Saturday, June 27, 2009

The Jobless Economy

The unemployment rate in the United States will probably not get a whole lot worse than it is now, but it has little chance of improvement. The President and the Congress seem intent on punishing businesses in every way that they can. A particular target of this administration is any business that has employees. If you don't have employees or can reduce dramatically your number of employees, then you might be able to survive this administration. But, if you have employees or were thinking about having any, watch out! You are and will be in big trouble.

First of all, "cap and trade" and "health care reform" are essentially massive new taxes on all businesses. So-called "health care reform" is only a tax if you have employees, so by all means figure out how to get out of that category. Secondly, a host of new Obama-mandates are floating through the Congress that require businesses to offer things like ten days of paid sick days (regardless of whether one is sick or not), substantial increases in the minimum wage, 401-K plans for all companies with ten or more employees, new rules on health and safety, and new litigation possibilities if a company happens to make the mistake of hiring any minorities or folks over the age of 50.

If all of this isn't enough to convince you not to have employees, then try this one: "card check." This employer's nightmare permits goons to coerce your lifelong employees into signing a card against their will and force a union onto your company (even if by voting in a secret ballot, the employees would vote unanimously against having a union...after all, Obama knows better than you do, if you should be represented by a union...your views don't count under "card check"). If the union doesn't like the collective bargaining results, they automatically get a government (Obama appointed) arbitrator to decided what you should pay your employees and what the new working conditions will be. That ought to give every business in America a reason to pause before hiring anyone. In fact, if you have employees, it might be time to rethink whether or not having employees makes any sense.

One way out is to relocate your business to Canada or to Mexico or even to China or India. The rules of the game are much more favorable to an employer in each of those countries and hiring employees is actually encouraged not discouraged. Europe is more like the US so there isn't much point moving anything there. They don't like employees there either. Unemployment, which is mostly double digit in Europe, will soon be mostly double digit, permanently, in the US as well.

Even if an employer decides to brave it out and continue in business and continue to have employees, there will be no chance of being competitive with similar businesses in other countries where businesses are not similarly burdened. We have already seen this happen with the financial service industry. The US has now lost its dominant position in the financial service industry due to the new President and the Congress. Foreign commercial banks and investment banks are having a field day taking over the businesses that once were dominated by US companies. There are no government imposed pay restrictions on HSBC, now the largest bank in the world (HSBC stands for Hong Kong Shanghai Bank). Young people still have a future in investment banking, but they will have to go to Asia to live that future...forget going to NYC. This administration is making certain tha there will be no future for the US investment banks. Remember "greed and corruption." That is what Obama thinks financial services are. Other countries don't agree and they are right. Asia is the future for financial services. Obama and the Congress are seeing to that.

The tragedy is that the days of sub seven percent unemployment are over. Even the government can't fill the void that will be left as employers face up to the fact that this President and this Congress are waging war on employees. Ten years from now they will still be blaming the economic malaise in America on the Bush administration, but this is an Obama disaster in the making. Bush, once relevant, is now irrelevant.

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