The Living Profit

Zonitics.com ^ | March 19, 2002 | Edward Boyd

[John Jorsett]

There's been much ado about so-called "living wage" ordinances lately. Despite my initial hesitation, I'm beginning to come around to the idea. However, I don't think that a "Living Wage" goes far enough.

According to the U.S. Small Business Administration, small businesses account for 51% of all private sector jobs, but over 60% of all small business fail within six years. Obviously, this means that the majority of small business owners are going bankrupt while an elite cadre of wealthy business owners make all of the profits.

I think that we can all agree that it is unacceptable in a country of such wealth for so many hardworking businessmen and women to work their way into bankruptcy while the minority of rich businessmen achieve huge success. Moreover, each business failure means list jobs and more workers forced into unemployment. It simply isn't fair for some to do so well, while both owners and employees suffer merely because they can't produce profits.

Accordingly, I propose that state and local governments across the United States adopt "Living Profits" laws. These laws would guarantee each business a minimum of 5% profits per year without requiring one dime of taxpayer money. The laws would work by forcing the rich successful small businesses to help out their competitors.

1. Each business that has recorded a profit of 5% or more in the preceding quarter and that has a competitor that didn't record a profit of at least 5% in the preceding quarter will be required to pay 75% of excess profits (over 5%) into a fund. The fund will be administered by the local government and distributed to failing businesses to bring them up to 5% profits. If the fund has excess money after providing the guaranteed profit level, the excess will be retained as insurance for the event that no businesses have excess profits.

2. Alternatively, a small business with excess profits that has a competitor in geographic proximity could agree to shut down at least two work days per week until the competing business has achieved reasonable profits.

I was able to borrow a list of reasons to support the Living Profits initiative from the Western Pennsylvania Living Wage Campaign's website. Surprisingly, only minor changes (mainly replacing "poverty" with "bankrupcty") were needed. Here is my adapted list of reasons to support the Living Profits initiative:

• Reducing taxpayer costs and the need for services that subsidize unsuccessful businesses – like bankruptcy laws, foreclosure auctions, unemployment insurance, and so on.

• Keeping business from bankruptcy will expand the tax base.

• Ensure that businessmen will be able to support themselves and their families and keep their workers employed.

• Helping us reclaim the time we’ve lost to spend with our families and communities [no change needed].

• Creating improved employee morale and lowering employee turnover [no change needed].

• Creating a level playing field for employers who pay (or want to pay) decent wages and provide good benefits to their employees [no change needed].

• This is a basic issue of morality – it goes against Christian, Jewish, Islamic and other faith traditions’ morality for businesses to drive each other into bankruptcy.

• While some competition is called for, excessive competition leads to bankruptcy and lost jobs.

• The right to a decent business with a living profit is a civil rights and human rights issue.

• Bankruptcy breeds other problems in communities such as substance abuse, crime, etc.

• Much of the moral decay in communities comes from severe and grinding bankruptcy.

• Human beings’ spiritual nature is violated when they are denied basic success, despite their hard work.

• Living Profits laws help raise the floor of wages and benefits by reducing the incentive to try to reign in costs. When businesses focus too much on cutting costs (i.e. wages and environmental protections), workers suffer. By taking away most of an employer's excess profits, there won't be as much incentive to cut costs and wages will rise.

You heard it here first. Now join the effort to establish Living Profits ordinances in your community. Next we will campaign to raise the minimum profit.

[John Jorsett]

My contribution was just posting it. I suggest you send your campaign contributions to Mr. Boyd.