My photo
Agree with me? Drop me an email or leave a comment. Don't agree? Drop me a line anyway.

Saturday, August 9, 2008

Thoughts on Michigan’s Unemployment Rate

From a 2008 blog entry, see source notes.

Much of Michigan’s political establishment believes (or pretends) that the state’s unemployment rate has surpassed 8 percent because of high gas prices and the entry of young workers into the labor market. That begs the question, though: How is it that in previous years Michigan’s unemployment rate wasn’t similarly affected by the entry of young workers into the market? And how is that, although the whole nation is experiencing high gas prices, the national unemployment rate rose just 0.5 percent compared to Michigan’s 1.6 percent increase? What’s the matter with Michigan?

There are many factors, but a fair reading must include the strong possibility that misguided public policy is partially, if not mostly, responsible. For example, Michigan employers just saw a big jump in the minimum wage imposed on them. A business can only spend a certain amount on employee wages without becoming uncompetitive and unprofitable. That means fewer people can be hired or retained.

This can be illustrated in the hypothetical example listed below:

In May 2005, XYZ Corp. produced widgets and had 50 Michigan employees. It earned an annual margin-on-sales of $300,000 (which may or may not represent a reasonable return on investment). Let’s assume that every worker was paid at Michigan’s old minimum wage ($5.15/hour before October, 2006) and that they all worked 40 hours a week. XYZ Corp. would have experienced annual wage expenses of $535,600. That’s $5.15 (wage) x 40 (hours per week) x 52 (weeks in a year) x 50 (employees) = $535,600.

Starting in July 2008, the mandated minimum wage has risen to $7.15/hour. Using the same calculation as before, XYZ Corp.’s annual wage expense has jumped from $535,600 to $743,600.

Source Mackinac.org

______________________________________________

I disagree.

What this whole article makes omission of if the grotesque wage increases for executive staff at XYZ Corp.

Whereas in say the 50's the executive salary would be around 30%-50% higher than average lower wage employees, it can now be counted on to be several 100's of percentages higher than the average worker with no improvement in job performance efficiency while again average employee wages have not followed with increases anywhere near this rate.

So in closing, cut the wages of the top 1o% of executive staff at XYZ Corp. by 50% and save over $1,000,000.00 in annual expenses thus increasing profit by roughly $250,000.00 per annum and still incorporate the legal minimum wage allowing people to buy food and a roof yet still remain far beneath the poverty level to ensure the remaining executive staff still feel elitist.

Since we are playing make believe I thought I would join in.

And I virtually ASSURE you the author went to school on his parents dime and did not work 40 hours a week to at minimum wage to sent himself to school.



Welcome to Detroit

Thousands Lose Jobs As Michigan Unemployment Offices Close

Thousands Lose Jobs As Michigan Unemployment Offices Close

LANSING, MI—In another devastating blow to the state's already fragile economy, the Unemployment Insurance Agency of the state of Michigan permanently shuttered its nine branch offices Monday, leaving more than 8,500 unemployment employees unemployed.

"People from all over the state used to come just to visit our unemployment office," Ayers, 52, said. "Just like Detroit, Ypsilanti, Novi, and most other Michigan cities, Flint's an unemployment town. Has been as long as I can remember."

The sudden collapse of the very institution that formed the backbone of the state economy has left its former employees in total shock.

The Onion

___________________________
The Onion never fails to make me laugh and we in Detroit need it about now.
Welcome to Detroit