Sunday, July 19, 2009

Unemployment: a double edged sword

First, let me predict that unemployment will show a significant increase in July and August. In related news, the second step of Congress' increase in minimum wage takes place mid-July. $7.65 an hour, for the same productivity, for minimum wage earners, that was $5.15. Wow. How many companies, managing their business, appreciate seeing their payroll jump without getting anything extra - except a corresponding increase in the amount of taxes the employer pays on payroll.

There is a flip side to raising the federal minimum wage rate. Many employers, including mine, let many promotions go the last two years. In fact, I have gone from $0.80 above minimum wage, to $0.25 above - to minimum wage. This is simple economics, I now get paid more than I did two years ago, but still make the same as a still-in-high-school new hire. That adds to a lot of job satisfaction. Some places use the nickel and dime differences in wage to express relative authority and achievement in skill. Losing that stratification erodes the likelihood of people remaining with the employer.

There is a social cache to making more money than minimum wage. Job churning, changing jobs within an industry for a real or perceived advantage, costs the employers involved, and their industry, and the community.

Think about it. Someone coming to work has a half day or a week to read company policies, fill out government and company forms, insurance, etc. Paid time that doesn't benefit the employer. Then there is time to come up to speed. A very experienced new hire may be able to get right to work - but won't be as valuable to the new employer for some time, maybe days, maybe months. It depends on the environment.

Meanwhile the employer that lost a valued worker - has a gap in the ability to produce. It takes time, money, and effort to locate and recruit suitable replacements, interview and evaluate, and choose to hire or not. Even with unemployment high, or especially with unemployment high, employers face a daunting task: Countless gurus and government agencies have been teaching people to "game" the system. To get their foot in the door and hopefully even get hired - when they are not qualified for the job they are applying for. Head hunters, job placement programs, many of them get paid for number. Numbers of people getting a job offer. Very few get paid depending on whether the person hired was truthful and accurate, and well suited to the work as assessed six months after the hire date.

This matters. Because whether B. Hussein Obama and the Pelosi/Reid axis raise taxes and increase regularions, or replacing a valued employee, the company loses money and time and effort that could have been used serving the community. The company makes less money. Less money gets spent in the community, and other jobs are put at risk.

And that brings me to unemployment. Washington, DC wants us to think that unemployment is about people not working. It is. But it is also about companies not making money, not contributing to the community.

And every industry that involves a company that loses a worker for any reason, loses. The industry and community lose a worker that has spend years, often, learning a trade and acquiring skill and experience at producing, and making a profit for the company, industry, community, and nation. Keeping jobs secure, keeping the company's products and services available, growing the national and local economy. Each job lost turns that productivity into a cost, a reduction in productivity, even if the worker finds the same job with a new employer within hours. The new employer must process in and train, evaluate, and otherwise spend resources and time, before that worker can again apply skill and experience in the new environment.

Where someone is underemployed or otherwise changes fields the cycle is more painful. Disparaging remarks about flipping burgers and working at McDonalds overlook the cost to the community of replacing those oh-so-easily-trained high school kids, retirees, and others that can't find work somewhere else. Where someone was a valued worker elsewhere, the national and local economy, and the industry involved, lose experience and skill sets that took years or decades to develop. Those skills are no longer available; the national economy is permanently reduced. For the new person at McDonalds the impact is more personal, learning new job skills in an industry where people routinely lose their job for simple errors and mistakes, accommodating changes in lifestyle and impacts to family expectations and needs, these things do settle down. But the community lost, the nation lost, the families involved all lost.

Companies don't shut down without spending a lot of money. Some of it is in debts that don't get repaid, that hazard other companies' ability to continue contributing to the economy. Some of the money comes from company assets that won't be available to distribute to shareholders and owners, so they can reinvest the money. Starting up again, or taking back people that have been laid off - again, it costs. Most people are changed when they change jobs. When the change is involuntary, they change even more. Not all people are suitable any longer for a job they once held. Changes in work group dynamics when one or more people don't return, or new people are added, threaten or delay productivity expectations.

Playing with unemployment numbers as a reason or means to criticize the President or Congress is petty. The fact that regulations, taxes, and games with fiscal policy impact unemployment - that is, the ability of the nation to function - should be sufficient to decry or laud efforts.

I have been told, no one ever got rich working with their hands. The money, the impact or power, is in having people work for you. I guess the next step up would be financing people that have people working for them, or maybe politicians making regulations that affect others. One person can impair the ability of others to live and work - terrorists and suicide bombers, and mass shooters are examples we live with. To build something, a craftsman or gardener can supply a family, or a community. To make a significant contribution to the nation, though, it takes the work of many. Many people to build the warships and weapons that maintain our security on the seas and in the air. Many people to grow the food that feeds our cities and towns. Many people to provide and transport and service the things we need, from food and clothes to MP3 players and iPhones. Many people to care for our neighbors.

Unemployment threatens us as much as an army marching on our land. Regulations and taxes that "redistribute wealth" and "limit corporations" weaken our ability to feed and clothe ourselves, to keep other nations from deciding to conquer and take our resources.

Some regulations are needed; unbridled capitalism can lead to monopolies that punish competition, and weaken the economy and the nation. But hating the wealthy is not healthy either. It is the holders and accumulators of wealth that have the resources and experience to take advantage of opportunities.

Companies making money and wealthy people can hire people, and reduce the number of unemployed. Not governments, not communities, not regulations, and not taxes.

No comments:

Post a Comment