29 October 2008

Cause and Effect

Let's say you are a small business owner. Lets say you own a plumbing business.

Why not. You are Joe. (Or at least you soon will be, as we will see.)

You have two teams, each made up of a master plumber, a journeyman plumber, and an apprentice plumber.

The masters have the knowledge, so they get 15 dollars an hour (just to keep it simple, I know they make probably twice that at least).

The journeymen do most of the work but don't have the knowledge or the license, so they each get 10 dollars an hour.

The apprentices are basically floor sweepers, so they get minimum wage, let's say 5 dollars an hour.

Each team makes you 50 dollars an hour (once again to keep it simple, good luck finding a decent plumber for 50 bucks an hour). Each team costs you 30 dollars an hour in labor costs, and the rest of your business expenses (gas for the trucks, tools, supplies, electricity, on and on) eats up another 20 dollars an hour. At the end of the day, you put 20 dollars an hour in your pocket. Life is good.

Bill down at the hardware store is doing pretty well, too. In fact, he's talking to you about putting in a hot tub. You can do that, sure. And it's not just Bill, it's Jim down at the appliance store who wants a new bathroom sink, and John over at the furniture place who wants floor drains put in his garage, and that doesn't even include Mr. Moneybags at the bank who wants his entire kitchen remodeled, which means a big plumbing job right there.

Business is picking up, so you look at hiring another team. You plan on promoting your senior journeyman to master, your two apprentices to journeymen, and hiring three new apprentices. You will make another 50 dollars an hour, minus thirty for labor, minus another ten for the new truck payment, insurance, and so on. At the end of the day you will be putting thirty dollars an hour into your pocket. Life is looking even better.

All of a sudden, the government steps in and increases minimum wage to 7 dollars an hour. You know that if your apprentices get a raise, your masters and journeyman damn sure better as well or they will end up quitting on you. So, each journeyman gets a $2.50 raise and each master gets a $3.00 raise. Your labor costs have just jumped by 15 dollars an hour, and you aren't making any more money. Expenses haven't dropped either, so now you are only putting 5 dollars an hour into your pocket. This just will not do! What do you do?

What happens is you fire one of your masters and you put your ass back into his truck. And all that business that was picking up? Well, Bill and Jim and John just had to do the same thing you did, so there won't be any hot tubs, or bathroom sinks, or floor drains, or anything else for that matter (except maybe for Mr. Moneybag's kitchen remodel). Gas ain't getting any cheaper, either. Now life is beginning to suck.

Not only that, but the master plumber you just fired is now drawing unemployment and welfare bennies. Instead of hiring three, you have fired one, so there's a net of four people in line at the unemployment office who weren't there before. Hello higher state tax rates!

Going one step further, he just defaulted on his mortgage and his car payment, and the credit card companies are calling non-stop. We know where that goes, don't we?

Now, this just happens to be an election year, and times are tough. Your Democrat Congresscritter, who is running for re-election, tells the now unemployed master plumber (and the three would-be apprentices) that he will pass a tax bill to raise your income and business taxes. The .gov will then take your tax money, since you are obviously doing well and just fired him because you are a heartless asshole, and give it to them. The higher taxes mean that you are now putting less in your pocket than the journeymen are. And, if that's not enough, Mama's pissed because she's not getting that swimming pool you promised, and the couch is cold at night. The suckage factor is increasing exponentially.

By the way, this is the same Congresscritter who you voted for the last time, and he is the guy that introduced the bill to increase the minimum wage for your floor sweepers.

Your former master plumber has just become a Democrat, and so have your three would-be apprentices.

Congratulations. You have just become a Republican.

Of course you are still outnumbered four to one. The best you can hope for is that the three would-be apprentices are too lazy to go vote, since they are just kids right out of high school and all.

Good luck, Joe.


The BoBo said...

Larry, good post. But, you left another really important piece out of that equation as well. Joe has a tax increase. Instead of paying $8,000/yr in taxes - he's now paying $10,000 (keeping it simple). Those guys who were formerly employed and now on unemployment and effectively don't pay any taxes in to the system - now get that $2,000 extra that you had to pay in because the Democrats gave them extra tax credits that give them a net negative tax rate below 0. WooHoo - welcome to the USSA!

Larry said...

Actually I did put in the tax increase, both state and federal, in paragraphs 11 and 13. I just didn't plug in any actual numbers. And to be fair, I didn't point out the "less than zero" tax rate, either.
You got the point without all that, and I hope that others can, too. But, "Some men, you just can't reach."
Thanks for dropping in BoBo!