Mutually Beneficial Relationships

I gave you inflation definitions from legitimate sources. When the prices of goods and services increase we have inflation…period. If you don't believe this then what do you call it when the prices of goods and services increase and everything we buy costs more??

 

Maybe all employees should become independent subcontractors. They quote an hourly rate, provide their labor, and the company pays their rate. BUT, the subcontractor is now responsible for all reporting, withholding taxes, FICA, health care, holiday pay, vacation pay, time off, 401K, etc.

In this scenario the subcontractor can expense some of their home and car and gas, etc.

 

Gas maybe. He would have to keep a mileage log. And if he uses the car for something other than work, he would have trouble deducting other car costs.

But a shoe salesman putting his home rent on a schedule C ... that would be like your plumber adding the cost of his kids bracers to a bill for unclogging your sink.

... you are right about the trend though. We're headed in the direction of less of the work force being 'employees' and more being independent contractors. With Obamacare and other stuff, the convenience is no longer worth the overhead to have as many employees.



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Unfortunately the late Senator Daniel Patrick Moynihan, as a payback for his Long Island Manufacturer buddies, introduced legislation requiring consultants to be on W2 (employees) rather than independent contractors. The legislation he rammed through made it impossible for Engineers to become independent contractors and it did this by requiring that a consultant could not work more than a day or so a week and for a limited number of weeks per year for any single employer. Most consultant/contractors depend on continuity of employment, very few are in such demand that they can jump from job to job daily, and certainly there is a limited demand for any particular service or skill. This effectively killed any independent contractors and now most workers go to "body shops" who fill contracts with temps that they hire, thus making them employees of the body shop. The body shops hire and lay off as needed and the employee is deprived of benefits, stability and the deductions he would have been able to claim as an independent contractor.

While this legislation was aimed specifically at Engineers to benefit the Long Island Electronic manufacturers, it applies to all forms of contracting/consulting, no matter what industry you are in. This is another example of our politicians "taking care of the constituency", unfortunately workers aren't that constituency

 

IMO, you are concerning yourself with other entities personal business. The economic system does not revolve around you. The consumers, venders and employees will make decisions for themselves. Your employees do not need you to be their babysitter/retirement provider.

 

With varying cost of living in every city and/or location, for example comparing San Francisco with Mayberry RFD, it makes no sense whatsoever to try to establish a federal minimum wage or living wage. The federal minimum wage of $7.25 is fine in Mayberry RFD but worthless in SF. Conversely, creating a $20/hour minimum wage for SF would be way too much for Mayberry RFD. So an across the board minimum or living wage can't be administered.

The entire concept of forcing employers to pay a so-called living wage IMO doesn't make an ounce of sense...

 

Exactly. This is the #1 reason why the federal government has no business having minimum wage laws. Most states already have them and are a better judge of what their state wage laws should be.

And yes, the idea that every job should be a breadwinner job is ridiculous.

 

"Inflation is a sustained increase in the general price level of goods and services in an economy over a period of time."

A one-time increase in the cost of goods and services, even if necessary, to accommodate a "living wage" is not a sustained increase over a period of time.

Just because there is a price increase does not indicate it's caused by or reflective of inflation. That is the point I make. For it to be "inflationary" it has to continuously cause prices to rise over a long period of time. That would not occur based upon a one-time adjustment in the compensation for labor to ensure a living wage.

 

It is interesting that the argument is based upon the fictional town of Mayberry RFD because, in reality, no one can live independently on $7.25/hr according to MIT. Pick any county in the United States from the MIT "Living Wage Calculator" and see what the actual minimum cost of living really is.

http://livingwage.mit.edu/

See if this makes sense.

We are a moral society that doesn't believe people should be forced to live on the streets, go hunger, or stand on the corner across the street from a hospital when they need medical services. Our government at all levels (local, state, and federal) reflect this American morality by providing welfare assistance to those that cannot afford food, shelter, medical services and other basic necessities.

The vast majority that require welfare assistance are hard working Americans that can't meet their basic expenditures because they don't receive enough in compensation for their labor by their employers and, as a moral nation, our government is forced to make up for this shortfall. At the federal level alone this costs the American taxpayer about $500 billion per year.

