Thursday, November 02, 2006

Issue 2 redux

Below is a piece about Issue 2 from Wizblog, a much better articulation of why Issue 2 needs to go down.

Ohio Issue 2

Issue 2 supporters would hang out a "No New Business Wanted" sign at the Ohio border, and hurt the very category of workers they purport to help. But hey, they'll feel good about themselves. For a state that already has a poor business climate and high income tax rates, I think a 33% hike in the minimum wage, with additional escalators, will function to hurt the jobs situation more than it helps. Jonathan H. Adler of CWRU, writing at NRO today, says the minimum wage hikes and future built-in increases would be a job-killer for the state.

The economic case against a minimum wage increase is well known. Raising the minimum wage slows job growth by increasing the cost of labor. It is a basic economic truth that when the price of something goes up, the amount demanded declines. So, when the government mandates higher wages, unemployment rises as a direct result. Those workers who keep their jobs may earn more, but this comes at the expense of those who are left without jobs.

Issue Two proponents argue that the majority of minimum-wage workers are adults (over 20) — and thus deserve a raise. The fact is that most minimum-wage earners are between the ages of 16-24 — and two-thirds only work part-time. People in their early twenties are certainly adults, but they are also more likely to be students or living with their families, and are rarely a household’s primary wage earner. A high-school student delivering pizzas, a 23-year-old graduate student who works in a coffee shop, or and a parent who works part-time to supplement his or her spouse’s income while leaving time for family obligations is more likely to earn the minimum wage than a family’s primary wage earner. Indeed, the average family income of minimum-wage earners is over $60,000.

Those who think minimum-wage increases are a matter of social justice ignore the fact that increasing the minimum wage cuts off the lowest rungs on the ladder of economic opportunity. Forty percent of workers earning the minimum wage were unemployed a year earlier, and the typical minimum wage earner does not earn the minimum for long. Most minimum-wage earners receive a raise within a year of employment. As young workers learn new skills, their productivity rises, increasing their value to their current and other potential employers.

For about half of my 29 year career in the employment and job placement industry, part of my job was managing a multi-office temporary services company in the Akron-Cleveland-Canton marketplace. We had a varied practice, with clerical and skilled hourly workers, but in terms of sheer numbers of employees, the biggest segment was what is called "light industrial", what you might call the bottom rung of the employment ladder.

I know conditions vary around the country with farm workers and large immigrant populations, but our market would never support paying minimum wage. And even at starting wages well over minimum, the problem was one of supply, never demand. We're talking about the labor pool after the jobs at the pizza and fast-food joints, mall stores and landscaping companies are taken. The work is often more physically taxing than taking tickets at a theater, or ringing a cash register at Orange Julius, but unlike much of the mall work, the need for labor with these companies is not temporary or seasonal.

Here in the Midwest "Rust Belt", from the mid-eighties into the 00's, we were not paying minimum wage to our unskilled workers, because they were hard enough to find and retain even at significantly higher pay rates. The marketplace was working, and it continues to work. In a job like assembling parts, or packing items in boxes, or taking plastic parts out of a machine, our clients wanted one thing from us as a service provider. Reliable workers. Some of them defined that as loosely as people who show up for work on consecutive days. And you wouldn't believe how often it was difficult to deliver even that. Anyone who owns a business large or small, or who is chartered with hiring entry level, unskilled workers of any sort, will tell you the same thing. It's hard to find people who want to work.

Issue 3

If you saw the ads for issue 3 you would think that we were voting on a tax levy to assure that all Ohio kids will be able to go to college.

There is absolutely no mention of legalized gaming in the state of Ohio.

As a fervent libertatrian, I have no qualms about legalized gaming. However, as that same libertarian, I have a huuuuuge issue with establishing a gaming cartel which sets up geographic and business gaming syndicates much like the Ohio lottery.

A good gaming law would permit localized governments to decide if they want casinos or not.

If Marietta want casino gaming, they should be permitted. If Columbus wants to limit gaming to horse tracks they should be permitted as well.

This law stinks; as it was set up by some individual land owners around the state and to get the public to bite in they wrote the law to sucker voters into believing that there would not be a gaming parlor in their corner of suburbia. In addition, the Argosy people put language in to prohibit Cincinnati from having a Casino thereby limiting competition to their Lawrenceburg shop.

Vote it down.

Capital Gains

There have recently been a number of articles related to the large capital gain distributions being kick out by mutual funds this year.

