Post by Mal on Sept 3, 2013 15:43:20 GMT -5
As with any other question, there are no easy answers. But one of the single biggest causes is the loss of manufacturing jobs to cheap labor in developing countries. The idea of setting up companies in developing nations was originally intended to create export markets for our goods. Unfortunately, companies discovered that with the abundance of cheap labor, there really was no point in trying to set up an export market: they just paid the labor cost at 10 cents on the dollar and reaped massive profits. So while the first prong of the idea worked, the second prong did not.
Fast forward a few decades and now we have foreign companies coming to America to manufacture because our labor is actually cheaper than say in Germany or Japan. For example, the line employees at the BMW plant in Greenville, S.C. make $15.00 an hour, which is actually half of what a BMW line worker makes in Germany. The fallout is obvious in that the American worker has less purchasing power than his or her German counterpart.
And you don't need a degree in economics to see the ripple effect: because the American worker is buying less goods, the labor demand to make those goods lowers, resulting in higher rates of unemployment and thus higher rates of poverty.
And while it is true that a small minority would like to simply live on the dole, most of the folks I encounter that are unemployed or underemployed are desperate to get a job. And most of those folks never went beyond high school. Which brings me to my second point:
Having a college degree increases ones chances of finding gainful employment at a higher wage, period. In fact, one study discovered that those with a 4 year degree had an unemployment rate half that of those with a H.S. Diploma: www.huffingtonpost.com/2013/06/19/unemployment-college-graduates-majors_n_3462712.html
Also, college graduates are more likely to start their own businesses than non college graduates: m.entrepreneur.com/article/226626
So what do we do about it? First, tax incentives would be a good place to start. Rewarding large employers with tax incentives for every job they create in the U.S. would be a great place to begin. There is a huge break in the tax code for a business that provides health insurance to its employees. Why not write in an incentive for job creation?
Second, make sure more people get a college degree by investing in education. Remove teacher tenure, increase salaries for teachers who show consistent success via their students grades, and provide pay for performance.
These are two small, relatively inexpensive steps we could take that would go a long way toward curtailing poverty. No, they aren't the total answer, but they are, I think, a good place to start.
Fast forward a few decades and now we have foreign companies coming to America to manufacture because our labor is actually cheaper than say in Germany or Japan. For example, the line employees at the BMW plant in Greenville, S.C. make $15.00 an hour, which is actually half of what a BMW line worker makes in Germany. The fallout is obvious in that the American worker has less purchasing power than his or her German counterpart.
And you don't need a degree in economics to see the ripple effect: because the American worker is buying less goods, the labor demand to make those goods lowers, resulting in higher rates of unemployment and thus higher rates of poverty.
And while it is true that a small minority would like to simply live on the dole, most of the folks I encounter that are unemployed or underemployed are desperate to get a job. And most of those folks never went beyond high school. Which brings me to my second point:
Having a college degree increases ones chances of finding gainful employment at a higher wage, period. In fact, one study discovered that those with a 4 year degree had an unemployment rate half that of those with a H.S. Diploma: www.huffingtonpost.com/2013/06/19/unemployment-college-graduates-majors_n_3462712.html
Also, college graduates are more likely to start their own businesses than non college graduates: m.entrepreneur.com/article/226626
So what do we do about it? First, tax incentives would be a good place to start. Rewarding large employers with tax incentives for every job they create in the U.S. would be a great place to begin. There is a huge break in the tax code for a business that provides health insurance to its employees. Why not write in an incentive for job creation?
Second, make sure more people get a college degree by investing in education. Remove teacher tenure, increase salaries for teachers who show consistent success via their students grades, and provide pay for performance.
These are two small, relatively inexpensive steps we could take that would go a long way toward curtailing poverty. No, they aren't the total answer, but they are, I think, a good place to start.