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A Real Problem with Labor. It Is a Mindset of Those With Money.
Just to hire one of these guys for a year will cost well over $32,000.00 and that would be at minimum wage.
Anything is better than hiring and paying workers.
This might sound over dramatic but in today's business climate it is very true and accurate. We have been working on some projects and from them I can definitely say that this is the way it is today. Successful business people have developed a mindset against hiring people. It is scary how pervasive the anti-hiring notion is among business today!
Projects that would make a reasonable return on investment are not being started or expanded if it means more workers need to be hired. This is absolute fact.
First let us look at a regular 50K a year employee, and yes you can just about cut everything in half for a minimum wage worker, and what it costs to hire them from a very basic level.
These statistics are pretty routine and I basically got this from an MIT article on the subject: http://web.mit.edu/e-club/hadzima/how-much-does-an-employee-cost.html
"In preparing your personnel budget be sure to include allowances for Social Security/FICA (currently 6.2% on the first $90,000 of salary – www.ssa.gov), Unemployment/FUTA (6.2% on $7,000 of salary - http://workforcesecurity.doleta.gov/unemploy/uitaxtopic.asp) and Medicare (1.45% with no salary cap – www.ssa.gov). Workmen’s compensation premiums will depend on the category of your employee, with clerical at about 0.3% of salary and manufacturing at 7.5%.
Basic salary and employment taxes are a minimum- in most cases you will need to provide some benefits. Typical benefits for a $50,000 salaried employee include life insurance ($150) and health coverage ($2,000-$3,000 for single persons; $6,000-$7,2000 for families - http://www.ahrq.gov). Other benefits could include long-term disability insurance ($250), dental plans ($240-$650), dependent care assistance, tuition reimbursement, retirement plans etc. These involve actual payment of benefits by the employer. There are also "self funded" plans where the employer contribution is the administrative costs- e.g. 401(k) savings plans where a portion of the employee’s salary is withheld. Vacation is another cost but is subsumed in the basic salary.
The costs to this point (basic salary, employment taxes and benefits) are typically in the 1.25 to 1.4 times base salary range- e.g. the cost range for a $50,000/year employee might $62,500 to $70,000."
This is set forth often just using different words.
Note we are not including Workers Compensation, anything to do with Unions, training, equipment or liability insurance. So this is pretty amazing.
Or you can outsource at about $400 a month in some places.
Let us look at a special program from USCIS.
The program is called an EB-5 project. We will keep it basic here. It means Employment Based Immigration. At a very simplified level it allows a qualified (rich and not an obvious criminal) individual from qualified countries to spend $500,000.00 dollars in the USA and have a clear pathway to citizenship. Let us cut through all the exceptions and stuff and get down to the numbers. This investment must create or save 10 US jobs for at least two years. There are quotients and derivatives that go into it but let us keep is simple.
Now you take your $500K and divide that up by ten workers for 2 years. That would be twenty work years and let us round down the minimum wage cost of a worker and I think you can see the math. 20 X's 30 equals 600. Actually more like 20 X's 34 = 680K. Now the author is no genius but those numbers do not work. The "enterprise" would need to be at least grossing $180K within that time frame. (yes we are not accurate on the numbers exactly but rounded off and simple). Now that scenario would leave no money for anything other than labor. And for sure there would be no return on investment. And where is the money for the executives to run the project.
Hey who has a project from start to finish that can yield enough to make that work within say a two year period.
Note here also that in certain census areas the investment needed is 1 million dollars for ten workers. Now that scenario can work.
The above is not accurate enough for anyone to use while costing and is simply an explanatory example to show the point.
Do you feel like this song? Well imagine how your boss feels.
So nearly every politician has in there portfolio of promises "more jobs". Almost every single person in the United States wants there to be more jobs. Jobs are good for everyone, from the corner store to the mega corps investors to the government and of course to homes throughout the land. Having a job is good for self esteem and jobs create the basis for support of our ever changing "normal" families. Jobs are good for young people and sometimes critical for elders.
But we have to face facts here. Does a fast food worker make over 30 thousand dollars for the company each year? Does the farm worker bring in over 30 thousand dollars to the grower each year? And so who can blame the business person for wanting to cut back on workers? This is not an easy answer concept.
Over the course of the last two years we have interviewed, made proposals, negotiated terms and created project and closed some down with over 100 business people. To a one, they all desire to cut down on labor costs. Who can blame them?
Well here is where the politicians come in. They do not but should create verifiable exceptions and incentives for people to hire people. They should not create more economic barriers to hiring people.
For what it is worth, looking at the above numbers makes clear, minor adjustments to the minimum wage really only will effect huge corporations, and we know they will pass that on to us, and not to the stock holders.
Right or Left, Right or Wrong we need our politicians to address this hopeless situation.
Is this the new American Workforce
How do you feel about it.
Do you want more for workers with a job, and less chance of having one?
The great good news.
We have a new frontier that we believe will have an impact on this existing landscape of business. It may sound strange to many. But it is technology. To this date most if not all advances in technology have created the scenario where it was used to decrease labor costs. Well guess what? (drum roll please) there is new technology that can help create jobs. That is strange indeed. It is Organic Sustainable Farming.
The notion is to get rid of the genetically modified foods, get rid of the "combines" and tractors and get rid of the pesticides and chemical fertilizers. And hire workers to do all of that manually. Using modern hydroponic and greenhouse advances we can produce healthier foods in less space with less water and energy with more labor and make it work. Believe it or not you can take ten workers, an acre of land, 3 greenhouses and produce enough edibles and ornamentals to make the figures crunch. And it is sexy for politicians and feel good investors. And it can be done in such a way as to make a return on investment within 2 years. Oh sure you can do it using more automation and letting machines creep back into the workplace, but there is little incentive.
So here is the fun part when developing such a project. The business people are conditioned to hate increased labor costs. It is almost laughable when in the middle of it. We are now so engrained with those crazy numbers up above that we fail to see the big picture.
When we slow down and make people our machines we find there are social issues that we cure. When we create a work atmosphere as clean and healthy as organic farming we are winners all the way around.
A fun note from the author. When I started going organic for eating, I bought less because it costs more in certain circumstances. When I bought less we ate less, and threw away even less. The big laugh is on me, not only do I eat better, I eat less and have begun to get to a healthier weight.
Let us wrap this bad boy article up on a positive note.
We are in fact our brother's keeper. We are in fact stewards of this great planet. When we combine those two notions and look for solutions we come up with health. A permanent kind of health. A real kind of strength. We -- if we choose to view it this way are born in the Golden Era of Man. How we act and who we help defines us much more than our things.
Good people are working hard to find good solutions. We need to look for them and give them a tip of our hat and some appreciation.
We thank all the good business people out there for getting up, suiting up, showing up and being up!