Friday, March 04, 2005


Angry Bear
Friday, March 04, 2005 February Jobs Report

Has an excellent Post and Graph on the Employment picture. The American economy still lacks a real element of Job growth. No Economist states the real rationale for this lack, which remains the American economy fails to produce effectively for itself. American labor can be competitive with foreign labor, and the Issue is not truly Wages, Pensions, or Health Care provision. The Issue is the excessively high Profit/Sale ratio on which American Corporate enterprise insists.

A large share of this excessive demand is the spread of Financial Paper (Stocks) due to the modern use of Stock Options and Stock Grants. Stocks must retain a high Profit and Dividend ratio to maintain Stock pricing. Why do Corporations maintain the practice of Stock Options and Grants? Corporate Executives and Employees make a fortune on sale of Stock, and they determine the amounts of such Stock issuances given. Government Tax policy cuts in at this point with provision of Tax credits and Tax deferments like 401(k)s, IRAs, and Koughs, which provide the market for these Stock issuances. The trouble resides in the fact greater and greater Profitability must be attained, because of Dividend spread across increasing numbers of Corporate Stock. American labor is not fighting foreign labor productivity or cheaper Wages; American labor must fight Corporate greed.

An EPI Snapshot:

The last minimum wage increase, from $4.25 to $5.15 in 1996-97, improved the earnings of 9.9 million workers, or 8.9% of the workforce. Because it did so without negative economic consequences, it provided a useful benchmark for crafting a successful minimum wage package. A proposal in the same vein by several senators earlier this year would raise the federal minimum wage from $5.15 to $7.25 in three steps over two years. This proposal would directly raise the wages of 7.3 million workers (5.8% of the workforce), and would therefore be likely to have an even smaller effect on the economy than the last federal increase while still having significant benefits for working families.

Last week, Senator Rick Santorum (R.-Pa.) announced an alternative plan—raising the federal minimum wage to $6.25 over the next two years. While an improvement over the current level, $6.25 would still be an inadequate federal wage floor. It would directly affect fewer than one-fourth the number of workers than an increase to $7.25, benefiting only 1.4% of the workforce. It would also fail to restore the purchasing power of the minimum wage to its 1997 level.

Corporate contributions control Congress, which will not provide fairness to even the Poorest. Previous Studies the Author has read indicate Wage Differentials do not impact as significantly when overall Wage levels increase (larger numbers reflect less need for status). Downsizing and Outsourcing eliminates even more demand for Wage differentials. A rise in Minimum Wage to $7.25/hour over Two years would have only 23% of the impact of the 1996-97 increase.

An Minimum Wage increase to $7.25/hour over Two years would actually employ more Labor than currently employed by close to Three million Jobs in this Wage range. American Business needs the low-Cost labor, with Retail and Manufacturing both suffering from lack of access to such labor. The increase in Minimum Wage would finance low-Cost Labor's ability to shift from Subsistence welfare programs sustainably. If only Congress and Neocons utilized more foresight. lgl