Our president has introduced a new jobs bill that is promised to focus on infrastructure rebuilding, which should provide work for some chronically or currently unemployed. It might help those in the construction trades, but what is it going to do for us—Mr. and Mrs. Main Street?
If you are in the auto glass business (and who isn’t these days?), what is going to make you hire someone? The way I see it, it is when an owner encounters overwhelming and sustained demand.
In my part of Central California, I have not witnessed the growth of a single, locally owned multi-point brick and mortar replacement business in the past five years, perhaps even ten. I have seen dozens upon dozens of one- and two-man operations start up as well as numerous shops closing down. But I would ask most owners today, would you open up a brand-new position and hire an additional technician based on your confidence in your local market and the national economy?
For us, adding a technician isn’t just about payroll costs. You have to figure benefits, support tools and, if you are adding a mobile tech, the real expense of a vehicle and its related costs. What about the additional risk of exposing your customer list to a potential competitor? Take Safelite, for example—if the company adds an installation tech somewhere to an existing shop, the start-up costs alone must exceed $30,000. That’s not peanuts. Then again, in my area, many of my competitors buy used pick-ups for less than $2,000 and look for accounts to undercut.
Business leaders complain about taxes and regulations. How do those really affect us? Everyone hates paying taxes. Our country started mainly due to disagreements between Britain and her American colonies about the unrepresented imposition of taxes. How would you feel if General Electric paid no American corporate taxes on sales of more than one billion dollars? Now, as a sole proprietor of a Chapter S corporation, how much did you pay in income taxes? I bet most of us paid taxes last year. How much profit did Belron pay American taxes on? Percentage-wise I bet it was far less than most of us. One huge flaw within our tax codes is that over time, many industries and multi-national corporations have garnered exemptions that have eliminated or greatly lessened their tax exposure. Here is an example: Google™ sells its intellectual property to its Irish-based subsidiary, which has a 14 percent corporate tax rate. Google Ireland then sends that asset through its Antigua shell and “washes” it, so that when it re-acquires that software code, which is the foundation of the entire company, it is now a tax-free asset. We are hearing a lot of political rhetoric about cutting government spending, but almost nothing about real tax reform—the burden of which falls percentage-wise far harder and higher on the middle class than anywhere else.
American business leaders complain that our corporate tax rate of 35 percent is far too high. What about cutting that rate to 20 percent but eliminating e any and all exemptions for these large companies? I would presume that tax revenues would increase due to the lack of exceptions being made to specific industries or companies. Remember, many CEOs’ whole existence is based on their ability to lessen any or all burdens on the company and increase stock prices to please Wall Street and shareholders. I don’t see many applauding the removal of any exemption that would cost their companies money. The CEO of Cisco recently complained that the company has five billion in profits sitting overseas because if it brought it back, it would be subject to tax. However, we keep hearing talk that the elimination of the mortgage interest deduction for homeowners is the most likely “reform” to take place. I have no issue with the fact that 410 richest American families have a combined net worth equal to 155 million others, but the latest reports say that out of just more than 300 million Americans, more than 46 million of us live under the poverty line. While we are not a third-world country, that growing division should worry all of us.
Fifty years ago, 25 percent of Americans were employed in the manufacturing sector. Many of our parents bought homes and put us through college by building cars, television sets and a thousand other items that now are made elsewhere. Our manufacturing sector has shrunk to under ten percent of our economy. Those who have little or no education are either working in low-paying service jobs, are tradesmen or are unemployed. In past decades, the economic alternative was working in a factory. That option basically no longer exists. Corporations have run overseas to manufacture in order to avoid paying high labor costs and environmental regulations. Should we applaud the fact that Lake Erie can’t catch fire anymore or the people of Pittsburgh can see the sun and deeply inhale the air?
Yet many of those core manufacturing industries that existed in those regions have been moved to foreign shores for avoidance purposes. Wall Street rewards these moves since they help stock prices climb while the area continues to rust and decay. Even call centers are moved overseas just because with developments in telecommunications, some bank will save money by hiring an Indian company to answer its customers’ phone concerns instead of keeping this function here in the States. The gluttony of a global economy has wreaked havoc here in America and there is no end to our downward spiral.
