Government imposes regulations on the way companies do business, keep records, affect environment, and compensate employees. These regulations add expense to business activities which must be offset by raising the price of products and services. The additional cost causes a decrease in sales, resulting in decreased profit. So companies compensate by finding ways to reduce costs, usually resulting in decreased quality, which lowers customer satisfaction and consumer confidence, which again reduces sales, decreasing income and profits; and as a side effect gives government more incentive to impose additional regulations. So the workforce is reduced due to the decreased demand for goods and services because the cost of those goods and services cause consumers to more stringently evaluate the cost versus its necessity. Decreasing the workforce causes a drastic reduction in consumer spending across the board. Companies become unable to profit from sales of goods and services, prompting the decision to shut down rather than continue to operate at a loss, leaving more of the labor force unemployed and unable to afford to buy goods and services that were once considered necessities. Loss of jobs and loss of income reduce the number of citizens from which the government can collect income tax, causing government to either operate at a deficit or find ways to increase taxes. Taxes on businesses get passed along to consumers in the form of price increases. Consumers think twice before making a purchase, leading to lost sales, reduced demand, decreased production, diminished profits, reduced workforce, higher unemployment, failing economy, government intervention, higher production cost, price increase, fewer sales, reduced demand, decreased production, diminished profits, reduced workforce, higher unemployment, failing economy.
So what can be done about this downward spiral? This is an unpopular proposal, but one that should be considered before the US economy becomes too unstable to prevent disaster. Reduce minimum wage for new hires and limit automatic wage increases. There are many who will refuse to work for such low wages, but those who really want to work will be more likely to show their worth to the company. And with the lower initial wages, companies will be less likely to ship US jobs off to foreign soil. Having more US workers on the payrolls will increase spending, strengthening the economy.
Wage increases should be rewards for valuable service to the employer, for innovation, and for improvements to the processes and procedures. There should not be rewards for laziness. If all workers are given the incentive to find innovative way to improve production, introduce new product, find better ways to provide service, to improve customer satisfaction and loyalty, business will have an extended resource base from which to draw. Better products and services will improve consumer confidence, customer satisfaction and loyalty, and have a positive effect on the nation’s economy.
But contrary to my proposal, the state of Illinois is raising the minimum wage in July of this year. I know several people who have waited through years of wage freeze wishing they could at least get caught up with the rising cost of living, while people who have more recently been hired may be getting a mandatory wage increase. Some of those who’ve worked faithfully for years may soon feel they’ve just been slapped in the face by the company. Companies that are struggling and trying desperately not to cut staff are once again faced with the dilemma. Do they increase prices, reduce quality, just ride out the storm and hope things turn around soon?
I don’t have all the answers. Pray that God will bless this country with technologies or resources that have global market value, restore our economy, and bring prosperity back to this land.
Tracy Henness
