Which brings me to the question: Do business people build things on their own? Or with help? I think the truth is a lot of both.

But since most of what we hear in the media is of business owners and their struggles, let’s examine the background against which their success is also built…

Consider that the average school district spends $10,000 per year per student on delivering public education. That’s teachers, classrooms, staff, facilities, textbooks, principals, administrators, janitors, coaches, materials, playgrounds, gyms, etc. So let’s say that’s $120,000 from 1st grade through 12th grade. Never mind college.

Then consider that the average middle class family in America spends well over $100,000 over 18 years – and considerably more in unpaid hours, blood, sweat, tears and hardship in parenting: bearing, birthing, caring, teaching, nurturing, educating, guiding, etc. If you’re a parent, you know exactly what I’m talking about.

All in all, over $220,000 to deliver a high school graduate to the work world. All so a business can hire that young individual at $8 per hour.

Now imagine if a business had to spend the time and money on their own to develop those workers from scratch. (And I’m not even talking about college-educated workers.) It would take YEARS, not to mention A LOT OF MONEY. Small business owners like shopkeepers who employ their kids to help mind the store know exactly what I’m talking about.

So… Do businesses REALLY build everything themselves? Or do they use the available building blocks that are provided extremely cheaply to them? Let’s look further at a few important factors.

Labor: As described above, the costly product of years of upbringing and education. People who develop themselves physically, emotionally, academically, etc. to be able to work for a business. Anywhere from 16 to 18 years at a minimum. For jobs that require advanced education, skills, and experience: 20 to 27+ years even.

That’s not usually someone that a business owner developed. That’s someone who was working on being prepared long before an entrepreneur even thought of starting a business! When we think about businesses being flooded with résumés during this down economy, where HR departments are experiencing an embarrassment of riches, this is the other side of the jobs coin: that there are numerous people ready to hit the ground running!

Infrastructure: Roads, bridges, water and sewage systems: paid for by generations of taxpayers. Already available so a business doesn’t have to send pack mules over muddy paths across town to deliver a product. So an entrepreneur cans reliably flush a toilet and get back to his desk.

Even public education not just as training for labor, is an “infrastructure” of sorts. I may have my misgivings about how educational dollars are wasted or how America’s educational system turns out too many unqualified graduates. But without consumers who have a basic level of education, the amount and quality of journalism and literary offerings would suffer even more. There would be fewer niches in the consumer goods and services ecosystem to support as many specialized or sophisticated offerings. There probably would be much fewer options available for many home electronics or appliances. Restaurant menus might have problems with words. Just imagine the drive-thru at your local McDonald’s with a much more limited selection.

Laws and Public Safety: Businesses can be sure that contracts they sign are honored. Most don’t have to hire a full-time security guard as they have to in a Third World country. They don’t have to bribe every policeman that comes in the door. There is someone to report to when criminal elements try extortion.

The products a business purchases for resale will tend to meet some level of standards (versus, say, pet food or infant milk formula from China, or lead or cadmium-laced toys), etc. As much as businesses hate regulations and grumble (sometimes legitimately), they are also protected by regulations and save a lot of time and money. For example, in knowing that a building they buy or rent is built to code – without having to hire their own engineers or inspectors. In knowing that there is a certifying institution that has at least vetted an engineer or inspector (or even a doctor) without having to risk as much in “testing” them out first.

Now, there are MANY honorable and good corporations and businesses out there. They pay their taxes. They understand that they are blessed with hard-working American workers, relatively decent law enforcement, a relatively incorruptible court system, and infrastructure that still works. They understand that part of their profits go towards maintaining that. I’m not bashing them at all.

However, more and more corporations and businesses try to out of paying taxes by exploiting loopholes, tax shelters, off-shore accounts. By buying politicians, writing legislation and purchasing the votes of legislators, etc. They are getting value from their fellow Americans’ contributions – in the form of labor, infrastructure, laws and public safety – for their profits, but without repaying or contributing to the maintenance of all of this by providing living wages or being socially responsible by paying taxes without weaseling out of them.