If you have a large amount of money invested in mutual funds, you may want to call your financial advisor or mutual fund company to see what the capital gain income is going to look like this year.

Wednesday, November 01, 2006

Issue 2

Imagine that you own a business. After years of operations, you receive a notice from the utility company stating that because of a new state law, your utilities in the state of Ohio will be doubling.

What do you do?

Option 1 You could simply raise your prices and pass along the additional costs to your customer. If you used this option, you must understand that companies in neighboring states are not subject to this law. Therefore, your product will be less price competitive and you will ultimately lose market share.

Option 2 You could cut costs in other areas such as wages or other expenses. Again, this may make you less competitive since you have less to reinvest in the production of your company.

Option 3 You could take less for your return on investment. A viable option but what business owner wants to take less for their efforts when there is yet a better option available.

Option 4 You could move your company to Kentucky, West Virginia, Indiana where you could keep your profits and not sacrifice customer service and/or lost business.

This is the exact impact that issue 2 will have on businesses in the State of Ohio. Ohio is already one of the most employee protectionist states in the union and what do we have as a result of that protection?

We have an unemployment rate over 1.0% higher than the national average. You can practically see the moving vans hauling people and goods out of the state to reside in employer friendly states like Tennessee and North Carolina. Manufacturing expansion in this state is practically non existant already.

States, like companies, have to make themselves competitive for employers to want to locate there. This issue makes Ohio tremendously less competitive than our neighboring states. So I'll rephrase the question that I have in recent posts.

Would the passage of issue 2 make it more or less likely that the Honda plant going to Greensburg Indiana would come to Ohio? I'm sure the average Ohio would rather have those jobs than pizza delivery jobs in their communities.

Tuesday, October 31, 2006

Tax cuts

Let's assume you are rich and as a result of the Republican "tax cuts for the rich" you had an extra $10,000.00. What would you do with it?

I figure that you would have one of three choices.

You could spend it. Let's assume you put an addition on your palacial estate that would spur jobs for the tradesmen and contractors all of which are notoriously middle class.

You could save it. Let's assume you put the money in the bank that would increase the amount of capital the bank would have thus lowering interest rates for middle class home owners.

You could donate it to charity. A wild one since we all know that rich people don't give to charity. But since you're not rich, you decide your tax cut would go to charity. what would be wrong with that.

In fact, what would be wrong with any of these uses?

Can anyone out there give me a good reason as too how a tax cut for the rich is a bad idea? If so please email me at

Influential blogs

I'm still working out some of the nuances of posting and linking....

A few of my favorite blogs

Check them out.

From Liberal to Libertarian

I'm often asked how does a guy who voted for Mike Dukakis manage to become a flaming libertarian?

The answer is, once one understands that a government that arbitrarily confiscates wealth from one person and gives it to another, regardless of how benevolent the intent, a new moral code has established by the state.

For instance, if the government can steal a $100.00 from me and use it for health care for the poor, then why can't I steal a $100.00 from you on the justification that I can use that money for a better purpose than you might have. It's the exact same rationale.

Growing up in a union home, I was constantly bombarded by messages about "the man" and how the rich were out to hold the working man down. It wasn't until I started meeting "rich" people that I started to get that the "rich" have the same hopes, dreams, and aspirations as others for their children. They tend to be of equal, if not higher, character than the average working class individual. They don't have the time to hold anyone down..... they're working.

If I need to reach my richest clients on a Saturday morning, they won't be on a golf course... they'll be in their offices and factories working. In fact, of my ten wealthiest clients I believe that only one actually owns a set of golf clubs.

Why should someone else have claim to the wealth created by that work and dedication?

Monday, October 30, 2006

Blackwell for governor

For the state of Ohio, I find that this election may be the most important election in the state's history for the long term viability of the state's economy.

There are several issues that will define our state as a continued expansion of a welfare/socialist state or define it as a pro-business, 21st century, state. I intend to be more specific down the road but there is no doubt that the choice for governor will be a pro labor anti business candidate, Ted Strickland v. the anti gov't, pro business, candidate Ken Blackwell.

As someone who has been an Ohioan his entire life, there is nothing I hate more than to continually see quality jobs leave this state for Kentucky, Florida, Mexico, or China because of the tremendous burden (both tax and bureacratic) this state places on employers.

As you vote next week I ask everyone to ask themselves one question, will this candidate or issue make it more likely to start or relocate their business in Ohio and vote accordingly.


Initial post

Today is my initial posting to my blog. Hopefully it works

Taxman 10/30/06 4:04 pm