Yes Virginia, The Rich ARE Job Creators.
I’ve lived through nine recessions. Some were short lived others lasted for some time. Each one of those recessions generated the same rhetoric. The front pages and talking heads, wringing their hands over rich vs. poor, and the inevitable income inequality that follows.
Oh, the unfairness. Who could possibly agree with greedy CEO’s making hundreds of times more than their poor unfortunate hourly workers, toiling day-after-day on the factory floor, living paycheck to paycheck?
As the rich got richer and the poor got poorer, the knee jerk reaction is to vilify the rich guys for getting rich, supposedly, off the backs of their unappreciated workers. The rich simply exploit the worker by demanding unrealistic goals, impossible deadlines, while paying bare minimum wages, slim benefits, and laughing all the way to the bank.
How Could That Possibly Work?
Companies produce goods and services that customers want. Big Screen TV’s, individually wrapped slices of cheese, cars with heated seats and cup holders, Sham-WOW and Ginzu Knives. The company challenge is to find a way to produce these products, get them to market, sell them at a profit, and satisfy their customers.
How do you accomplish that with an entire country of underpaid, unhappy employees? The answer is very simple.
The majority of workers in America are not underpaid. According to the Bureau of Labor Statistics the average hourly pay in America is $23.82. That’s just a little shy of $50,000 a year. That means with a workforce of 143 million at least 71 million are taking home more. That’s $3.55 TRILLION Dollars just for the middle. If the other 71 million only made minimum wage ($16,120/yr. in Montana), that they of course don’t, that would come to another cool $1.1 Trillion.
The majority of American’s have the good sense to accept, or look for jobs, where their skills and experience are appreciated and rewarded by their employers.
How does the employer benefit from a factory, or retail floor, full of unhappy, underpaid, workers? Is it possible that their work might be less than exemplary? Do you think employers somehow miss this fact? Who buys inferior products? A still better question — Who stays in business making inferior products?
How Does Job Creation Happen?
People with a dream see a need not being filled, or that could be filled better or more profitably, and decide to fill it. People start sole proprietorship, home-based businesses and grow them into full time businesses. People max out credit cards and start small businesses. People get loans, mortgage their homes and start small businesses. People borrow from family members to start businesses.
When the business outgrows the owner, jobs are created. I somehow missed the exact spot that greed and exploitation, of the not yet hired worker, fits in here. When they do finally hire, the vast majority of companies in the US are less then ten employees. But you can bet they all want the best 10 employees possible.
How the Rich Create Jobs
Rich folks will tell you that it’s just not possible for them to create enough jobs to make any difference. After all, they can only buy so many clothes, so much food, so many houses, etc. They would surely buy more than you and I, but still not enough to really make a dent in the economy. On the surface that argument sure seems to make a lot of sense — until you move it from your world to their world.
To sympathize with victims you put yourself in their shoes, not the other way around. Most everyone knows what it’s like to have little or no money, but few know what it’s like to have a lot of money. So if I’m rich I’m going to try to make the case that I’m just like you. I buy shoes, but only a few more than you, and maybe mine are a little higher priced. But my money won’t have any appreciable effect on the economy or unemployment.
The Rich Create Jobs ONLY the Rich Can Create
Not only do the rich create jobs, they create jobs ONLY the rich can create. But Tom, what about the argument above? Instead of talking about what the rich can buy that you too can buy; let’s talk about what they can buy that you can’t — and how that creates jobs.
Let’s Create Some Jobs
The price of a new Gulfstream Jet G550 will go between $45 million to over $70 million depending on whether you want heated seats and cup holders. So what — most people only buy one right? How many jobs are created to manufacture that single plane?
Some one makes the parts. Granted they could be made overseas by cheap labor and shipped here. Someone assembles that plane. I guess that could be done overseas too. But that’s not all the costs.
Fuel, regular maintenance, trip expenses could run around $2,300 per hour but that’s just the beginning. You have to park it someplace, crew costs, insurance and storage will set you back about $600,000 or so each year. An engine rebuild will run a cool $1 million. If you want your name on the side, and a fancy paintjob, figure $200,000, and you could run up a $300,000 tap to redecorate the cabin.
Paint manufactures, oils and lubricants, man-hours, tools, wire, electronics, computer components, carpet, upholstery, wood, metal, hydraulics, fabrics, communications, trucking, shipping, packaging, and metal screws and bolts — how many jobs and man hours will have something to do with this plane during its lifetime? And the owner only bought one. I think I see this single purchase creating at least a few jobs.
Some Final Thoughts
Multiply my plane analogy by Lamborghini, Rolls Royce, Bentley, Cadillac, Lexus, Tiffany’s, Rodeo Drive, the Four Seasons, Carnival Cruises, Versacé, Las Vegas, and Atlantic City. Every single one of those products has employees attached to them. Mechanics, gas stations employees, tire manufacturers, maintenance, repair, furniture, plastics, sales people, delivery people, etc. Are you beginning to get the picture?
Are there really enough underpaid people in the world to build, service and maintain all the rich folks stuff? Try to tell me again how the rich don’t create jobs! That dog definitely won’t hunt. In fact, another Gulf Stream Jet just rolled off the line.