These business violators are the ultimate parasites taking advantage of a generous American society that has provided so many of the building blocks they use to profit. How about the hedge fund billionaire who makes a billion but pays only 15% in taxes on passive income while a doctor makes $150,000 has an effective marginal income tax rate in the high 30% range, because the laws have been changed to value passive investment income (like a dividend-paying stock purchased years ago) over the blood, sweat, and tears of labor donetoday. Even Google, for example, pays an effective 2.4% in taxes – but ties up the court system and Patent Office in massive lawsuits defending against or attacking other companies. Corning has paid no taxes in several years – even got a refund last year – yet is asking for more tax cuts.

These rogue businesses built their profits not on their own, but at the expense of other businesses and the American people. They didn’t build it all on their own. But they sure act like they did. And it’s sad that so many have been brainwashed into believing them.

School districts will spend a about $120,000 (an average of $10,000 per year) to educate a child from 1st grade through 12th grade.

If the young adult goes on to college, that’s $20,000 to $40,000 per year for four years.

And then some business might hire that young adult, the result of anywhere from a quarter million (working class, public schools, no college) to half a million in investment (middle class, private schools, college) for anywhere from $9 to $30 per hour (total cost).

It’s like you bought a $300,000 industrial robot and rented it out for $15 per hour. Assuming all of that $15 rental fee were applied to repaying the cost of that robot at 0% interest (and nothing on living expenses), it would take 20,000 hours, or 10 years of 40-hour weeks, to justify the cost.

Who you are isn’t just special and unique. Who you are is expensive. Honor that. Make yourself more than worthy of what your parents and society put into you, and don’t sell yourself cheap.

But if I were a cynical, uncaring bastard of an entrepreneur or CEO today in the United States, I would do the following…

Labor Cost Reduction Strategies

1. Get college-educated, unpaid interns to do a lot of the office work and grunt work required in the U..S. – and every few months, bring on new interns while letting the previous interns go with glowing letters of recommendation.

After all, 85% of recent college graduates are returning to live with their parents anyway. Their parents can subsidize the cost of my free employees, with room and board, transportation, and health insurance (up to age 26 under the new health care law).

Why bother with sustainable planting and harvesting of trees if there’s lot more virgin forests waiting to be clear-cut?

2. Outsource a lot of the other work to freelance programmers and engineers in India, sub-contractor manufacturers in China, and freelance office and network administrators and data entry typists in the Philippines who can log in remotely to do the work I need them to do. They cost anywhere from 5 to 10 times less than the going rate here in the U.S.

3. Use consultants and contractors. There are so many people, either unemployed or moonlighting for additional income, who I can hire for projects lasting a few days to a few weeks here and there: marketing, IT, legal, accounting, even sales!

By having a bidding process, I can take the lowest bidder to ensure I pay the least amount possible. If someone wants my repeat business, they will have to keep their bid low. And by paying for results, I don’t have to worry about unexpected costs. If something takes a consultant or contractor too long, they can’t pass the additional time costs onto me.

4.  See about getting a cheap foreign worker into this country on an H-1B visa after advertising for a job with deliberately difficult-to-meet requirements to avoid finding any eligible applicants amongst the millions of unemployed, talented Americans out there. Maybe with help from a law firm.

I can do that to avoid paying the prevailing wages and benefits that an American worker would desire. The foreign worker would be stuck with me despite 12-hour days of hard work, because if I let him go or he leaves my employment, he can’t stay in this country anymore.

4. Use temporary labor for unskilled or semi-skilled work if I needed such work to be done in the United States – especially for grueling warehouse jobs (like at Amazon) where I don’t have to worry about paying too much for injuries, worker’s compensation claims, sick days, or vacation days.

There’s always someone available from Labor Ready or Manpower, whether it involves heavy lifting or lots of typing and filing.

