood to hear positive things and through positivity, I Know I can conquer all obstacles.."

The Doc says, "I understand.. Well you do seem to have a great spirit, always seem to have a funny joke to share when you visit and by all accounts you appear to be a really super person that people want to know.."

"Thanks" says the guy.. "That means a lot from you..."

"Don't mention it" replied the Doctor.. "But based on your test results, I Really will need to Insist on payment Today!"
Not really a 'Ha-Ha' joke but not really meant to be..

A lot of truth is found in humor.. even gallows' humor..

 And the previous little yuk-yuk demonstrates better than ten paragraphs of us venting, what the mindset of many Americans are when it comes to this economy and why they let their leaders get away with endless promises and lies with no follow-through..

For instance, for the past week or so the President has been touring the nation talking up the economy and acknowledging it wasn't strong...
Obama even admitted in one speech the stock market was artificially inflated and its success did not accurately represent the overall 'Main Street' economy (Where was this honesty in July 2012?  Oh yes-- re-election campaign.. gotcha)

How many new economic proposals have been offered by the President in the last week or so?

Zero.

How many bills currently being debated on Capitol Hill to create jobs?

Zero.
Too busy dealing with hot-potato social issues that don't put money in anyone's pocket or food in any child's belly..

A recent survey conducted by AP showed, "Four out of 5 U.S. adults struggle with joblessness, near-poverty or reliance on welfare for at least parts of their lives, a sign of deteriorating economic security and an elusive American dream."

80%... is that all?
"Survey data exclusive to The Associated Press points to an increasingly globalized U.S. economy, the widening gap between rich and poor, and the loss of good-paying manufacturing jobs as reasons for the trend."

Well, that's Some of the reasons...

See there's this eternal academic debate about who really creates jobs...

The private sector like to trump their horn and say they are the true job creators... the corporations hire people en masse and the the reason for an improvement in the economy..
Really the best paying jobs come from government but shhh.. don't tell a fiscal ultra-conservative that... He/she will label it wasteful spending or bloated government on the poor taxpayer's dime..

Of course the only entity who has the Power to force the business world to raise their salaries is the Federal Government by installing massive hiring programs at living wages that severely draw away all the temps and part-timers from private companies...

But for some reason, our liberal Democrat President decided he admired Reagan more than FDR and so we are actually guided by fiscally Conservative policy decisions even though most are clueless to this..
So how does this whole job-creation thing really work..

Let's take a look at Amazon.  Right before a visit today by the President to one of its distribution centers, Amazon is going to officially announce is will be creating 7,000 new jobs..

Woo Hoo!

These will mostly be people who assist the machines in sorting out packages to be mailed out to customers so the company can save on delivery fees...

Ah..
Average wages:  $8.50 to $11/hr ($17,650 to $22,880 annually)

And here's how interesting or insidious it gets depending on your point of view..

Let's take 'Kathy'.. she's 30-something, unemployed.. gets $750/month.

The government says "We're tired of supporting you.. get a job!"  So she gets hired to work at Amazon's distribution center.. her pay is to be $9/hr which comes to $1,440/month based on full time work..

Great!
Except Amazon really doesn't hire full time workers.. Like most places it wishes to avoid having to give its workers benefits and pay higher premiums so for Kathy and others, its really 35 hours a week which equals $1,260

Now Kathy would have to pay federal and state taxes whether or not she worked since unemployment is deemed (inaccurately in our opinion) as income but let's take the math a step further...

$1,260 (income) - $750 (unemployment) = $510 difference monthly

$510 x 15% federal tax = $76.50
This is how much Kathy has to pay more in taxes monthly for the "privilege" of working 140 hours a week in a windowless factory vs receiving unemployment compensation.

And because Amazon gets one tax break after another by state politicians to open the distribution center in their state, in reality not only is Kathy paying for the 'honor' of working but she's subsidizing Amazon by contributing to the tax bill that by rights they should have to pay themselves...

And those states that now have Amazon distribution centers... like PA, TX and CA... their citizens get severely Fucked because whereas before they didn't have to pay a single penny sales tax to buy millions of items....
Now they have to pay sales tax on everything purchased as part of the agreement made when Amazon places its centers in those states..

And Amazon are such bastards on the issue, the did a complete 180 degree reversal from passionately fighting Congress to prevent a national sales tax bill from passing, to becoming on of its biggest supporters...

They figure, 'If we now have to pay, then to hell with our competition.. make them pay too!'

Gotta love corporations with principle...
So to clarify, an Amazon distribution center built means Amazon pays no property taxes paid for years, the new employees make up the tax slack via their wages and the populaces of those states now have to pay 6-9% in taxes which they didn't have to before for items bought...

Lose-Lose all the way around...  well except for Amazon and the politicians who lured companies like this to their state and can say at election time they were job-creators...

Its really hard for anything to ever get better for real when the mindset of most people is of acceptance..
We were once told by a dear old friend and mentor that the business world loves recessions...  It is the the economic version of a 'reset' button...

You i.e. corporations get to fire large numbers of people at a time...  Sometimes ridding yourself of certain people of races or denominations you'd normally have great difficulty ridding yourself of...

And then after everyone lays off 10-20% of their work force (downsizing) then you start rehiring them at 10-25% less wages (restructuring) and the difference saved in salary/benefit expenditure along with any government or Fed assistance allows most companies to turn back to quick profit...

Profit to re-invest in themselves via buying their own market shares and pumping up their company value to appease and fool shareholders...
But we the people accept all this muck and scum as standard business practices... besides, as people love to say, 'What can we do?'

All we know is until people get as angry, vocal and demonstrative over the US economy as they are in some circles over a local court case involving a gangsta' thug beating up a dark-complexion Hispanic until shot in self defense..

Well there's really little hope in things ever getting better for most...