Corporate tax cuts/breaks don't create jobs!

[Bonam]

5k to create, not replace existing ones, a new job……Even if it’s near minimum wage, that’s still ~20k a year in salary……..Would you spend twenty dollars to save five?

No but if I needed more employees but had limited revenue with which to hire them, a 5k difference might occasionally nudge the decision one way or another.

[Jack Weber]

You completely evaded my point! I was NOT defending U S Steel in its present dispute with Local 1005! I was merely using Local 1005 as an example of unions not seeing the big picture, or not caring. Watch that situation closely, Rick. Comrade Rolf is going to get U S Steel to close that plant. When it happens, he will lay ALL the blame on the company!

Afterwards it will get very interesting. Sooner or later he is going to have to face a vote from his membership, if not on the contract then about his own leadership. Steelworkers have long memories.

The federal government is suing U S Steel for breach of its agreement. Personally, I hope they hang them!

So what? How does that change my point that unions today are living in the past?

The fact that you so completely missed my point to pounce on my model is EXACTLY what's wrong with much of union thinking today! Because the union leadership doesn't have to worry about the company's day to day struggle to be profitable they seem to believe that NO ONE has to worry about it! That it is written in the stars that the company will always be there to employ their membership!

I've worked for two companies that went bankrupt. Both times the writing was on the wall for months, if not years. Yet when the axe came down fellow workers all around me were totally shocked! They just couldn't believe it! Sadly but also laughably, at one firm some tried to organize some kind of effort to FORCE the company to stay in business, despite it's being broke and in debt!

Most of my career was in sales and one thing you learn early is that in any deal or partnership it has to be good for both parties if its going to last. If a deal is so much in your favour that it breaks your opponent then you both lose.

1.You said 1005 is out on strike...

That is patently false!

They are locked out (job action by the employer)!

1005 is locked out the same way the USWA local at Lake Erie was locked out (see starved into taking a bad deal) last year.And,as stated before,in contravention of the agreement they signed with the federal government.

2.The small group of 1005 members were finally given their chance and it amounted to nothing.They were a small,yet vocal,minority that wanted to take whatever the company was throwing at them.That's simply not uncommon in any labour dispute.

3.I have suspected all along that US Steel wants to shut down the former Hilton Works all along.It's an antiquated plant the requires untold billions in CapEx upgrades.They have always coveted the Nanticoke plant.

edit...

Sorry...I see this has been asked and answered...

Edited September 10, 2011 by Jack Weber

[dre]

Your avoided my question: do you think that increasing the cost of employing people will lead to more or less jobs?

The fact is, no matter what your opinion of corporations, increasing the cost of employing workers will result in them hiring *fewer* workers. So all you would do would make like better for a few while making life worse for people in general.

In any case, I thought the left was all hot about 'jon sharing' and 'reduced work weeks' to keep people employed.

Your avoided my question: do you think that increasing the cost of employing people will lead to more or less jobs?

That entirely depends on what kind of economy youre talking about. Low wages reduce consumption, reduce the number of transactions, and in an economy based on consumption will result in less jobs.

[TimG]

That entirely depends on what kind of economy youre talking about. Low wages reduce consumption, reduce the number of transactions, and in an economy based on consumption will result in less jobs.

You seem to be nostalgic for a time when the majority of the world's GDP was produced in wealthy countries. This time is long gone and will never come back. Today companies paying their workers a 'living wage' do not increase business because most businesses are facing competition from low wage countries. i.e., workers would simply take those higher wages and use them to buy goods from cheaper foreign competition. This is great for the foreign competition but bad for the locally based business paying those higher wages.

Obviously, you can complain about the ungrateful behavoir of the the employees but there is not much that can be done about it.

Edited September 10, 2011 by TimG

[Wild Bill]

1.You said 1005 is out on strike...

That is patently false!

They are locked out (job action by the employer)!

1005 is locked out the same way the USWA local at Lake Erie was locked out (see starved into taking a bad deal) last year.And,as stated before,in contravention of the agreement they signed with the federal government.

2.The small group of 1005 members were finally given their chance and it amounted to nothing.They were a small,yet vocal,minority that wanted to take whatever the company was throwing at them.That's simply not uncommon in any labour dispute.

3.I have suspected all along that US Steel wants to shut down the former Hilton Works all along.It's an antiquated plant the requires untold billions in CapEx upgrades.They have always coveted the Nanticoke plant.

edit...

Sorry...I see this has been asked and answered...

Slow down, Jack! You were jumping all over my model instead of my point!