And if they don’t get enough hours or enough pay? Or if the minimum wage is lowered or done away with altogether, then even better! After all, government, family, and local charities can subsidize the cost of my temporary, part-time employees with food stamps, Section 8 housing assistance, Medicaid, room and board, more food – so that they (or others just like them) are always relatively fed, rested, and healthy enough to be available at a moment’s notice, whatever the shift or number of hours I require. I don’t need to invest much in these workers. As the economy continues to deteriorate, there will always be more of them. And society takes care of them, keeping them ready until I need them.

Just A Few To Tease The Many
Now if I did have to hire some permanent staff, I’d make sure their numbers would remain a core few. But I would pay them somewhat decently and give these few some benefits to rave about.

I would make sure to pick people who believe as I do that a job is a privilege and people who can’t keep a job deserve to remain unemployed. These would be the most loyal and enthusiastic people, extremely grateful for the jobs they had. Their fierce loyalty and great enthusiasm would be held out as an example, used like carrots dangling on a stick in front of any disheartened interns and disenchanted temporary workers.

“See? If you work hard enough, you can make it, too!”

But most won’t.

Regulations And Taxes

It wouldn’t matter to me if environmental, business, or worker safety regulations were reduced, or taxes were reduced, or wages were reduced in the United States. None of that compares to the cost advantage offered by technology and globalization: Internet, cheap and instant global communications, containerized shipping, and an outsourced workforce that can easily be 5 to 10 times cheaper than the typical American worker, whether skilled or unskilled. The lack of environmental, business, or worker safety regulations in other countries are mere icing on the cake.

And lowering taxes on my net income wouldn’t necessarily mean I would spend it on hiring Americans.

• First, I would have to see that there was growing demand that I couldn’t meet by squeezing more productivity from my existing workers, but instead required additional employees.
• Second, I could just as well hire more contractors, temps or more outsourced workers.
• Third, since labor costs are a business expense, the cost of workers I hired (who presumably would make more money for me) would not be taxable anyway – only the additional income they generated.

No… Lowering taxes on my net income would just mean I had more money to spend on expanding to where the regulatory, taxation, and labor cost environment is much more favorable. (I could even set up a bidding war between two towns, two states, or two countries – for lower taxes, tax credits, free utilities, government grants, low interest loans.)

Or, I could just use the additional tax savings to spend on vacations abroad to St. Tropez, to buy luxury automobiles from Germany, or get my wife some of the latest fashions from Milan.

But I would definitely continue to say that lower taxes for me mean more jobs for Americans. That’s right!

Yes, if I were a cynical, uncaring bastard of an entrepreneur or CEO  in the United States today, this is how I would do it.

And I wouldn’t be the first in doing this, either. There are many American companies doing this already.

But you probably don’t want to do that every day for the rest of your life, right? Besides, what if you want to free up time to do other things? Or God forbid, what if you get sick? What happens when you get old?

You could build a water cistern and a roof catchment system, so you not only have something to store the extra water you’ve carried up from the river, but it also automatically stores water from the occasional rain that passes your way.

Beyond that, you can invest in a well, too. With a well, you can use a pulley to make your work easier. No more walking down to the river and walking back under a heavy load.

Now if you really want to go all out, you can build a windmill atop your well, to fill the cistern for you.

There! Now you don’t have to carry water from a river, nor wait for rain to fill a cistern, nor manually draw or pump water from the well. Anytime there’s enough wind, some water gets pumped from the well into the cistern until it is full.

Work Smart, Save Your Labor And Invest Wisely
That’s one of the most important things to remember about labor. You have to invest the fruit of your labor wisely, so that it will be there to take care of you one day.

Or, I guess you could count on the government to take care of bringing you “water” (money) when you are no longer able to labor for yourself. Social Security in the United States came into existence 1935! Medicare came into existence 1965.

But what many people have forgotten – and are now starting to realize – is that such government welfare systems are but a blip (76 years and 46 years, respectively) in the scale of human history. Even now, our social welfare system is already showing signs of trouble. Benefits are not as generous, they are not keeping up with real inflation – even as mandatory contributions (taxes) have increased. (For example, Social Security taxes started out as 2% of the first $3,000 in income, now it’s 12.4% of the first $106,800 in income.)

