09
Feb
09

Minimum Wage: The Key to an Economic Stimulus

icon_digg11 Everyone has developed there own sure-fired economic stimulus package, even the ordinary man on the street, all with some degree of merit, with only a few good enough to be considered of ever beginning to work.  We have some countrymen say, “No stimulus package at all” basically let the banks, home owners, auto workers (plus the auto companies) along with the  state and city governments – “go broke”; meaning America starts over with a new economic system.

Others support the GOP package of reduced taxes and/or federal check in the mail, while the Administration and DNC support a “job stimulus package” with “checks” in the mail; from there every politician and hopeful presidential candidate for 1212 has their conceived answer to our economic burden.

I’ve heard a lot from my own friends and family, again, some sound good, and others come from people who would have a difficult time balancing a “check book.”  Of course, I’m no exception; I have my own, which of course I feel has merit!

Here’s the Stimulus Package we should consider!

My package would require about the same amount of money (900 billion) as President Obama’s, since I feel a job creation package is needed for our highways, schools, linking of the health care via the Internet and energy independence.  The aforementioned job creation would also benefit our returning veterans from Iraq and Afghanistan.

Proponents feel there is no way of knowing if this aforementioned package is going to work or not, which I agree – who dose know?  But, every package I‘ve heard of only encompasses our immediate economic concern along by updating past problems that should have been addressed years ago; what about today’s additional concerns that require attention, such as:

  • Enhancing our current immigration laws
  • Outsourcing American Jobs
  • Limit exporting our technology
  • Dollar acceleration into the economy
  • Decreasing our foreign trade imbalance
  • Affordable health care the economically underprivileged

Basically stating my stimulus package is simple English, it would be almost identical to President Obama’s with the exception of “Raising the Minimum Wage to $8.00 an Hour.”

Revise Immigration Laws

America’s become fat and Lazy!  We allow illegal immigrates across our borders to take jobs we don’t want because the pay is to low and the work to hard; also we provide employment visas to foreign educated individuals in the eastern hemisphere to come and take jobs away from our own recently graduated college graduates.  Our Fortune 500 companies must stop this practice of hiring lower priced labor (in both outlined example) to replace the American laborer.

Our Immigration laws need to be revised, of course, but again here’s an issue congress has avoided.  In essence let’s make it more difficult for illegal immigrates to work in our country, but let’s make it worthwhile for American wide bottoms to stop living on welfare if that’s how they’re surviving, and get back to work or in many cases start working for the first time in their dismal lives.

The revising of laws pertaining to foreign student work visas would also aid our college students by allowing them the opportunity to pay back their tuition loans, hence a side benefit of aiding the banking community by decreasing the number of student delinquent loans.

Halt Outsourcing American jobs

Again, I have to call upon our Fortune 500 companies to use prudence and suffer somewhat higher taxes for shipping our jobs overseas where, as I see it, the American citizens and government receives very little as far as a reduced price of goods exported back into the US.  These corporations, I believe, who subscribe to the notion of shipping our jobs abroad receive a very profitable bottom line in their profit and lose balance sheets while we receive increased taxes to pay for State Unemployment Compensation for those whose livelihood is overseas.

One aspect of the outsourcing issue, which remains unclear and introduced during the Clinton Administration is the “North American Free Trade Agreement (NAFTA).”  What remains unclear is most of the top ten Fortune 500 companies have smaller sized facilities in both Mexico and Canada than they do in Asia – why?  For me, I feel NAFTA was a smoke screen so the GM’s, Fords, Motorolas and the like could obtain certain loopholes in our government’s taxing structure knowing all along they were going to Asia.

Enough, I’ve made my point, bring our jobs home!

Limit exporting our technology

In many ways this goes hand-in-hand with outsourcing with the difference being, by selling foreign countries or allowing foreign countries to develop and manufacture products sold back into the United States, which in mostly all cases generates a sizable profit for the in the US company while giving the foreign country the ability to use the sold technology for other purposes that usually turn out to hurt our economy (trade imbalance).