[Wild Bill]

That entirely depends on what kind of economy youre talking about. Low wages reduce consumption, reduce the number of transactions, and in an economy based on consumption will result in less jobs.

Dr. Dre, that's the "book" explanation, the sort of thing a teacher might say. It's true as an overall explanation but it totally fails in an individual "real world" situation.

A business can rarely afford to take the "long" view. Sure, if they need a market that can afford to buy their products they need to pay their employees enough so that they can afford to buy what they make. However, as Tim pointed out, companies face stiff competition from China, India and other low wage companies. That competition must be met or the company goes bankrupt TODAY! The firm doesn't have the luxury of taking the future effects into account, even if it were smart enough to see them coming.

It's easy to take the "book" view if its not your business! I don't have all the answers but I know you can't just ignore all the factors.

[fellowtraveller]

Yes, god forbid that anyone should be looking out for the workers best interests and ensuring they get treated fairly.

I mean the gall of some people to dare cut into the CEO's golfing budget....

If Conservatives had their way, we'd all be working in sweatshops.

Or they'd legalise slavery.

You forgot about mandatory Jesus lessons and eating puppies for dinner.

[Evening Star]

You seem to be nostalgic for a time when the majority of the world's GDP was produced in wealthy countries. This time is long gone and will never come back. Today companies paying their workers a 'living wage' do not increase business because most businesses are facing competition from low wage countries. i.e., workers would simply take those higher wages and use them to buy goods from cheaper foreign competition. This is great for the foreign competition but bad for the locally based business paying those higher wages.

Obviously, you can complain about the ungrateful behavoir of the the employees but there is not much that can be done about it.

Do you see any solution to this, Tim? Or do you just think that it's necessary to allow our wages to drop to levels that are competitive with those in Taiwan and Bangladesh?

[CPCFTW]

Do you see any solution to this, Tim? Or do you just think that it's necessary to allow our wages to drop to levels that are competitive with those in Taiwan and Bangladesh?

Simple. End the culture of entitlements and make people actually work for a living. Sorry you can't have 10 weeks vacation and 20 sick days when someone in India or China will do the job for 1/4 your wage with no days off. Poor you.

[TimG]

Do you see any solution to this, Tim? Or do you just think that it's necessary to allow our wages to drop to levels that are competitive with those in Taiwan and Bangladesh?

There is a world of difference between Taiwan and Bangladesh. But the short answer is yes - our standard of living will go down. Probably not to Bangladesh levels. But Taiwan and South Korean levels are probably where we will end up. The only choices are whether we drive ourselves into pit trying to prevent it from happening or do we retool our society to succeed in the new global reality. Edited September 11, 2011 by TimG

[dre]

There is a world of difference between Taiwan and Bangladesh. But the short answer is yes - our standard of living will go down. Probably not to Bangladesh levels. But Taiwan and South Korean levels are probably where we will end up. The only choices are whether we drive ourselves into pit trying to prevent it from happening or do we retool our society to succeed in the new global reality.

Actually I think the clock on globalism is gonna get rolled back pretty soon. By 2020 a gallon of gasoline will probably cost about $10. Its going to get more expensive to move goods around. People in the west are going to push for a more protectionist national economy again as well, once they realize the "service based economy" they were sold on is a myth/lie/fraud.

Edited September 11, 2011 by dre

[TimG]

Actually I think the clock on globalism is gonna get rolled back pretty soon. By 2020 a gallon of gasoline will probably cost about $10.

Gas is already between $8-9/gallon in most of Europe. The clock is not rolling back there. You also have to seperate the $US price from the world price. If the $US collapses the a high $US price oil will have little effect on the world. Lastly, international trade ran on coal in the past it will run on coal in the future if oil becomes too pricey.

That said, I agree 100% with your "service based economy...myth/lie/fraud" comment. We need to build stuff to have a self-sustaining economy. But protectionism will only make things worse. What needs to happen is wage levels need to come down in all sectors of society to the point where industries can compete. i.e. the cost of living here must be reduced. An engineer can get paid $8/hour in China and be fairly confortable. We need to reduce the cost of living here so most people can live comfortably on less money.

Edited September 11, 2011 by TimG

[Wild Bill]

Gas is already between $8-9/gallon in most of Europe. The clock is not rolling back there. You also have to seperate the $US price from the world price. If the $US collapses the a high $US price oil will have little effect on the world. Lastly, international trade ran on coal in the past it will run on coal in the future if oil becomes too pricey.

That said, I agree 100% with your "service based economy...myth/lie/fraud" comment. We need to build stuff to have a self-sustaining economy. But protectionism will only make things worse. What needs to happen is wage levels need to come down in all sectors of society to the point where industries can compete. i.e. the cost of living here must be reduced. An engineer can get paid $8/hour in China and be fairly confortable. We need to reduce the cost of living here so most people can live comfortably on less money.