We are living in an age of economic decline even as massive government debts are looming over our heads and increasing millions are dependent on the government. Our government welfare systems may not be there one day. Or, if they survive, what they offer may not be sufficient at all.

Don’t you want to make sure you have your own independent store of labor in the form of wealth and personal resiliency?

Are You Prepared For A Hurricane Or Tornado?
The question is: Are you prepared? How prepared are you? Were you one of the 1 in 5 Americans in Hurricane Irene’s path who rushed to the stores and found shelves empty of food, water, flashlights, batteries, and plywood?

The point is, you never know when disaster – whether natural or man-made – will strike.

Tornadoes
On April 27, a massive mile-wide tornado ripped through Tuscaloosa, Alabama with wind speeds of over 250 miles per hour. It and other tornadoes in the days before and after affected at least eight states. An estimated 346 people died.

Earthquake On The East Coast
Just earlier this week, on August 23, there was a magnitude 5.8 earthquake centered in Virginia, with several aftershocks. The quake was felt across over a dozen U.S. states and several Canadian provinces.

Luckily, no one died, and there was “only” an estimated $100 million in damages.

Some Preparation Basics
At the very least, keep on hand on a few weeks of water, emergency food, prescription medicines, flashlights, batteries, a radio, blankets or a sleeping bag, rain gear, a safe source of heat. Don’t forget to include supplies in your car.

Home prices have dropped by more than half – in some cases by two thirds – but these families are stuck. Japanese banks can foreclose and still go after the borrower for the money. Filing for bankruptcy is considered very shameful in Japan. Especially stuck is the now-adult child, who may have signed the loan documents while still a minor.

I tell this story because…

If you ask the average American, they will tell you that they would never want to saddle their young children with the financial burden of taking care of them both now and into their old age. They want the best for their children. For them to have a brighter future – not to be crippled with onerous debt placed on them by parents. For them, it would be a shameful deed to bind their children into a lifetime of debt slavery.

And yet that is what the previous generations have done to today’s children and to future generations. Debt is a claim on future income, and our country citizens has laid a crippling claim to the productive efforts of future generations. All in order to fund all sorts of past,  present-day, and future enjoyments and priorities. I do not say this lightly, but it is true.

We borrowed trillions and spent it all already. Our nation officially owes so much money – at present almost $15 trillion – that it would take at least eight full years of ALL Federal government revenues spent on nothing else but debt service (both interest and principal) in order to extinguish the national debt. No money for defense, no government services, nothing.

That’s assuming there is no more additional taking on of debt of any kind whatsoever. And I’m not even counting the unfunded portion of Social Security, Medicare, and other liabilities, which are even bigger and would more than quadruple the number of years.

We ALREADY spend $400 billion per year in interest payments alone on the National Debt. We owe so much and spend so much that, on top of our borrowings, we borrow to pay that $400 billion in interest just like an irresponsible person would use a credit card to pay interest on another credit card. (See also: “How To Explain The National Debt To Friends And Family“.)

And we’ve been lucky! Yes we are, because right now we only play $400 billion of our estimated $2.1 trillion in annual Federal revenue on interest payments. As the National Debt grows in size over the years, adding at least a trillion or more per year over the next ten years, interest rates likely will rise from the current average 2.5% to the more typical long-term average of 5.5% (investors may want even more, due to the risks). So we may very well see interest payments alone double to $800 billion within 5 years!

The government will soon have to make drastic cuts in spending. It will happen whether we want it to or not. With interest payments that will soon suck up 40% of Federal income, major cuts in government spending and social services, a National Debt that will be impossible to pay off, and entitlement promises that are even more impossible… This is a terrible, terrible burden to place on our children.

It would be as if you or I had signed our little kids up to indentured servitude contracts, to have ripped away from them a large, significant, and substantial sum out of their income each year for their rest of their lives – all in order to pay for our current consumption lifestyle and our eventual retirement.

If you knew of such a person who did that to their children, I bet your reaction towards that person might range from pity to disgust to outright hatred. Wouldn’t you, if you knew a neighbor who signed their children’s future away like that?