In a self authored posting earlier, entitled: “We’re Going to be Trading Microchips for Toasters”, describing how our American steel industry, TV manufacturing and Intergraded microchip foundries have been exported and how we have came to suffer from our exporting these specialized technologies, please consider giving this rendered posting a read.

In other words let’s get back to “Made in America by Americans.”

Increasing the dollar acceleration into the economy

As you can certainly ascertain by now I’m not an economist, but I try to follow what stimulus packages are being presented and attempt to play the devil’s advocate on each of them.  They all have one item in common, which is; “get the American public spending again”, which I agree with, but disagree with how this should be accomplished.

President Obama wants to place $1,000 into the hands of the lower middle class, as I understand it, which is, to my way of thinking is to short sighted.  I feel most Americans will take the one thousand and use it to pay off credit cards or back mortgage payments.  This means the money goes directly back to the banks that created the economic problem in the first place.

If the minimum wage was increased to $8.00 an hour, more people would benefit from the increased salary and it would go directly to the people who probably need it most.  This would also be an incentive for people start back to work and remove themselves from the welfare list(s).

The big benefit, the low wage earners would spend their increased salary quicker while spreading it out over a number places, instead of giving it all back to our failed banking system.

Decreasing our foreign trade imbalance

We as a nation have to get back to exporting more than we import, since I feel this has caused us, both as a country and has citizens to spend more than we make, thus generating and adding to the massive trade imbalance we have.

With all the economic problems we have accumulated this could be the most serious and most difficult to solve, since we have to completely retool the way we think and manufacture goods and perform services.  We can’t be beaten when it comes to innovation, but bad when it comes to implementing it; meaning making our products affordable, reproducible and our biggest problem with a higher degree of quality.

What ever country, America’s products are exported to, we end up paying an extremely high tariff tax, while we allow foreign products to enter the US with a modest tariff tax – Why?  Furthermore, our products are usually copied and bootlegged without hardly any repercussions from us regarding our trading partners.  This is true for clothing, software, DVD movies and of course music.

The trade imbalance must be shifted into our favor and then tightly controlled if we are ever to become the nation we once were back in the 50’s to 80’s.

Affordable Health Care

Even if President Obama’s Economic Stimulus package is passed by the Senate; how many Americans would be able to afford it?

Increasing the minimum wage would be the answer for many; this couple with the recent passage of the “Children’s Health Insurance Program Reauthorization Act” would assure must Americans would be covered with medical insurance protection.

Summary

Should congress pass President Obama’s Stimulus package and the minimum wage be increased to a minimum of $8.00 per hour, the price of doing business in America would increase dramatically, along with the costs of consumer goods and services, but it would put more Americans back to work and off welfare.

This would also increase the standard of living for many, which we have seen America’s middle and lower classes living standard decay over the past twenty years.  This can be witnessed by the number of homeless individuals filling our inner cities and our increased prison population (one out a hundred Americans currently serving time in prison).

Just increasing of the minimum wage is not enough and will not work by itself; we must revise and author new laws pertaining to immigration, outsourcing and flow of technology from our shores.  Again, I echo we must return to the proverbial “Made in America by Americans.”

It is my very strong feeling; increasing the minimum wage will hurt many in business while helping our most needed citizenry segment within our society of troubled Americans, kick start the economy back on track as a strong economically sound nation.

Update 05 May 09:

Gary Shapiro: American Brain Drain: Why We Need H1B Visa Immigration Reform
from HuffingtonPost.com by Gary Shapiro

America’s immigration system is broken. While most focus on illegal immigration or changing ethnicities of legal immigration, what concerns me is that we are losing our historic ability to attract and retain the word’s brightest and most entrepreneurial workers.

Silicon Valley exemplifies an American success story threatened by a shift in how we treat the type of bright foreign-born technologists and entrepreneurs who help make us great. These engineers, scientists and entrepreneurs build companies that create jobs and wealth in the United States. Of the 163,000 applications for H1B visas received last year, the law allows for just 65,000 approvals picked through a lottery system. H1B visas allow foreign workers in specialty occupations to work in the United States.