$500 billion in annual taxation and spending to make-up for the under compensation by employers gives me good reason to argue that a "living wage" is necessary to eliminate this huge government responsibility. If all employers paid a "living wage" then the necessity for government welfare assistance for working Americans disappears because they wouldn't need it just to survive.

I'm a "small government" advocate and one of the best ways to reduce the overall size of government is to eliminate the necessity for government welfare assistance for working Americans. That can only be accomplished if employers ensure that their workers don't require welfare assistance by providing a "living wage" to their employees.

Does that make sense?

 

Actually the IRS does agree with me because every individual is provided with a "standard deduction" when they file their tax forms. Unfortunately the standard deduction is determined by Congress and it is not enough to cover basic expenditures for the household but it's purpose and intent are clear.

Of note an enterprise does not have a standard deduction on it's tax form.

 

In point of fact my employees do need me to ensure that they can afford both current expenditures (e.g. rent, food, utilities, medical services) as well as future expenditures (e.g. retirement).

Let me use a commodity as an example. I purchase a TV and to operate that TV I need to also pay for the electricity to run it but that isn't the only cost associated with it. When it's service life is done I also have to pay a "disposal" cost to get rid of it. An employee can be compared to that TV because there is a cost associated with using them. They have their expenditures that they must meet in order to work for me. If they don't eat, or if they don't have money to afford transportation, or if they get sick and can't afford to see a doctor then they will not be able to come to work. When their "service life" for me as a worker is over then there is also a "disposal cost" associated with that. If we assume that a person has a 45 year "service life" then all of the employers have a shared responsibility where each is responsible for 1/45th of the "retirement" (disposal) costs of the employee for every year they employed the person.

Once again, while I've mentioned this before, I'm a "small government" advocate and if employers took responsibility for the "disposal costs" of the workers they employ then the necessity for Social Security would virtually disappear. If the employers of the worker assumed that 1/45th/yr of employment (disposal) cost for retirement then workers wouldn't require Social Security when they became too old to work.

 

Your only duty is to produce/provide a quality product/service at the best possible price. It is not to figure a price based on socialistic elements. I see no harm in you offering a retirement plan, but the employee should have the option of a higher paycheck.

It is the employees responsibility to be as marketable as possible in order to demand a better wage to meet his needs. It is also his responsibility to save for his retirement.

The invisible hand should be influenced by as many participants as possible and not determined largely by a single entity(yours or governments social engineering).

 

Charity.




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Even at the state level it is impractical to establish a minimum wage…again compare cost of living in SF versus Fresno...

 

Forcing the minimum wage to $20/hour is a ticking time bomb! It will be the gift which keeps on giving over time as ALL wages are increased proportionately then those earning the minimum wage of $20/hour will start whining they need a living wage of $40/hour.

Inflation does not need to be continuous? Things go up and things go down. When spending/demand slows and inventories increase consumer prices will go down…deflation.

 

I fully agree. An economy will not function if there is no equilibrium between production and consumption. Consumption cannot occur if employees cannot afford products. The invisible hand will better sort out pricing and wages.

 

In dealing with government perceived issues the solution should never be to mandate higher expenses in the private sector…like a minimum or living wage. Don't screw up the private sector! If government wishes to support their citizens then collect taxes for this purpose. Let the government go to ALL people and ask for $500 billion…if ALL people like this idea they can pay higher taxes to fund it.

Lastly, three thing linger on this topic; First, even if you increase the minimum wage to $20/hour when the dust settles these same people are still earning minimum wage in a highly inflated economy. Second, tens of millions of government dependents don't work and therefore will not earn the $20/hour which means billion$ of taxpayer funds will always be spent to support these people. And third, inflating the US economy will have a negative effect on the US competing in the global marketplace...