That is how many younger Americans feel about the previous generations’ politicians (on both sides) and the lies they sold to an American public that has always known, deep down, what the truth really was… But wanted the easy, money-greased, low-tax way out.

This is the shameful, impossible legacy of debt left to us, a diminished future that we Americans of today and our children are facing. We are fast approaching that point when our nation’s debt problems can no longer be pushed into the future.

Yes, this is dysfunctional. Yes, this is insanity. What kind of family in America would take both a voluntary 10% pay cut AND start living it up, borrowing for major unnecessary expenses? But as we know, this is EXACTLY what our Federal government did, of course. That’s our American family for ya.

Time To Face The Music
But now, hung over after years of wasteful spending, your friend is coming up against his credit card limit. The family knows it has to apply for another credit card. But it also has to do something to address the problem. Now, the prudent thing would be to take TWO sets of actions, right?

1. Cut Expenses! Stop spending so much! Prioritize what’s needed and what’s wanted. There is a huge difference. Most wants are not needs. (This includes expensive expeditions abroad.)
2. Increase Income! Put an end to the stupid voluntary 10% pay cut. Go out and get a second job to bring in more income.

Sounds like the smart thing to do! If you were somehow to find yourself in such a position, that’s what you would do, right? Does anyone here believe the advice should be to ONLY cut expenses? It would be crazy to suggest ONLY cutting expenses, right?

And yet this is EXACTLY what the House Republicans in Congress are doing! They only want to cut spending. They don’t want to raise taxes or even allow the tax cuts enacted back in 2001 and 2003 to expire. Now don’t think I’m being partial here. I think the Democrats in Congress want to cut too little and the Republicans in Congress don’t want to raise any taxes.

Moral Courage Needed
I’m sorry, but we can’t afford to have what we want in this country anymore. We can only afford to have what we need. We need those people in Congress to have some moral courage to come together and make the tough decisions without regard for powerful corporate lobbying interests, while having some empathy for the poor. There are a lot of things this country doesn’t need, that we are borrowing money to pay for.

Fat chance, right?

My Prediction On This Debt Ceiling Debate
I believe either of two things will happen: The more likely scenario is that the debt ceiling will be yet raised – as it has been 102 times in the past. The deal will be a compromise that doesn’t solve the National Debt problem, likely will create more problems and misery (small increases in the military budget, major decreases in social spending). Like all other debt ceiling increases, it will just kick the can of worms a little further down the road. There will be a nice relief rally in stocks and precious metals will drop somewhat.

The less likely scenario is that our politicians won’t meet the deadline. Parts of government shut down and some people won’t be paid. World markets will dive while precious metals will soar. But then the politicians in Washington will come to their senses and do the above – i.e. a debt ceiling rise and compromise that doesn’t solve the National Debt problem, likely will create more problems, and just kicks the can of worms a little further down the road.

1. Interviewed Without Intent To Hire
Some companies with frozen headcounts may advertise open positions so they can always have freshly interviewed applicants at the ready. Just in case executive management approves an opening, they have someone to bring in immediately, rather than start a hiring process that may take months (during which time executives may close that headcount before it gets filled). So applicants get their hopes up, spend money on dry cleaning their suit, shell out gas money or even borrow money for a flight to another city… But all for nothing.

2. Unpaid “Internships”
Unscrupulous companies (especially in public relations, media, copy writing, etc.) advertise full-time unpaid internships and get people desperate to subsidize labor (paying their own rent, food, travel expenses, etc.) for the company because they don’t want a gap in their résumé or because they want “experience”.

By law, unpaid internships are supposed to be educational for the intern, and more importantly, paid employees must not be displaced by the unpaid intern. But a New York Times article quotes a spokesman for Oregon’s labor department finding, “We’ve had cases where unpaid interns really were displacing workers and where they weren’t being supervised in an educational capacity.”

3. Kept “Hungry” For Work Hours
Some fast food outlets and retail stores offer only part-time shifts, keeping their low-paid workers starving for additional work hours in order to make ends meet. That way, someone is always available and willing to come in to work at a moment’s notice if another worker can’t make it in.

