Michigan has firmly established itself as the worst-performing economy in the country. Its unemployment rate, at 15.2 percent, is nearly six full percentage points above the national average, and nearly three percentage points higher than the next highest state. You currently have a better chance of finding a job in Puerto Rico than in Michigan.
In response to this situation, the Michigan Democratic Party is promoting a series of ballot proposals that will only make the situation worse. Three of the proposals will make it more expensive to hire labor, especially low-skill labor that is feeling the economic crisis the most. The other two will create uncertainty in our utility services and make it harder to buy and sell houses.
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Thursday, August 20, 2009
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Even this author ignores one of the big effects of this kind of proposal.
It will drive more business and people into the UNDERGROUND economy.
as a connected small business employer, I already see LOTS of this!
This article oversimplifies the minimum wage and healthcare issues.
As someone who is fiscally conservative and thinks that balanced budgets are good, low taxes are better and individual responsibility is underrated I still want to see arguments made logically.
First, let's look at the min. wage issue.
If the minimum wage going up drives unemployment up, unto itself...
Why is that Ontario Canada, across the border has a min. wage of roughly $9.00 an hour, yet a much lower unemployment rate? Another close example Mass. Further afield Oregon, Washington or how about Australia where the minimum wage is almost double that of Michigan working out to about $12.00 U.S per hour.
Now let's be clear I am not championing a sudden massive increase; but let's not chicken-little things.
The majority of jobs that are desirable, high-wage, full-time jobs pay an order-of-magnitude above the minimum, and will in way be affected by an increase. Dentists, Doctors, Engineers, Electricians, Professors, Designers, these are jobs we want.
And they will not be impacted by the Min. wage at $7, or $8, or $9 or $10 per hour.
Will such a rise reduce employment at the local fast-food outlet? Possibly. But a typical fast-food outlet, with a teen-dominant workforce, 15 part-time staff and 1 full time manager, may lay off 1 teen who worked 1 shift a week and didn't need the money. That's not really an economic injury. Its the full time manager we're worried about, and any F/T staff, who probably are quite safe.
And a layoff is by no means assured. A healthy fast-food business should be turning over about 20 orders an hour, with an average value of around $9 (due to families and group orders)
At such a pace, they probably have 4 staff working, so $1 per/hour per staff person is $4 divided by 20 orders, equals an impact of .20c per order if the full impact is passed to the customer.
If that puts the business under, the business was on its way out already.
Its also important to remember the positive effect of the wage hike on businesses. A low-income person typically spends 100% of every dollar (after tax) earned. That means raising low-wage rates tends to result in an immediate increase in customer spending.
The key here is balance, increases phased over time; and if aiming for substantial increases, pairing with off-setting corporate tax or fee reductions.
Example:
Min Wage goes up $1 per year, for 3 years, to $10.40 in 2012, then gets indexed to inflation.
Pair that with a 1% reduction in corp. tax and some fee reductions for businesses; and I think it makes eminently good sense.
The suggestion that its good for the economy if people can work for $4.00 an hour is just silly, since no one will agree to work for that, and if they did, they would require gov't handouts to survive, so corporate and personal taxes would rise to pay for them!
Must better to increase the incentive to work! (but fairly and in moderation)
I will follow up on HC in another post
On the subject of healthcare....
Again,let's use the comparison with the system across the border.
I can report to a certainty that most people in Ontario are satisfied with their healthcare.
I am not suggesting an identical or gov't system for Michigan,but I think its important to compare costs and outcomes before discussing solutions for Michigan.
Ontario's system costs the average person far less in tax that most Michigan employers or residents pay in healthcare premiums.
All the while delivering a similar level of service to the insured, but in the Ontario model there are no uninsured.
This latter point is what the Health Care Ballot measure seeks to address in some way.
Clearly there are many in Michigan w/o health insurance. Beyond this being a sob story for those lacking coverage, it also has a direct impact on the rest of Michigan as folks go the ER to receive far more expensive solutions to their care that could have been addressed by a family doctor or nurse, and that cost gets passed on to everyone else.
People who also get inferior care are more likely to be off sick or to be on gov't assistance, in order to get access to benefits or because they can't work due to their condition.
That's not useful.
Now do I think the Michigan ballot proposal is the best possible answer? Probably not.
But you still have to answer the question if not this? Then what?
Employers in Ontario pay nothing for healthcare, as its funded from personal taxes.
That's an option, but I'm not sure too many would like it.
What else? There are many other choices out there, but its incumbent upon those who don't like this one, to argue what they would like better, and that addresses the problems of the current situation.
You could for instance propose, that business providing health insurance are subject to a lower tax rate? Or that everyone has an obligation to purchase a certain basic insurance policy (they could always get more coverage, just not less) and leave it to the private market. But then medicaid or something like it will have to fund those who can't afford any coverage at all.
You need to find the solution that solves as much of the problem as possible at the lowest possible cost.
But the status quo IS a problem, not a solution.
The Center for Media Research has released a study by Vertical Response that shows just where many of these ‘Main Street’ players are going with their online dollars. The big winners: e-mail and social media. With only 3.8% of small business folks NOT planning on using e-mail marketing and with social media carrying the perception of being free (which they so rudely discover it is far from free) this should make some in the banner and search crowd a little wary.
www.onlineuniversalwork.com
The Center for Media Research has released a study by Vertical Response that shows just where many of these ‘Main Street’ players are going with their online dollars. The big winners: e-mail and social media. With only 3.8% of small business folks NOT planning on using e-mail marketing and with social media carrying the perception of being free (which they so rudely discover it is far from free) this should make some in the banner and search crowd a little wary.
www.onlineuniversalwork.com
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