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The "One Percent" might be creating jobs, but where are they creating them?

By Debbie Kwiatoski  |  Posted on 2012-07-07 21:14:24

As the presidential rhetoric on both sides of the aisle heats up in the midst of this very hot summer, the argument that we should not be raising taxes on the "One Percent" in this country, because they are the "job creators," is far from settled. Stay tuned for the battle over keeping Bush's tax cuts. Too bad the truth about who's really creating jobs in this country - and who's keeping their tax breaks and chuckling all the way to their hedge fund manager - is sure to become lost in that upcoming battle. In this globalized, technology-savvy economy, being a millionaire or a billionaire or whatever comes after that does not, per se, make you a "job creator." And even if you do happen to be creating job, chances are you're creating them in China.

Let's get some perspective on these so-called 21st Century "job creators" by looking at two of the most creative, enterprising and successful entrepreneurs in American history: Henry Ford and Steve Jobs. In his heyday, Ford employed over 100,000 workers in his River Rouge manufacturing plant alone. These workers were paid well above the average wage of other similar factory workers in United States. Why? In 1926, with the sales of his iconic Model-T sinking, Ford came to an inspired realization: If his workers had enough money in their pay envelopes to afford the cars they were making, they would buy them - and his sales would soar far beyond the extra wages he was paying. Just as importantly, that leveraged money would create demand for everything from Mr. Goodyear's tires to Mr. Rockefeller's gas. With cars to drive, cities could expand and grow, creating a housing boom and, ultimately, the demand for all sorts of consumer goods and services would trickle down and water the entire U.S. economy. None of it was done with tax bailouts, give backs or underwriting. It was Adam Smith's "The Wealth of Nations" illustrated in practice - actual community-based capitalism of the sort we used to espouse, before the whole concept of trickle down economics was corrupted into a tax break for the rich.

Not quite a century later, Steve Jobs had an entrepreneurial notion that was as important to our culture and our economy as Ford's Model-T. But look more closely at this modern day "job creator." In 2006, the year iPod sales jumped from 42 million to 88 million, Apple (directly or indirectly) employed only 13,920 people in the United States. Many of them were engineers (average salary then of $85,000) or retail clerks in Apple stores (average 2006 salary of $25,580). Only 30 were actually employed in the United States in iPod manufacturing. They mainly worked for independent chip fabricators.

So, who was actually making the iPod? 11,715 Chinese workers, complemented by 4,500 workers in the Philippines. That year, Apple's total payroll for all those foreign workers was less than it was paying for its 13,920 people in the United States. So, where do you think Apple (and IBM and Microsoft and any other manufacturer you can think of) is heading for new workers? Not here.

Yet, Congress continues to actually debate not just the "job killing" impact of letting the Bush Tax cuts expire. It's even thinking about giving these multi-billion companies a "holiday" to repatriate all that money they make abroad by cutting the usual tax bite on such funds from 30 percent to 5 percent, on the "promise" that they will bring that money back and use it for "job creation." Yeah. Right.

I've got a better idea. Instead of buying into the notion that the "One Percent" will create more jobs if we would only free up their capital to do so, why not turn the tables and offer them a tax credit for every single American job they actually create? I'm all for encouraging job creation in this country by freeing up actual working business capital - but I want to actually see some jobs before they get to keep the money. Otherwise, let them pay their taxes like everybody else and be glad they don't actually have to live within the sorts of political systems where they like to create their jobs.

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