At the same time, they require workers to always be available by shifting their work schedules around every week, making it difficult for them to have another part-time job to earn money.

They also don’t do lay-offs. Rather, they just reduce the hours available to someone until that person only works 4 hours a week, then eventually quits on their own and can’t file for unemployment.

4. Discriminated Against For Being Older, Appearing Ill, Or Having Children
Those who appear older, or not as physically healthy, or have children may be rejected for a job, but never told it is because the hirer is concerned about increased health insurance premiums, or an employee with children who cannot put in 60-hour work weeks.

Or, a loyal employee may also be laid off or “fired” once their boss knows an employee has an expensive medical problem (currently, health insurance companies can still charge a small business significantly higher premiums just for having one sick worker) or cannot work additional unpaid hours.

5. Harassment, Violations, And Overwork
In tough economic times, some employers know that they can get away with abuse. So they do it or allow it to happen. Women get sexually harassed, minorities suffer a hostile work environment, employees may have to keep their mouths shut about safety violations or law-breaking.

Men and women may also be coerced into work a lot more unpaid hours: those on salary, but also those who legally should be hourly employees but are paid a salary, and those hourly employees who are forced to work extra hours off the clock.

6. “Firing” Instead Of Laying Off
Of course some employees will lie, cheat, or steal. Or repeatedly fail to come into work on time. They may deserve to be fired.

However, some companies will fire people using trumped-up causes (theft, supposedly lying on a job application 5 years ago, behavioral problems, supposed tardiness or absenteeism, etc.) and/or dispute a former employee’s unemployment insurance claims, appealing any judgments – all so that they can avoid increases in their unemployment insurance rates.

1. Technology
There is nothing wrong with technology by itself. It depends on how the technology is used. We all depend on technology for our everyday lives, and to save our lives.

However, with automation and production technology, more can be done with fewer people. Today there are fewer phone operators, typists, secretaries, and factory workers. Economists used to say that this would free up people for other jobs, but that’s only if the other jobs are there and workers can be quickly trained to meet the supposed demand.

2. Outsourcing
Jobs go where the labor is cheaper. With developments in global communications technology and with other countries “up-skilling” their workers, this means not just cheap manufacturing, but also basic data entry, customer service (Philippines, Ireland, etc.), legal research (India, Philippines), accounting (India), engineering and high-end manufacturing (India, China), pharmaceutical R&D (Eastern Europe, Russia), etc.

3. Credit Busts
Easy credit, low interest rates, expectations of rising home prices or of a growing economy…. They all pull money from the future into the present, making demand look higher and times appear prosperous. But debt has to be repaid, so once all the money is spent and people can’t borrow anymore, their future is poorer. Demand for goods and services dries up, as people have to pay off money that was lent to them. Businesses and workers that may have depended on a certain level of consumer demand will find that the other side of the hill is a cliff.

4. Insourcing
At the low end, illegal immigrants crowd into the unskilled and low-skilled labor pool. They do have an effect on wages and jobs availability and wages, because businesses get to pick and choose from amongst more workers, which means they can offer less pay and otherwise qualified workers are left out when all positions are filled.

Businesses  also sponsor skilled foreign workers on H1B visas, because they can pay these workers a lot less than similarly qualified Americans (but more than these foreign workers would make in their home country). The workers can’t jump to another company, because their visa is tied to the employer sponsoring them.

Lastly, if a company location has to be located in the United States (say for example, the customer base is complaining about the inability of service staff to speak English), you’ll be more likely see that location in Oklahoma or Nebraska, not California or New York. The situation is bleak enough even there, that those workers will willingly drive 1 to 2 hours from their homes to that full-time minimum wage job, between doing chores on their farms and homesteads.

