Jobs and the Government
Other than the individuals who get a paycheck from the Federal, State, or Local Government, the Federal Government has very little direct input for creating new Jobs. They don’t create jobs, they don’t maintain jobs, but they can create an environment that can make employers avoid hiring.
Let’s start with the minimum wage laws. The intent of many legislators has always been to buy votes from the working class by forcing the minimum wage up artificially. A job is worth what the market will bear. Unskilled labor is worth very little, and an employer should have to pay whoever it costs to hire unskilled labor. Those labor costs must be reflected in the price of the products manufactured. Artificially inflated labor costs, such as labor rates based on minimum wage laws will affect the price of the product, and will cause the price to be higher than it should be. When the product costs more than the competition’s product consumers will usually buy the cheapest brand.
We can also discuss how the new health care laws have an impact on employers. For every employee a company will have to make payments to the state and local governments for each employee. Some of those payments are known and some are not known they but will be known in a year or so. Employers want to minimize their exposure to those costs so they are not moving forward with new hires. The costs of healthcare will have an impact on the cost of the product. We are in a global economy our competitors come from all over the world. If the price of our products are out of line with the competition’s price we will lose business.
Regulations are another area that government can have a negative impact on jobs. Reporting requirements and government inspections and other interference from government adds to the costs and competitive pricing of some products. As companies have to raise their cost of goods to cover the expenses of the government regulations it will affect the pricing of their products which will also impact their ability to compete.
The good intentions for the naïve observer of the minimum wage requirements always reduces minimum wage jobs. When the cost of unskilled labor goes up employers will choose not to pay for it. The naïve who want to believe that every job should be able to support a family will see the minimum wage as a noble gesture. For the not so naïve we will see a politician trying to buy the votes of those who believe in the noble gesture.
The effect of the increase in minimum wage is to reduce the number of unskilled jobs available in the community and the increase of out sourcing. Many unskilled jobs can be done much cheaper in the third world. The cost savings there allow for a competitive price in the market place. The company is in business to make a profit and generate income for the stock holders. The company is not in business to pay above the market price for unskilled labor and take a lower profit or no profit just to keep the jobs within the community. Without the profit there is no need to make and sell the product.
The profit will determine how many employees a company keeps when they are required to make payments to provide health care to their employees. When the profit it affected by the cost of benefits for the employees then the head count will be adjusted. Business men and women are hired to maximize the profit not to maximize the number of jobs that the company creates.
Profits make the world go around. Companies exist to make money, money equals success. Success is not a bad word and success should not be punished.
I have identified several ways that a government can have a negative impact on companies creating jobs. The environment that a company exists in will affect how jobs are created and how they endure in the marketplace over time.
A government can’t create private sector jobs, but they can create an environment that is job creation friendly. Success is not a bad word, stop punishing success. The makers in this country should be hailed as heroes and allowed to be as successful as possible. Lower the tax rates and let them earn lots of money. If we allow the big businesses and private business owners to make a ton of money and then tax them at a reduced rate, I’ll be you a nickel we get more revenue than if we increase the tax rate for the same people. Receiving a smaller percentage of more earnings will bring in more than receiving a larger percentage of less earnings. Reducing tax rates has always brought in more revenue.
Allow the free market to work its magic with little to no interference from the government. Consumers set the price for products and services based on what they are willing to pay.
The Free Market is always the Little Engine that Could. It chugs along at a steady rate and provides incentives and rewards for success. Good products sell at a price the market will bear. Create a great product and sell it at a price the public will pay for it and you’ll do well. The price of the product and the sales provides the information a company needs to determine how to pay for labor and expenses. This provides the incentive for a company to create jobs and employ lots of taxpaying employees. The Free Market is an excellent motivator for success. The public wants good products and is willing to pay for them. Companies want to satisfy demand and will make good products at a good price and still make a profit.
The Free Market loves profit and success. The Free Market doesn’t need any help from the government. The free flow of goods and services at market process and the opportunity to make a profit is all we need to create adequate jobs for all who need them.