Part of that problem is that governments have greedily deliberately pushed up the cost of living! When I was a lad my father bought a lot in a rural area just outside of town. He had to install a septic system and have a well drilled, as there was no city supplied water or sewers. No sidewalks or street lights. All we got from the municipality was garbage pickup. The county plowed the roads during the winter.

For some decades now you can't get a building permit to do the same. As far back as the late 70's the City went for a policy of only allowing new homes to be built in large subdivisions. Every house was a 3 bedroom, with LOTS of square feet inside! All sewers, water, sidewalks and paved streets were done as the houses were finished, usually before most people had moved in.

The reason was that this meant the City got a huge amount of residential taxes almost instantly! Since we were riding a 'baby boom' and newly started families were everywhere most people were happy with the arrangement.

Population demographics have changed and now there are not nearly as many of those starter families in the market. Elementary schools have been slowly pared back here in Hamilton the past few years. There are more 'empty nesters' looking for a 2 or even a 1 bedroom house. Not all are ready for a condo. New such homes are no longer to be found. That leaves the old, central, crappy looking part of town as the only choice for a detached home of a suitable size for a senior couple or even widow or widower.

[Evening Star]

There is a world of difference between Taiwan and Bangladesh.

Fair point, yes.

But the short answer is yes - our standard of living will go down. Probably not to Bangladesh levels. But Taiwan and South Korean levels are probably where we will end up.

OK, that clarifies things, thanks. It's rare to hear someone say this openly.

[TimG]

OK, that clarifies things, thanks. It's rare to hear someone say this openly.

You do realize I am making exactly the same argument that anyone calling for a lower Canadian dollar makes (many labour groups do this). The only difference I am assuming that Canada will not be able to manipulate it's currency and must achieve the same effect my lowering wage levels across the board. Edited September 11, 2011 by TimG

[TimG]

Part of that problem is that governments have greedily deliberately pushed up the cost of living!

Governments are the biggest part of the problem. Between unions that expect endlessly increase benefits to bureaucrats that are constantly inventing new things to regulate. My city taxes went up 4% this year because of 'wages and benefits' after a similar increase the year before and year before. It is rediculous. Nobody but city employees are getting those kinds of pay raises now a days.

[Smallc]

I agree with you on some public sector wages, but it isn't as if regulations are imposed at random. There are, generally, reasons, some of them very good, for regulations.

[MiddleClassCentrist]

Governments are the biggest part of the problem. Between unions that expect endlessly increase benefits to bureaucrats that are constantly inventing new things to regulate. My city taxes went up 4% this year because of 'wages and benefits' after a similar increase the year before and year before. It is rediculous. Nobody but city employees are getting those kinds of pay raises now a days.

And top executive pay will only go up... at additional expense of the average worker. And conservatives will cheer with glee, until we repeat the cycle and revolt.

The working class has a hard time taking cuts when they know their boss is getting huge bonuses and pay increases during economic downturns. The rich don't follow economic reality... they get the average person to bail them out with government loans and free money that the average worker will have to pay back.

Top executives should set an example and cap their total compensation to that of the lowest end worker in the organization (50x base salary). Especially since there are so many hard workers near the top who want to replace them... Except for some reason supply and demand doesn't apply when you are at the top.

We are living at at artificially high standard of living though. Every time I think of moving out of my semi-detached house, I think "This is what would be reasonable to afford in Toronto" "it would be a dream to own this in England." "It would be a modest mansion in the 3rd world". Hard to justify moving when I already have it better than 95% of the world.

[Michael Hardner]

Governments are the biggest part of the problem. Between unions that expect endlessly increase benefits to bureaucrats that are constantly inventing new things to regulate. My city taxes went up 4% this year because of 'wages and benefits' after a similar increase the year before and year before. It is rediculous. Nobody but city employees are getting those kinds of pay raises now a days.

I got over 5% this year, private sector.

[Argus]

Right. You want companies to hire more and your solution is to make it even more expensive to hire people? You are crazy if you believe that would do anything other than increase the unemployment rate even more than it is today.

The outsourcing agencies are basically pimps taking a share of those workers salaries while returning nothing. Sun Life, as an example, used to have data entry people who earned $12hr plus benefits to input claims. Along came a company called Business Data Services which told Sun Life they could take over inputting that data and do it for $11 hr and no benefits. This saved Sun Life a considerable amount of money since they no longer had to pay for office space or benefits, and they gladly agreed. Business Data Services then set up sweatshop data entry offices with employees crowded together earning $8.50 an hour and no benefits. Sun Life profited. The weasels who owned BDS profited. The mass of employees got screwed.