5. Labor Oversupply And Mismatch
This is more of a result of all of the above, but in itself, it’s also a factor. With fewer jobs available, high school graduates apply for jobs that those without high school degrees or those with prison records used to go for. High school graduates tend to get those jobs because they’re more likely to be literate, educated, and deemed reliable, as compared to high school drop-outs, many of whom may be functionally illiterate. College graduate scramble for jobs that don’t require a degree (waiter/waitress, flight attendant, etc.) – often because they have woefully inadequate expectations of what their choice of degree will help them earn!

With money stresses (stock market downturn affecting retirement accounts, the need to help adult children or care for elderly parents, dealing with medical bills or large mortgages, inadequate Social Security income), seniors who will try to stay on at their long-term jobs rather than retire. Or they may retire and find part-time seasonal jobs to help with expenses. A company that offers health insurance may preferentially hire them because they already have access to Medicare.

Things Are Not Improving
The above reasons illustrate why it is so important to hold onto whatever job you have, live frugally, save money, be out of debt, and be aware and prepared. These uncertain economic times are not improving, and you have to be able to weather the storms.

According to a report from Education Week released last month, using the latest available data from 2007 and 2008, the graduation rate improved to 71.7% in 2007, from 65.6% in 1997. That still leaves three in ten (or 1.2 million) high school students who fail to graduate! Every year!

Minorities Graduate At Lower Rates
The actual numbers show stark differences when broken down by race. The situation is especially bad for minorities. Except for Asians (where the Class of 2008 graduated at a rate of 82.7%), the numbers are starkly lower for Blacks (57%), Hispanics (57.6%), and American Indians (53.9%). Whites have a 78.4% graduation rate. If you want to know why minorities tend to hold low wage jobs or make less money, this is a good place to start looking.

High School Graduates Have Their Advantages
Now we know that a high school diploma is no guarantee that a young adult has a good education. As mentioned before, half of the adult population in Detroit are functionally illiterate and yet half of Detroit’s illiterate adults have a high school diploma or GED! Rates of illiteracy amongst high school graduates may not be bad in other parts of the country – but in many places, the rates are just as bad.

Yet overall, graduating from high school is a major boost to a young person’s chances in life. Compared to a high school drop-out, a high school graduate has several advantages. He or she tends to:

• Gain and keep steady jobs
• Earn several thousand dollars more per year
• Have more stable marriages
• Not be as depend on social welfare and other government assistance
• Pay taxes rather than use up taxes paid by others
• Not be incarcerated or on parole

All of the above are positive factors for the high school graduate. It stems from the fact that, if a business is going to hire someone, they will hire the high school graduate over the drop-out. Just putting in the effort in high school places a young man or woman above roughly 30% of the competition. Doing well in high school also opens up the door to college.

Every Year: 1.2 Million Drop-Outs
Well, what about the three in ten high school students (or roughly 1.2 million) who fail to graduate each year? They are at a huge disadvantage. While some high school drop-outs can find good jobs and become successful, overall most will not. Their failures in life place an undue burden on society.

It starts with the average $10,000 spent every year by school districts on delivering education to a student – everything from classroom facilities and teachers, to administrators and support staff. Countless hours of instruction spent in the classroom. If all that effort produces an illiterate adult, then the money – easily over $100,000 per student over time – was pretty much wasted.

Additionally, compared to high school graduates, drop-outs tend to work at unstable jobs that don’t pay a living wage, tend to have unstable families, are dependent at a higher rate on social welfare and other forms of government assistance, and are more likely to be in jail or on parole. This is a vicious cycle that can perpetuate for generations.

Our Unskilled Workers Can’t Compete
Politicians like to talk about how the American worker is globally competitive, but it makes you wonder about their outright lies. When almost a third of Americans don’t even graduate high school – and even some of the ones who do graduate are illiterate – how would that make a corporation want to pay them a minimum wage that is ten times what a similarly unskilled worker in another country makes?

High school drop-outs as a whole place enormous costs on society. Even in good times, they have few resources to depend upon and live on the margins of society. But in these times of economic uncertainty, with jobs being shipped overseas, with massive debt burdens being faced by local, state, and federal governments… Our society will be increasingly less and less able to help them just as their demands on social welfare and government assistance reach record highs. Their quality of life will only continue to decline.