Even though we have put many hours into our home-based or small
businesses, and have assumed the associated risk, after a while we
become complacent and tend to ignore things going on around us. Often,
dangerous situations occur out of nowhere, posing calamity for our
livelihood, but exposing opportunities, as well.
A recent article, Americans Are Overpaid,
stated the view American workers at all levels are overpaid at least by
20%! You may say nobody will pay attention to this, but only a year ago
it was considered impossible to control what people make. So here comes
the Pay Czar, with caps on the exorbitant salaries paid to a few
financial executives. I agree, these people don’t deserve pay like that
because they aren’t doing their jobs. But wait, some in Congress and
other government agencies want to extend this pay cap policy to all
other businesses that somehow come under government supervision. Nearly
all businesses of all sizes could be subject to controls under this
thinking, because most need some kind of permit to do business. They
all, every single one, are subject to regulations of the IRS. These are
the reasons for this article.
Many of you readers already have your own businesses, and have
some control over your own financial future. However, when government
policies run wild, as they seem to be doing right now, it’s not beyond
imagination to assume some future cap on what even the self-employed are
allowed to make. This also opens the chance to promote your business
opportunity to people as a way to avoid any such pay caps as the authors
of this article advocate. No matter how ridiculous such an action may
seem, be aware of what is already happening and prepare yourself and
your recruits for a possibly frightening future. Starting and nurturing a
new business requires some amount of time to get going, possibly even
several years. If you are thinking of starting a business, go ahead and
do what you think is best for you. Use the ideas in this article to
persuade as many prospects as you can to start their entrepreneurial
businesses, as well. Use this precious time to protect against whatever
government controls may be imposed. If nothing like this happens, you
are still way ahead of everyone else because of your defensive actions.
The authors of “Americans are overpaid” are supposed to be
well-qualified experts on all aspects of economics. Martin Hutchinson is
a Contributing Editor to both the Money Map Report and Money Morning.
He is an investment banker with more than 25 years’ experience, having
worked on both Wall Street and Fleet Street. Hutchinson has an
undergraduate degree from Cambridge University and an MBA from Harvard
University. Edward Hadas, the other author, writes about macroeconomics,
markets and metals, for Breakingviews. He has written several books and
has degrees from Columbia University, Wadham College, Oxford, and the
State University of New York at Binghamton. He also teaches political
and social philosophy at the Maryvale Institute in Birmingham, UK.
With all their knowledge and experience, you would think
whatever they say is absolute truth. Of course, there is no such thing
as absolute truth, not even in Quantum Mechanics�Heisenberg’s
Uncertainty Theory took care of that. So, let’s examine a few of the
ideas in “Americans are overpaid.”
An early statement in the article is, “U.S. workers are
overpaid, relative to equally productive foreigners doing the same work.
If the global economy is ever to get back into balance, that gap needs
to be closed.” The authors go on to say American workers take advantage
of higher productivity which makes America rich. High productivity, they
say, is the result of better education, a developed infrastructure,
available capital, and a more highly developed work ethic. Is all this
bad? Look at these elements.
In addition to political issues, which I will not discuss, our
government, from the President on down, constantly preaches about the
shortcomings of our educational system, and daily presents policies to
improve it. They say we will soon be taking a back seat to the rest of
the world, and they present volumes of statistics to “prove” it. If the
system is as bad as our leaders say, there will be no need to cut wages;
it will be done for us through the economics of global trade.
These ideas present opportunities for home-based entrepreneurs.
Even if the educational system were not broken there have always been
opportunities to help people with problems learning difficult subjects,
such as math. Many years ago I tutored several people in Algebra for
pay, never realizing I was operating a home-based business. The same
opportunities exist today if you know a particular subject well. You may
have noticed there are a number of franchises that provide educational
services. If you have an educational skill there is really no reason to
buy a franchise. Just advertise what you do and go from there. Many
opportunities exist in foreign languages, math and science, computer
technology, music (I took piano lessons in a teacher’s home for 11
years), and anything else a person wants to learn.