That, in miniature, is what happens with all these outsourcing and temp agencies. It used to piss me off that we hired temp clerks, knowing the clerk only got 2/3rds of what we were paying the temp agency. But we had little choice given the unbelievable level of incompetence and complexity the federal government puts on hiring people. Most of the agencies, at least at that time also had clauses in their contracts which forbid the organization which employs their people from offering them permanent employment. Why lose a good producer, after all? We used to hire them anyway, telling them not to let their agency know they were coming to work for us. One of the agencies found out once, and demanded a large payment which was in the contract. I wanted to tell them to go screw themselves since I doubted that provision was legal, but those above decided to pay them. I did make sure, however, that we never gave that company, which we had used often, a single dollar's worth of additional business. I had a word with my counterpart on the next floor up, too, who did the contracting for much of the branch there, and he never hired from that company again either.

[Argus]

Governments are the biggest part of the problem. Between unions that expect endlessly increase benefits to bureaucrats that are constantly inventing new things to regulate. My city taxes went up 4% this year because of 'wages and benefits' after a similar increase the year before and year before. It is rediculous. Nobody but city employees are getting those kinds of pay raises now a days.

And you blame the unions? The bureaucrats? Why don't you put the blame where it really belongs? The stupid dullards who troop out to the polls to vote in the same slack-jawed cretins year after year to city council. They're the ones who are always coming up with new ways to spend money, not those beneath them. And if the citizens keep voting them in then that's the citizens problem. You think I feel sorry for the morons in Ottawa labouring under incompetent local government? Not in the least! They keep voting in the same losers every election so they deserve what they get.

Right now in Ontario, who's leading in the polls? Why it's Dalton McGuinty, the man who increased spending by 70%, the man whose dumbass green program has seen everyone's electricity rates go up 50%, and will see them go up another 50% in the next few years. The provincial deficit is at record levels, in no small part because of generous wage increases to public sector workers, to teachers, to doctors, to nurses and health care workers, to police. And there's a very good chance he'll get re-elected again.

You blame the workers. I blame the voters. And if McGuinty gets in again I won't feel the least bit sorry for them when they whine about their high taxes, or high electric rates, or collapsing manufacturing base.

[Michael Hardner]

My city taxes went up 4% this year because of 'wages and benefits' after a similar increase the year before and year before. It is rediculous. Nobody but city employees are getting those kinds of pay raises now a days.

Another thing to add - those who own capital have a great advantage in globalization, as they can go offshore for labour, for capital, or for places to invest. This is just "being smart". Working people will look after their own interests when they can, just as the owners of organizations do. Does it make sense to moralize how people behave in these matters when it's their own wage versus when it's their investment ?

Does the Teacher's Pension Plan invest offshore ? I'll bet that they do.

[TimG]

And you blame the unions? The bureaucrats? Why don't you put the blame where it really belongs?

Really. So governments should simply legislate public sector workers back whenever they strike? Impose contracts that bring benefits into the realm of reality? I wonder how that will go over with the unions.

You blame the workers. I blame the voters. And if McGuinty gets in again I won't feel the least bit sorry for them when they whine about their high taxes, or high electric rates, or collapsing manufacturing base.

You have a point there - if he gets back in.

[Michael Hardner]

Adding to the discussion: Statscan graph of manufacturing jobs in Ontario

http://www.statcan.gc.ca/pub/75-001-x/2009102/charts-graphiques/10791/c-g000b-eng.htm

[TimG]

The outsourcing agencies are basically pimps taking a share of those workers salaries while returning nothing.

The provide labour at a cheaper rate than can be provided with in the company. What exactly is the issue? Where is it written that "benefits" are a god given right? Perhaps we should be reducing what benefits are required for full time workers so companies do have an incentive to hire full time workers?

It used to piss me off that we hired temp clerks, knowing the clerk only got 2/3rds of what we were paying the temp agency.

And what do management bureaucrats do when politicians ask for a budget? This give a number that include a lot of overhead on the labour rates that the employee never sees.

Why lose a good producer, after all? We used to hire them anyway, telling them not to let their agency know they were coming to work for us. One of the agencies found out once, and demanded a large payment which was in the contract.

In other industries they would simply sue the worker for breach of contract. Having a payment negotiated that the government is willing to pay sounds like a good deal for the employee to me. The agency hires 50 people. The government figures which ones are worth hiring. Pays a fee to break the contract. Everybody is happy.