Are we all making too much money? (July 28)
By Chuck Doud
The Madera Tribune
It may be we all are making too much money.
California, the biggest state, has a 12.3 percent unemployment rate, but it probably is more than that. The system in use for counting the unemployed counts only those actively looking for work. Some believe the real unemployment rate could be as much as 20 percent.
Yet, the international companies of California, such as Apple and HP, are prospering. That is because all or most of their products are not being made by Californians.
They are being made overseas because overseas workers are willing to do those jobs for somewhat less — in some cases much less — than American workers. Sending jobs abroad is called outsourcing.
Outsourcing is being used more and more. If you wear Nike running shoes, for example, you are wearing a product that was never made in America, except during its development years. Nike has made billions on two simple concepts — that Americans are dumb enough to buy high-priced running shoes and that Americans are too dumb to care where those shoes are made.
If you dial the so-called service number for that computer you just bought, someone half a world away answers your call. We all know that, but I remain amazed that even telephone answering is outsourced.
That is because Americans make too much money, in comparison to people in other countries who are willing to answer phones for less. For example, in 2005, according to The Boston Globe, the average wage worldwide was about $7,000 a year. That’s about $3.50 an hour, less than one-half the American minimum wage of $7.25 per hour. That $3.50 an hour is about the average wage in Mexico, for example, or in Latvia. Of course, many earn far less. The median wage worldwide is about $1,700 a year.
We may finally have priced ourselves out of the world labor market.
You share several things in common with Jerry Brown. One of these is an absence of knowledge about Mexico. The average wage in Mexico is more like $3.50 a day (not $3.50 an hour).
The following is from the Bloomberg Report. The exchange rate last December was about 14 Mexican pesos per $1 U.S. I think it is about 12 pesos per $1 U.S. The minimum wage applies to an eight-hour day.
“The highest level of the minimum wage, which includes Mexico City, will rise to 57.46 pesos a day from 54.80 pesos this year, according to a statement from a commission consisting of representatives from the government, companies and labor unions. Wages in the second-highest category, which includes Monterrey and Guadalajara, will increase to 55.84 pesos from 53.26 pesos. The lowest minimum wage, applied in smaller cities, will rise to 54.47 pesos from 51.95 pesos this year.”
I have been going to Mexico since 1990. They seem to hold about 50 cents per hour against the U.S. dollar. This includes people we consider skilled such as carpenters and masons (construction labor).
Please avoid misrepresenting the situation in Mexico.
Bob Christiansen,
Madera