Now, consider the infrastructure we depend on for
transportation and energy delivery. The government says our roads and
bridges are so dangerous as to be almost unusable, requiring many
billions of dollars to fix. Some of the stimulus money is directed to
correct part of this. The government, as well as private advisors, say
the electrical grid is subject to eminent attack by cyber criminals
using the Internet to bring it down completely. This would certainly do
the job of reducing wages.
There may be home-based business opportunities providing
information on the safety of local infrastructure. You may be able to
establish contact with government officials with duties to maintain
roads and bridges so you can keep a constant check on the condition of
the roads used for local people to get to their jobs every day. You can
work some way to get paid for daily information to provide safety and
convenience to these local travelers via newsletter, e-mail, text
message, Twitter, or calling system by subscription.
The next advantage stated by the authors is an abundance of
available capital. What are they talking about? Since late 2007 the U.S.
credit markets have completely dried up. Sure, the Donald Trumps and
Warren Buffets are able to get all the financing they require, either
because lenders view them as being no risk so far as repayment of credit
is concerned, or they have their own capital to invest. That helps no
small or home-based business owner. Most cannot get enough credit to buy
a car, much less finance their businesses. Small business is the
acknowledged backbone of the U.S. economy�but, they are starving for
financing. Banks had to ask for bailouts by the government, but the ones
still solvent are anxious to repay the government and get out from
under the stiff controls that came with the bail money. Many smaller
banks go under every week, and the other not-so-large ones are strictly
regulated as to the risk they are allowed to take, so instead of lending
money freely, they have become more conservative in their lending
criteria. Business can no longer depend on the U.S. Treasury to provide
more money for them through the banks or any stimulus, because America
is flat broke and owes trillions of dollars to the Chinese and other
countries. Our government is helpless to stop the economic catastrophe
we are in, and yet these writers say American workers are overpaid? If
the new unemployment claims continue to increase weekly at the current
rate, there won’t be any workers to get paid anything, much less too
much. The authors obviously have never done any meaningful work.
The answer to no credit is more income, something you are in a
unique position to provide. With your own established business, you will
be able to convince a lot of prospects of the necessity to begin now to
prepare for a better future. With additional income, they will not need
to ask for so much credit, and they will be able to come up with larger
down payments on the things they need. They must be shown the time is
now, and very critical, to begin their business so it will have time to
succeed when they need it most. Nothing happens quickly in the business
world.
Then comes the statement in the same article that a great
American advantage is our well-developed work ethic. What are they
talking about? Our forefathers brought the idea of the Protestant Work
Ethic with them when they came to the New World. It is discussed
in-depth by Max Weber in The Protestant Ethic and the Spirit of Capitalism.
The entrepreneurs associated with the development of rational
capitalism combine the impulse to accumulation with a positively frugal
life-style. Weber described the moral concept supporting this idea as
the “calling.” It refers to the idea that the highest form of moral
obligation of the individual is to fulfill his duty in worldly affairs,
which projects religious behavior into the day-to-day world, and stands
in contrast to the Catholic ideal of the monastic life, whose object is
to transcend the demands of mundane existence. The work ethic morally
required people to do their best to produce goods and services that were
of benefit to their fellow men. Its concept is that God put people on
the Earth to help others. In other words, workers were called by God to
perform their duties to the highest degree of their capability. This
ethic worked very well through the early years of the Industrial
Revolution, through two World Wars, and into the ‘60s until the Great
Society introduced the idea of entitlements from the government. Since
then, more workers have begun to depend on government handouts of one
kind or another and the Protestant Work Ethic has continued to decline.
This is in drastic contrast to the claim by the authors of “Americans
are overpaid” that one advantage American workers have is their well
developed work ethic. This used to be so, but now is greatly weakened.