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8 Responses to “Minimum Wage: The Key to an Economic Stimulus”


  1. February 9, 2009 at 7:18 PM

    Great blog. Very thought provoking.

  2. 2 Tom Awtry
    February 9, 2009 at 7:38 PM

    Thanks much for both your kind words and consideration.

    Regards,
    Tom

  3. February 9, 2009 at 8:10 PM

    I strongly suspect that neither side really knows what they’re doing. The problem is simply too large, complex, and interconnected with economies of other nations, over which the US has no control. To fix most things in the universe, you have to get it to sit still at least for a short period of time. This is a dynamic situation. If we as a society actually knew what worked, and could establish a cause and effect relationship with any certainty, we would have done it by now. Don’t you think?

  4. 4 Dhandapani Ammasai
    February 9, 2009 at 8:26 PM

    Tom, You ideas are thought provoking. However, minimum wage is a double edged sword and need to be treated very catiously. By increasing the wages, the business owners need to pass on the increased cost to the consumners which means the retail price of produce/service would increase and may impact the consumption levels. It is a vicious circle that need to be handled with care.

  5. 5 patpaulson
    February 10, 2009 at 2:26 AM

    Speaking of outsourcing, I just heard President Obama talking in Indiana about how we need to increase science and technology classes in schools. He said this:

    “Because the quality — the quality of the workforce is probably what most companies are going to pay the most attention to over time.

    There are going to be some companies that just ship jobs overseas because it’s low — it’s low value-added work and they don’t need skilled labor. And if you don’t need skilled labor to make certain things, then you’re just going to find the cheapest place, and we’re never going to be able to compete against a country like Bangladesh when it comes to, you know, low-wage work.

    But what we should be looking for is, how do we encourage high- wage, high-value work? And there, the key is going to be how well we are training our workforce.”

    I suggest he talk to the information technology professionals who’ve lost their “low skilled” jobs to companies who’ve outsourced, or hire H1B workers. Microsoft won’t even disclose how many H1B they have in their workforce. Take a look at the Target department store job listing for IT jobs – there are 20 jobs. All are in India. Is that because Target can’t find IT workers in Minneapolis? The answer is no. The answer is it’s cheaper. I’ve written to Target, inquiring about positions that fit my skills perfectly. I live 150 miles north of Minneapolis. Well, you’d think if they have people working from India, with an 11 hour time difference, they’d be able to have one person working 150 miles away, with the same workday hours. Nope.

    Pat

  6. February 10, 2009 at 4:54 AM

    I don’t see why the trade imbalance is a problem. Consider:

    We trade the Chinese 100 US dollars in return for some DVD players (or whatever).

    If they turn around and trade that 100 US dollars for, oh, I dunno, California almonds, then there’s everything’s balanced, and I suppose you’re happy.

    But lets say they decide to sit on that 100 US dollars, and not trade it back to us for anything (at least not right away). Now there is a trade imbalance; we owe the Chinese 100 dollars worth of stuff.

    That seems like a pretty good deal to me. We get to use the DVD players, and we didn’t have to give the Chinese anything (well, not yet, at least). If you offered me that deal– I’ll print up an IOU and give it to you in exchange for your DVD player– AND I needed a DVD player– then I’d be dumb not to take it. Especially since the Chinese are charging us such a low rate of interest right now (they’re actually taking the dollars they get and turning them into US Treasury Bonds).

  7. February 10, 2009 at 8:53 AM

    Tom- Very well written statement of your solutions to our economic problemms.

    We have been thinking along similar lines:

    http://www.communati.com/steve-lee/think-free-trade

    The American economy’s next problem is not going to be happening on Wall Street:

    http://www.communati.com/steve-lee/think-china

  8. February 11, 2009 at 7:12 AM

    An interesting proposal to stimulate the economy. I think your wage floor ($8) is too low. Otherwise, I think your general assumptions about the problem and its solution may be faulty. A book titled “The Creature From Jekyll Island” would clarify my point and possible your assumptions. The book places the history of our current monetary system in a global context, an shows why the stimulus and bailout have and never will benefit working of Americans and the national economy.


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