 

In San Francisco, on the Golden Gate and other toll bridges, the toll workers who were unionized were earning on average $52K plus this much or more in benefits. Although I'm sure nice people, these were unskilled to low skilled workers earning a horrifically inflated wage as compared to ALL other jobs with similar job descriptions. As happens whenever labor becomes a larger and larger issue, all of the toll workers have now been replaced by automation. How well do you believe these employees are doing today as they will not find jobs that even pay half as much? The unions could pound their chests and the workers could brag about how much they earned, and this was great for them as long as it worked, but at the end of the day, forcing these costs by demanding higher and higher labor rates was a failure...

 

I'm a socialist and even I can agree with that. What a gawdawful progressive/conservative compromise that was.

 

As an "owner" I don't produce anything. I don't provide a service and I don't produce a product. As the owner I provide the business plan and the means for my employees, at my direction, to provide a service and/or produce a product. Because I control the business plan exclusively it's my responsibility to ensure that the business plan provides the necessary revenue for the employees that create the products and/or provide the service based upon the tasks I assign them to do.

As the owner it's also my responsibility to determine if compensation should be in wages or benefits. For examply providing health insurance is beneficial to the employee and the enterprise. It is beneficial to me if my employees receive preventative medical care and early treatment for any illness because it means they're going to be at work more overall. When my employee misses work they're not producing anything or providing any services and the enterprise suffers. I'm targeting a mutually beneficial necessity for the employee that wages alone will not ensure. The same is true for retirement. It is mutually beneficial for both the employee and the enterprise for the enterprise to ensure that the employee's retirement is taken care of because it can be accomplished in a far less expensive manner.

As the owner of the enterprise I'm not concerned with how marketable the skills of my employees are when it comes to other jobs. I'm only concerned about their skills related to the job (tasks) that I need to be accomplished for my business plan to work. Every employee is vital to the success of my enterprise and I need to compensate them based upon my enterprise generating the necessary revenue to ensure that their labor results in them being able to meet their basic expenditures. I create the business plan and either I'm successful in creating the business plan where both the employee and the enterprise profit or I'm incompetent because I didn't create a good business plan where this will happen. The employee is effectively contracting with me to provide the business plan where we will both profit from the enterprise and I have a contractual obligation to fulfill this responsibility even though it's not expressly addressed by the employment contract.

Once again I'll return to a fundamental principle. Both the owner/manager and the employee have obligations under the employment contract. The employee is responsible for carrying out the tasks I assign and I'm responsible for ensuring that the business plan is successful for the employee. If the employee has to "beg for assistance" (i.e. seek welfare or charity to survive) when they get off work then my business plan is unsuccessful and I've failed on my end of the employment contract.

In point of fact I'm an advocate for a balance between the "market" and "organized labor" where as many participants as possible are reflected in the employment contract. An individual has no power when it comes to addressing the "market" forces that invariably seek to drive all employment compensation to the lowest possible level. Only "organized labor" has enough "workers" so that the downward pressure of the "market" can be opposed and a mutually agreeable employment contract can result. Unfortunately we've had union-busting legislation for decades that has gutted the power of organized labor and this is overwhelmingly the result of "right-wing" political agendas that favor the owners over the workers. Favoritism is reflective of crony capitalism and that is what we have based upon "right-wing" economic philosophies.

We need balance between the workers and the owners in our economy and that balance has been lost.

 

In point of fact this reveals a much greater problem for our economy. Based upon projections Artificial Intelligence (computers) will know more than all of mankind by the year 2045 and combined with Technology (robotics) there will soon be virtually no necessity for human labor at all. Even the brain surgeon will be replaceable with Artificial Intelligence and Technology (AI&T) in the not too distant future.

I've personally witnessed this in my career where mechanical engineers, a very "skilled" profession, have been replaced by computer technology. Today it requires about 1/10th as many mechanical engineers to design an aircraft as it did in 1970 because the advanced computer systems are doing the work formerly done by the mechanical engineers.

So what do we do when AI&T makes human labor obsolete? How do we earn a living when we're not needed because the computers and robots can do everything from flipping a burger to brain surgery and rocket science? We've seen the effect of AI&T in manufacturing where the jobs weren't really sent overseas but instead they simply disappeared. Roughly 40% of all manufacturing jobs per capita worldwide have disappeared since 1970!

