I can’t schedule something in Nov. like I thought so I have some down time. I thought about the president’s press conference about job creation. Its tough. I think the biggest problem is not wages, but legitimate asset values here as oppose to the in these countries where jobs tend to go. I believe it’s the asset values of land, raw materials, etc that justify different wages in the US and abroad. If you lower wages here to compete internationally, a person could not make enough to live based on the cost of our assets and living in the states. In a market driven economy like ours, it is virtually impossible to make to lower the cost of assets. Much of why we have such high wages for some jobs is because of inflation over time, value added by improvements, innovation and transaction volume. If you try to make the US worker more valuable with technology (allowing each worker to produce more); than a company will apply that technology to a foreign work force to make them more valuable per person.
Since the president said he was serious about examining new models I will give this a shot. It has a lot of flaws that will make it difficult to work for all jobs, and difficult to rectify someone in this situation changing jobs or losing them. But I think the math can hold up if government allows for early tax breaks or grants, and participants are willing to commit long term.
Give some businesses the ability to purchase homes in some cases (based on higher income levels) or decent apartment-like housing in others at a decent price and maybe with a tax incentive or government help. The company then offers employees a lower wage as a benefit for the ability to live in a ‘company’ home or apartment-like environment for a much reduced rent, rent to own situation, or mortgage. If the price of the living arrangement, home is low enough and the reduction in wages is not too steep, it may be possible for an employer to offer lower wages than the normal market while the average worker in this program has enough disposable income to live on that lowered wage, or even come out better off. A two income family could make out very well.
To give some perspective, what if that $65 to $75/hour (with benefits) wage of American auto workers could be reduced much closer to foreign counterpart’s $45 roughly, but in exchange for that lower wage the American worker pay a mortgage/rent to their employer on a home the employer bought with tax breaks, government assistance with purchases etc. Instead of paying the bank or landlord for the mortgage/rent, you pay your employer in order to pay rent or buy off your house, in this program. If the employer gets to buy the house or rental property with enough incentives from state and local government, they may be able to make up the cost of the housing purchase with the savings in wages paid out. Assuming that benefits stay about the same per hour, the purchase of an average American home at about $200,000 can be made up in savings in wages in a short period of time, if wages can come down by about $10 to $15/hour. Especially if that company only pays about 50 cents or less on the dollar for the house upfront out of pocket when they first buy it to be mortgaged or rented to an employee. But remember that same person would not have the typical $1000 to $1200 mortgage payment. If the ‘employer’ rent or mortgage is considerable less, like $100 or $300 a month in this program only, the cut in pay may not be so bad. There needs to be a reduction in what the company has to pay out, but not at the risk of market price. So government aid steps in to help a business meet reasonable market prices. A program like this can not bring down the prices in a local market. Remember that the fixed payment in a mortgage for land in this idea, saves the company more overtime when wages rise. There may be situations where the employee could come out with far more in disposable income.
And there are a lot of flaws with the idea, but the principle I think is logical. That in order for some of our labor markets, particularly our physical labor and manufacturing, to compete with foreign countries, we will have to find ways to reduce the prices of assets and services people pay for that work those jobs. Housing seems possible to me if entry prices are low enough, and are financed over a long enough period of time. And that way has to work within a capitalist model of profit creation. Another step is to make what other countries want better and cheaper then whoever does it now. This is really hard since most marketing info can not really tell you what can be sold in many parts of the world from American in my opinion.
I know I don’t provide empirical support for a lot of my stuff, but I don’t have time. When I do I can put together a small spread sheet, but the calculations may not be that hard and others may have better research info than I do to check some numbers. After that the projection of saving should not be to hard to calculate. I will have to start studying for 2 of exams for early next year, since I can not take one this month. I’ll add more about this and some possible new ways for the middle class to be involved in investments usually reserved for the ‘high net worth’ club. I may get into some detail tonight if I get off work early or have some time, but by tomorrow I gotta get on the grind. Gibbs and Plouffe over the week. Hang in there Mr. President and bring home a good health care LAW.
