A Better Economy

At this point all or most of us in America have heard the following:

1. Raising the minimum wage creates jobs by putting more money in more people's pockets creating the need for more Employees.
2. Raising the minimum wage is a job killer.

I suspect both sides are right. In the past, raising the minimum wage has led to more spending which led to higher Employment. Back then, Executives were more generous with their profits and wouldn't necessarily rush to raise prices to compensate for the higher cost of labor. But it's different now. I do think that in order to pay for the added cost of labor, businesses will start by laying people off and raising prices. They will overcompensate out of panic. But not all businesses will take that approach. There are still some businesses run by people who value their Employees and will not lay people off unless they genuinely can't afford it. Those are the companies that will invest more into their products and services.

The key is going to be how much prices go up. Corporations are hoarding profits like crazy. They are sitting on $1.25 Trillion!!! They never used to hold on to that much money. They used to put more of that money back into improving their companies especially Research and Development. This is what that translates to for us consumers: products will cost more but won't be as good because of a lack of investment in product improvement. That means less money will be spent on non-essential goods and services. While more people will HAVE more money, they won't necessarily be spending it like they would have in the past. I understand why companies are holding onto some money. Because they don't know how laws will change. But they don't need to hold on to that much. Especially, since some are doing it just to make their stock look good.

The original point of the stock market was a place for companies to get people to own a small part of their company and to use that money to make better products. Customers were more likely to buy products made by companies they owned stock in. There isn't a point in buying stock in a company that isn't using that money to improve their products. All you are really doing when owning stocks in these companies is giving them more money to hold on to. The system that worked for generations is broken and that all started with the Financial crisis created back when George W Bush was President.

What Companies Are Sitting On:

http://www.usatoday.com/story/money/markets/2014/02/02/if-companies-shared-cash-with-employees/4496341/

How do countries with a high minimum wage fair?

1 Luxembourg t $10.66 2 France t $10.60 3 Australia t $10.21 4 Belgium t $9.97 5 Netherlands t $9.48 (8th Best Economy) 6 Ireland t $9.01 7 New Zealand t $8.62 8 United Kingdom t $7.88 (10th Best Economy) 9 Canada t $7.85 10 United States t $7.11 (5th Best Economy)

Minimum Wage:

http://www.bloomberg.com/visual-data/best-and-worst/highest-minimum-wage-countries


Economic Ranking:
http://247wallst.com/special-report/2013/09/10/the-best-economies-in-the-world/2/

Japan: 11th Highest Minimum Wage $6.61 9th Best Economy
Hong Kong: 7th Best Economy
Sweden: 6th Best Economy
Germany: 4th Best Economy
Finland: 3rd Best Economy
Singapore: 2nd Best Economy
Switzerland: Best Economy!

So, What about countries with the smallest wage gaps?

Minimum Wage Closest to Median Wage Countries:

1	Turkey t	0.725
2	Chile t	0.674
3	France t	0.615
4	New Zealand t	0.599
5	Slovenia t	0.595
6	Portugal t	0.577
7	Israel t	0.574
8	Hungary t	0.539
9	Australia t	0.527
10	Latvia t	0.509

So, Let's look at Switzerland, the BEST Economy. If you read that link you will see they invest strongly in innovation. They invest in Research and Development and because of that they have a strong Economy. Like I said before, investing profits back into the company, especially Research and Development, leads to Economic growth.

Bottom line, We DO need a higher minimum wage but that will only work for economic growth if businesses invest more into their businesses through better Employee pay and improving their products and services. They used to invest more into their Employees. Both my parents spent their Entire careers at the companies they started in. Jobs acquired not long after graduating. They each went through training programs and had opportunities to climb up the corporate ladder. They had the kind of careers most Americans want and work hard for today.

That hard work USED to lead to better jobs but it doesn't usually work that way. Recently, it DID for Josh. He has new responsibilities and a nice raise. That's not as common as it should be and not as common as it used to be. His company does invest in improving their products and it's working.

I find it ironic that Switzerland is a top 10 Tax Haven for the same ultra-rich Executives who can but refuse to copy it's blueprint for economic success by investing in Research and Development. Switzerland doesn't have a minimum wage yet. They vote on May 18th of this year. If they vote yes, it will be for $24.73 an hour. That would be the highest by far. But there is resistance. The theory is that a minimum wage would hold workers back. Employers wouldn't pay more when they could and should because they don't have to. I don't think they NEED a minimum wage. Employers already invest in business and pay their Employees well. We don't get that same cooperation and respect from Employers here in America. Because of that, we NEED a high minimum wage. It's one of two crucial steps to a better economy.

Switzerland Minimum Wage:

http://www.reuters.com/article/2014/02/25/us-swiss-minimum-wage-idUSBREA1O1AI20140225


Tax Havens

http://www.forbes.com/2010/07/06/tax-havens-delaware-bermuda-markets-singapore-belgium_slide_4.html