Excluding the philosopher and the artist there won't be much demand for labor by the end of the 21st Century because AI&T is making human labor obsolete.

 

Only those that have incomes in excess of what is necessary for them to live on can afford to pay taxes. It makes no sense to tax someone and then refund that taxation in the form of welfare assistance. So can we raise taxes on those that have enough income to fund the necessary expenditures of those that don't have enough income (often referred to as income redistribution)? Of course we can do that but it doesn't make a lot of sense. It creates a huge government infrastructure to provide this necessary welfare assistance.

Are you a supporter of higher taxes for the wealthy to support a larger federal government?

The first and third points are myopic because the least desirable means for providing higher compensation for the employees is to raise prices. Even if prices are increased to offset the increase in compensation the benefit is greater than the cost. If, for example, the compensation for labor is 25% of gross revenue a 10% increase in the compensation would only result in a 2.5% increase in the cost of the product/service to offset the increase in compensation. Because that 10% increase in total compensation costs would only target the lowest income earners many could see an increase of 20% or more while the full offset would still only be a 2.5% increase in prices.

The second point is both accurate and misrepresentative. Yes, tens of millions of Americans that don't work receive government welfare assistance because they're children!!! Overwhelmingly welfare assistance goes to working households that have children. If the working parent(s) had enough income then the children would not require the government welfare assistance.

About 47 million people receive SNAP benefits and perhaps 50% of them are children where the parent(s) work for a living. This thread only addresses working Americans so how many tens of millions of adults and children wouldn't require SNAP assistance if all employers provided a "living wage" to their employees?

 

I agree that automation will expand but not at the rates you state…we simply don't move at that pace. And automation is not cheap, not always available, and doesn't apply to lots of situations so costs are prohibitive and new technology is needed. To use your extreme prediction that 'soon there will be virtually no necessity for human labor' would mean few will have cash to be consumers…zero consumption? It's unlikely any of the workers and/or attendants at a Four Season hotel are going to be robots. And, I'll guess 200-300 more years before humans go to a Roto-Rooter to have brain surgery!

Computer technology has certainly eliminated jobs but it has also created jobs so I don't know the net results?

Manufacturing generally involves repetitive work, with consistent quality and quantity and/or situations in which the process is more technical than humans can handle, and this is the perfect scenario for automation. But automation requires humans and the percent of human content will fluctuate if and when humans are unable to perform at required levels and/or human labor is problematic.

If you truly believe automation can do brain surgery then there is little doubt that automation can also do philosophy and art...

 

In the USA, it's not the job of wealthier people to look after the welfare of the nation…this is the job of all Americans! If the nation wishes to socialize Americans, for whatever reasons, then let ALL Americans fund this effort through general taxation. It make zero sense to further burden industry with more government costs.

IMO government needs to be greatly reduced, but I also believe government should work with the private sector to create affordable housing, public transit, health care, improved nutrition, and to eliminate the ghettos, crime, gangs, and drugs.

A minimum wage, no matter what the minimum wage is, will always be a minimum wage! Whatever problems you have with a minimum wage today will be identical in the future with it's minimum wage. People who perform at the minimum levels of society will always need assistance...

 

Every individual has a responsibility to formulate a business plan for how they are going to earn an income sufficient for survival. That's part of being human.

Every human must figure out a business plan by which he can earn sufficient money to support himself, because each of us has needs that must be satisfied in order to survive: shelter, water, food, clothing, security, etc. One can go into the business of manufacturing shoes, or one can go into the business of providing labor services. Each person chooses to do what they think will make them the most money, given their talents and abilities.

If the best business plan one can devise is that he is going to work for McDonalds and flip burgers, then he isn't going to earn a lot of money. If he wants more money, he needs to come up with a better business plan.

No one is under any obligation to compensate for another person's faulty business plan. If someone's plan is to flip burgers, and that plan doesn't yield enough income to provide a comfortable living, then the ONLY person responsible is the person who devised and implemented that plan. Nobody else is responsible for his failure but him.