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Thursday, July 17, 2014

The Real Expendables (Not the Mindless Action Film)

There are many ways companies can cause widespread economic pain and fear among its employees:

For example mass firings when economy is weak i.e. 'downturn', mass firing when economy is booming i.e. 'restructuring' and when companies outsource their manufacturing and customer service call center jobs abroad..

But one that few think about until it directly happens to them is known as 'Mergers & Acquisitions'.

This is where one company takes control of another and either the dominant business strips the submissive one to the economic bone or rids itself of excess salary since the new company's employees can do the same work for less..
And as this Fed manipulated fake fraud of a stock market goes up, beyond the 1% expanding their profit portfolios to seismic proportions, it is an environment that greatly encourages M&A which once again causes average people to feel the brunt..

Microsoft is one of those companies having recently acquired Nokia Devices and Services and at the beginning of the week and announced 6,000 Microsoft jobs would be eliminated as suddenly these men and women were now deemed redundant

Turns out Microsoft got their numbers wrong by a mere 66%

18,000 men and women's jobs will be eliminated instead with 12,500 of those positions being professional and factory positions..
In other words we are not talking about $8/hr laborers who clean the 24k gold toilets Bill Gates and the rest of top-brass squat down upon.

We're talking real jobs with real salary..  The kind that allow one to pay all their bills, live very nice and still have savings to put aside for lil Jeff and Jenny to go to college

From Microsoft's PR release:

"The company expects to incur pre-tax charges of $1.1 billion to $1.6 billion over the next four quarters, including $750 million to $800 million for severance and related benefit costs, and $350 million to $800 million of asset-related charges."

So imagine how long term profitable Microsoft expects this salary dump to be that they'd be so willing to incur over $2 billion in cost to achieve this numeric goal.
But hey... Bill Gates has that precious 'Bill and Melinda Gates Foundation' and they donate all that money to people in need around the world, right?..

They're all the same..  utter scum

They'll set aside billions for their vanity foundations and public relations charity projects yet have no care or concern the effect it has of tossing away people who've devoted their adult lives to being in their employ...

Let's try to break this down using very simple math so you can see how national and local economies feel the brunt of decisions like this..
Since these are jobs which require degrees and the possession of specific skill sets, we will make a logical deduction that the average salary lost comes to $60,000 per individual.

$60k x 18,000 equals $1.08 billion dollars Microsoft will not have to shell out in salary for the next 12 month period as these mass firings are implemented.

These people will now be dependent upon the US government's teat for up to the next 99 months as well paying jobs are very hard to come by in this service-sector society and often will be receiving a fraction of what they were once accustomed to earning

The US income tax bracket for those earning $60k is 25%..  For those earning between $9k and $36k, the tax rate is 15%
So using simple math, let's see how much $$ the US government loses in taxes thanks to Microsoft's decision to maximize their profits..

$1.08 billion x 25% equals $270 million in tax revenue

Now based on the average person receiving $20k in benefits since there's maximums a state will pay per week regardless of how much you earned...

$20k x 18,000 people equals $360 million in unemployment

Then based on a 15% tax rate, $360m x 15% equals $54 million
Finally we subtract the number tax revenue the government would be taken in based on Microsoft paying each worker $60k on average minus the revenue based on what unemployment is giving each person..

$270 million - $54 million equals...

The US government will be deprived $226 million in tax revenue over a 12 month period based on Microsoft's decision.

And who makes up that shortfall?

Usually no one..   The government doesn't want to tax the wealthy or the corporations and we don't generate enough income tax as it is to pay our bills, so we just borrow more..
Because ultimately what's the difference between a deficit of $1.2 Trillion and $1.6 Trillion when the smaller number can't ever be repaid anyhow and governments like individuals in serious debt Must be be practical..

Survive to live another day..

Businesses take a different tact..  they will unemotionally cut and slash and burn to save a penny here, a nickle there because they're always thinking long term.

And ironically, Microsoft's cold-calculation decision will force thousands to now think very short term:  'How much savings do I have?.. How many months or weeks before I start missing payments?..  What do I cut back on first?. etc..'
You hear many people say we need a leader who will run this nation like a business..

And while we wholeheartedly agree we need a different and better leader from this pompous 'professor' in charge; this lightweight academic, we also state a common refrain of 'Careful what one wishes for' when seeking a businessman to run this nation..

Because at least when a corporation cuts the legs from under their employees, there's social safety nets in place to catch the fall..

But who's going to catch you when the nets themselves are removed in order to repay another half-percent on the deficit?