No Minimum Wage
President-Elect Obama has promised to stop the hemorrhaging of U.S. jobs overseas, a very worthy goal, but one which will never be accomplished because of economic and political barriers. The basic cause of the loss of U.S. jobs has been the Fair Labor Standards Act, which establishes the minimum wage.
As it stands now, the minimum wage is $6.55 an hour. On July 24, 2009, it will increase to $7.25 an hour. This will continue creating an upward spiral on wages, forcing manufacturing businesses, including car manufacturers, either to send jobs overseas or cease operating.
If a minimum wage could be implemented on a global basis, we would still be manufacturing auto engines, television sets, furniture and fabrics. But if a widget can be made in China at a cost of $1.50 an hour vs. $7.25 an hour in the U.S., what manufacturer in his right mind would take the U.S. route, particularly when his competitors are using Chinese factories?
Ted Kennedy has long been a champion of the minimum wage because it is a good "vote getter." Time after time, he has introduced legislation escalating labor costs. This is where politics stamps out common sense and economics.
Assuring that everyone has enough to live on is a commendable goal, but there is an obvious choice between having a low-paying job and no job at all.
The bailout of the U.S. auto industry will never work, and Obama can't do anything about stopping the steady march of jobs overseas. Unless Chrysler, Ford and GM can increase their use of foreign factories, they cannot compete with Honda, Toyota, Kia and Subaru while bearing the twin burdens of politically inflated labor costs and archaic union rules.
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