If it isn’t wages, it is the wage package. What you pressure your employer about may change with the developmental stage of your country, but pressure is mounting globally and has spread to the “Good Ol’ U.S. of A.”
Half-way around the world, there are growing Chinese labor movements that will lessen the pricing advantage of “Made in China.” Honda’s price advantage has been in part from its Chinese manufacturing plants. However, unlike Henry Ford, Honda hasn’t figured out how to build a car that its Chinese workforce can afford. The consequence is labor strikes and demands for higher compensation. Strikes have been a growing problem for several years affecting multiple provinces and industries.
We have previously referenced the aging problem in China. With a history of relying on mobile youth for factory work, falling demographics is catching up with demand for labor. Discouraged youth having returned home are less likely to be drawn back to an industrial center. The older we are, the less mobile we are. Even in our 40s, family begins to have roots to hold us. Labor will become more expensive as the declining supply of young laborers imposes market realities on manufacturers as Honda has learned.
As in widely spread Chinese provinces, a budget issue in another state seems remote to us. Problems are increasingly similar and persistent. New York’s lack of cash is not new and is not going away. The cost of pensions and other post-employment benefits, i.e., healthcare, are unaffordable from California to New Jersey.
The Greek riots over cuts in pensions aren’t news any more and seem to be disconnected from anything in our lives. Regardless of nationality, even modest austerity measures are objectionable to recipients of government checks. Disregard the fact that the bank account is empty if the credit card still works.
What happens when the credit disappears as in Greece, Hungary and soon for Spain, Italy and France? The American solution is litigation. Baltimore has no money but owes the police pension system $65 million. It is either pay up (the bank account is empty) or go to court to get out of it. Protests, yes. Riots, not yet.
Solutions are few. Vallejo, California had one, bankruptcy. However, it did not include its largest liability, pension funding, in its resolution. Without restructuring, meaning reductions in future payments, complete default or objectionably high tax increases are inevitable. This is coming soon to a town, or state, near you. If you have a better idea, you need to file papers and run for public office. Good luck!
Don Creech Don hosts the weekly Don Creech Radio Show (www.DonCreech.com) discussing current events affecting your financial well-being. Don is the founder and co-owner of Investor Resources, Inc. He has attended Grossmont Community College, San Diego State University, Bellevue Community College and City University. Full Profile & Contact Information...