Those of you who try every day to recruit people to help in your
business know this is true. People expect to be paid immediately for
doing nothing at all.
Here is another opportunity for you to help your prospects
obtain additional income. Because many of them have been snared by the
hype that you can get rich quick, which you know won’t work, there is
the opportunity to work patiently with them and show them how to proceed
at a measured pace that will result in their own successful business.
This produces two happy people: you, and your successful associate.
You may recall the first reason the authors mentioned as having
a bearing on American overpay was high productivity, which the authors
said was caused by the elements we just discussed. Well, there is much
more of a human element to productivity. Human Resources Departments are
given the responsibility to provide their companies with the very best
people they can find, but at the lowest possible cost (meaning pay). One
way they have found that attracts good people is to offer paid time for
training in a multitude of disciplines at no cost to the employee. The
employee feels more important, and thinks the company really plans to
promote him with accompanying pay increases. He is quickly given
additional things to do requiring extra hours to get everything
completed. The overtime seems good, but promotions and substantial pay
increases seldom come. This is especially true now�people are so afraid
of losing a job, they will do anything to keep it, which often means
extra duties with no extra pay. These people are supposed to be overpaid
requiring a 20% pay reduction?
Here is another opportunity to convince your prospects how much
better off they could be with their own business. They should develop
their own business further to help them avoid falling back into the
corporate trap. Perhaps this applies to your own situation as well.
Remember, time is always of the essence�you have to plan and work far
ahead in order to accomplish your goals.
Hutchinson and Hadas say recent U.S. labor market statistics
indicate a need for greater downward adjustment in American pay. They
say the great loss of jobs proves people make too much money and require
at least a 20% reduction. Without this, they say the depression could
be much worse than the one of the ‘30s. Where do they get such nonsense?
Do your own research on causes of the Great Depression and you will
find a number of reasons discussed by historians and economists,
sometimes with great disagreement. Nowhere have I seen where overpaid
American workers were a cause. I don’t want to speculate on the authors’
reasoning because I don’t know the answer, except that worker overpay
is probably not a cause. There is no reason for further discussion of
the Depression, except that it lasted over 12 years and devastated many
lives. This is a further reason for you to protect and increase your
business, and it gives a very good reason you can present to your
prospects , as well.
Now, let’s talk a little about the idea of wage payments. Wikipedia
says the idea of connecting wage payments for work with the concept of
wage slavery has been around since the days of Cicero and Aristotle; in
the days before the American Civil War the argument was even used by
U.S. slave owners to show how their slaves were better off than workers
in the North. My own research into wage slavery led to several books by
Adolphus Slade. Slade, a British Naval Officer who went to Turkey in
1829, discussed his ideas about the evolution of Turkey from the Ottoman
Empire.
Slade makes an interesting observation about slavery saying
there is no country or society in which slavery does not exist. Examples
he uses, writing in the 19th century, are the farm laborer chained to
his plow, a mechanic forced to operate his machinery in order to live,
or a homeless person scavenging for recyclable materials for a few
pennies. As my research progressed, I found there are many who have
recognized work as slavery. What began as a noble calling encouraged by
the Reformation has become a system where workers have allowed
themselves to become enslaved by some mindless bureaucracy. Among those
who have discussed this slavery idea are Max Weber, F. Hertzberg, R.
Jackall, and L. Festinger. Their ideas are much too involved for this
article. Suffice it to say they all recognized the element of slavery
that exists in modern industrial society. An interesting discussion of
these ideas may be found on this Villanova University site. I believe some elements of wage slavery do exist in our current economic system. Here’s why:
Nearly all those interviewed by Fast Company Magazine about
losing their jobs to offshoring expressed the idea of total job
insecurity. This, coupled with information in a 2005 Merrill Lynch Retirement Survey,
leads us to the real reasons we’re slaves to what we do. The survey
shows the unpredictable cost of illness and healthcare is by far baby
boomers' biggest fear. They are three times more worried about a major
illness (48%), their ability to pay for healthcare (53%), or winding up
in a nursing home (48%), than about dying (17%). The rest of the story
is in Retirement Income Blog,
August, 2008, where Ben Stein, noted economist and comedian, quotes his
study which indicated the average baby boomer needs to save about
$400,000 to have sufficient interest income to make up the difference
between Social Security and what he or she needs for retirement.
