"Let's Go Back To Get Ahead"
By Capt. Fred Davis
Published: Saturday, October 29, 2011

For some reason, our government is not making the right moves when it comes to creating jobs.

Looking back over the years, wages increased because of unions negotiating contracts which resulted in cost of living increases. As wages rose, prices rose resulting in large profits for corporations. It was the American way.

Laws requiring minimum wages were put into place in 1938 by the federal government. The first amount was 25 cents per hour and increases were put into effect down through the years. The latest in 2009 was set at $ 7.25 per hour. States had the option of meeting it or adopting a higher wage base. Washington’s is highest at $8.50. As mandatory wage increases advanced, employers had to adjust prices to continue making profits, thus problems began. It seems simple to me but appears to be breaking the back of our country.

Workers who received the increased wages due to government mandates did not do more work to earn the increases; therefore employers were forced to raise prices. As prices for goods (such as vehicles) increased, those same workers had to pay more of their wages to purchase them.

In conjunction with the fact each raise in wages resulted in price increases and higher profits, it’s almost obvious where the money went. The greatest amount is resting in the increased wealth of those receiving the profits!

Once minimum wages reached a point some smaller employers could no longer afford to pay, layoffs began. As layoffs continued and the ranks of the unemployed grew, the government had to extend unemployment benefits. Light bulb moment – the unemployment benefits paid were based upon the higher amount of wage the employers could no longer afford to pay. We, the citizens of a country mired in debt, cannot afford those payments either

One of our biggest problems facing our country is exports from other countries flooding our markets with products similar (sometimes exact copies) to ours for less cost. Our manufacturing companies cannot compete because of the vast difference in wage levels paid. I am not endorsing child or “slave” labor practices, but somehow we have to find a way to compete in pricing our goods.

How about dropping minimum wage levels to enable us to deal with our present dilemma? I’m sure many of those laid off and running out of benefits would be happy to get called back even at a reduced wage. Most of them, with families to feed, are eager to find any job, paying any wage. A drop in minimum wage would also address the problem of immigrants coming to our country and doing jobs that pay less. I think most employers would prefer to hire our citizens if the legal minimum wage were lowered or dropped.

As I see it, reducing minimum wages and limiting or reducing unemployment benefits paid would help solve some of our country’s financial problems.

The recently introduced program of cutting payments and balances on homes considered underwater may help some but at who’s expense? Seniors who are being threatened with cuts in their entitlements did not receive reductions while paying their mortgages. If those receiving funds they put on loan to the government, (via payments from wages to fund social security) had not paid into that system in advance, what would they draw from now? Why is, depending upon whom you listen to, the balance on hand in social security funds announced as “enough to continue on for decades” or “almost gone?”

If cuts have to be made they really have to be made by younger workers who can take necessary steps to fund and secure their retirement. Those who thought they had accomplished that objective should not be forced to sacrifice it.

Would a flat tax work? Lot’s of numbers being crunched on that theory but will it work to control government spending? Why, if individuals are told they MUST CUT BACK AND LIMIT SPENDING, should that advice not apply to our government?

I am convinced of one fact — any further borrowing definitely needs to stop. If we settle down much of the hype and rhetoric our politicians love to dish out, stop reckless spending and work hard on our country’s real problems, a plan should emerge.



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