10/23/2008

People Are Going To Lose Their Jobs

There is a sad series of events that are going to occur which will make it more difficult for individuals affected. To begin with, unemployment is going to go up over the next year. This is an unavoidable situation since we are in a recession. During times of economic downturn, companies are forced to lay off workers.

The second event that is going to hurt people is the impending tax increase on businesses from the government. It now appears that Obama is going to win the election (if the polls are correct) and the leader in Congress are itching to hit business with a tax increase. This is their agenda.

I was talking the other day with a business owner who told me that a 5% increase in the corporate tax rate will force him to lay of 3 employees. It is curious to think that the people who will be forced to lose their jobs most likely will have voted for the man who promised to raise the corporate tax rate.

This gentleman's company is in an industry that is having it's margins squeezed. There is a simple lesson that many fail to consider when taxing corporations. They respond in two ways: either pass the tax on in a price increase or cut expenses. If the margins in a particular industry are tight, the former is not possible. Thus, people are let go.

Many think this is "mean-spirited". They point out that businesses always let people go to save money. That is because it is a move that realizes instant savings. Closing locations will save on electric but the company is still responsible for the rent until the lease expires. Cut personnel and you will realize a savings the next pay period.

It is time that we got realistic about what is going on. The media is leading us down a road where surprises occur. Everyone was shocked at the financial crisis as a result of the mortgage meltdown. How come the American people were not forewarned? We were living in a dream world.

Prepare yourself for things to get worse. Do whatever you can to increase your abilities so you are not one of those chosen. The owner I mentioned might lay off 3 people (he employs 135). If I worked there, I would do all I could to ensure that I was at least 4th from the bottom.
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