Volume 13, Issue 02-26: The Economy

The outlook for the next four years is bleak. There are several factors that will prevent the economy from growing at a rate that will bring down unemployment and create growth that raises the standard of living for the middle class.

The first item is the new healthcare law. The new taxes associated with Obamacare are just now starting to be phased in. This will cripple small business and larger corporations alike. The real problem is the taxes are not the only item in play. The increased cost of healthcare for employees will hurt business as much or more than the taxes involved. The only recourse for business is to reduce overhead, or cut costs. This means business must do more with less. That means cutting back on payroll.

Congress just raised taxes on the most productive members of society. These are the same people who provide the most jobs. As time goes on, these producers will reduce employment to counter the tax increases. If they don’t, profits will suffer. Without profits these businesses will not be able to get financing to expand their operations.

“If Congress insists on making stupid mistakes and passing foolish tax laws, millionaires should not be condemned if they take advantage of them.” — J. Pierpont Morgan

Obama stated he wants to raise the minimum wage to $9.00 per hour. Every time the minimum wage has been raised in the past, unemployment rose. This also puts wage pressure on the rest of the workforce, causing all employees to get raises. Small business is especially being squeezed.

Regulations are being written at a dizzying rate. Large corporations have whole departments that deal with compliance of regulations. Even so, regulations cost business money to comply. Small business is a different matter. A guy who owns a business and employs 25 or 50 people doesn’t have the manpower to stay on top of the new regulations, let alone comply with them. Many of the new regs are written for ATT or Microsoft, but Johnny’s Pizza Shop must comply with the same paperwork. On a percentage basis, Johnny’s pays much more to comply.

All these things hurt small business more than the big corporations, and guess who provided most of the jobs?

Education

Things have changed during my working career. When I became responsible for the office staff in the 70’s, we gave a vocabulary test for all the secretary positions. These girls were required to score 70% or higher to be considered. By the end of the 80’s the test was scrapped because we couldn’t find a candidate who could score above 30%. PC’s were just coming onto the market and cell phones were these big boxes with batteries the size of car batteries, so technology wasn’t a factor.

The kids coming out of high school just weren’t prepared to work in the world. Today colleges teach these fundamentals. A college degree today is equivalent to a high school education in the 50’s. The cost of education, on all levels continues to skyrocket. And the quality of the product continues to decline. I must admit that technology has changed making many of the old skills outdated.

Kids today are facing huge debt loads upon completing their degrees. Unfortunately, their employment opportunities are severely limited. Many are forced into part time positions without benefits. (See THE ECONOMY previously). Since most college loans are now issued through the Federal Government, I expect the default rate to explode. This is not the fault of the students.

All these problems are the result of the Administrations policies. I do not foresee anyone addressing these problems.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s