Yellen & The Big Push To Offshore US Labor

Janet Yellen’s latest commitment to support the Biden progressive agenda from higher taxes to unionization, will not lead to increased economic prosperity. Instead, it will lead to more outsourcing and offshoring of U.S. Labor. Such was evident in two recent comments.

“With corporate taxes at a historical low of one percent of GDP, we believe the corporate sector can contribute to this effort by bearing its fair share: we propose simply to return the corporate tax toward historical norms.”

And;

“Workers, particularly lower-wage earners, have seen wage growth stagnate over several decades, despite overall rising productivity and national income. There are several contributors to this troubling trend, but one important factor is an erosion in labor’s bargaining power.”

In theory, there is nothing wrong with either of these two statements. Why not have corporations pay more in tax and push companies to unionize.

In reality, however, if Janet Yellen and Joe Biden get their wish, it would lead to a sharp increase in the offshoring of manufacturing and employment.

Let’s dig into both of these issues.

Increase Corporate Tax Rates

Increasing corporate tax rates certainly seems like an easy task. However, the negative impacts of increasing taxes on the primary suppliers of employment will likely outweigh the revenue increase. 

Let’s start by understanding some of the most basic facts.

In the U.S. there are roughly 30.7 million businesses. Of those, 81% have ZERO employees. Such is important to understand because many of these “businesses” are set up for tax shelters and estate planning purposes.

The remaining 19% employee 100% of all non-governmental workers.

Yellen Offshore Labor, #MacroView: Yellen & The Big Push To Offshore US Labor

Importantly, when Yellen suggests we raise taxes on corporations, she is primarily talking about the roughly 10,000 major corporations in the U.S. However, 50% of all jobs are created by firms with fewer than 500 employees, and almost 90% by firms with less than 1000.

Yellen Offshore Labor, #MacroView: Yellen & The Big Push To Offshore US Labor

While Yellen is suggesting we go after those “evil corporations,” she is only talking about a fraction of the businesses that employ workers. However, the impact of higher taxes, unionization, etc., impact all businesses and hurts the small business owners that employ the most workers the most. 

Such was a point made by the Chamber of Commerce in response to Janet Yellen’s statement:

“The data and the evidence are clear: the proposed tax increases would greatly disadvantage U.S. businesses and harm American workers, and now is certainly not the time to erect new barriers to economic recovery.” – Suzanne Clark, CEO/President US Chamber of Commerce

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