However, Stein says boomers have accumulated only $50,000 (exclusive of
home equity), which is likely to be a real problem for this large group
of people. As they age, many of these people will have to make very
large cuts to their standard of living, and some will just run out of
money. Since this data was gathered, home values have declined as much
as 50% and the stock market crash has put a significant hit to the value
of boomer savings.
You may or may not be a boomer, but the implications in this
study should raise all kinds of warning signs in your mind. Build your
business as fast as you can so you will be ready to slow down at some
time in the future when it is your turn. This also gives you a powerful
selling point to convince your prospects to pursue your business
opportunity so they, too, can begin building a foundation that sets them
free from the worry and uncertainty of being an employee.
Finally, here are more reasons why I believe the authors of
“Americans are overpaid” are way off base with their call for American
worker pay to be cut by at least 20%. Wikipedia says poverty in 2008-2009 is defined as $14,570 for a family of 2, or $22,050 for a family of 4; the U.S. Census Bureau
shows, in 2008, about 21% of the population had income below the
poverty level. The Federal Minimum Wage is $7.25 per hour = $14,500
annually (very close to poverty for family of 2). Are workers overpaid?
The U.S. Census Bureau says the median household income in the United States, in 2007, was $50,233. In addition, the Bureau of Labor Statistics
says the average wage for production workers in October, 2009 (now),
was $37,440 annually. None of these is very far over the poverty level.
Even if you believe everyone should make no more than the poverty level,
which is unreasonable, are these workers overpaid?
It’s obvious not one of these groups is overpaid. In fact, it
would be difficult for people making these averages in many high cost
areas like New York City to pay just the exorbitant rent on an
apartment, which could be more than $50,000 a year. No, none of these
people are overpaid. The story of these average wages is still another
selling point you can use to show the importance of a second income to
skeptical new prospects. It should continue to make you aware of the
importance of building your own business, as well.
The last, and very important, reason for doing whatever is
necessary to keep the money flowing has to do with the difficulty of
getting a job, any job at all. Statistically, finding a job is much more
difficult than government data show�the unemployment rate is actually
just about double what Washington says. The reasons for this discrepancy
are explained in the simplest terms by Samuel Sherraden on CNN.
The official unemployment rate is published by the Bureau of
Labor Statistics, but they only count as unemployed those people who
have tried to find a job in the last four weeks; all other jobless
people are excluded. Many unemployed workers become frustrated and give
up looking for work after a month or two of unsuccessful efforts. Part
time workers who are doing what they must just to survive also are not
counted in the official unemployment rate. If these two excluded groups
were included, the real rate would be 19.2%, or 30.6 million people. The
significance of this to someone seeking a job is they are facing the
same odds of getting a job, 8 percent, as a fresh high school graduate
has of being accepted to Harvard University, the gold standard of the
Ivy League.
This is an excellent reason for your prospect, especially if he
is unemployed, to seek self-employment. What is there to lose? If he
is able to begin making a little money on his own, he is just as well
off as being employed part time at minimum wage, and he could hit the
jackpot and become very successful.
Now you have a complete dictionary of highly convincing reasons
to become self-employed�ideas you can present to your prospects, and
serious reasons to renew your own business efforts. What started as a
rebuttal to a perceived ridiculous theory that American workers are
overpaid by at least 20% became a collection of important current
reasons for having a home-based business. Most of these I never
considered before and intend to use them in advertising and all other
prospect communication. Perhaps some of them will be helpful to you, as
well. Go back through the article and pick the selling points most
useful for your purposes.
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