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Pennsylvania once functioned very well on a 2 percent personal income tax, which means the current 3.07 percent rate is more than adequate. The state Legislature should reject unequivocally any income or sales tax increases, and instead try a procedure with which most of us are familiar. It is known as “living within our means.”
Henry Ford, along with the Japanese quality and productivity experts who adopted his methods, had no use for managers who asked for twice as many resources to do twice as much work. They looked at the resources they had, and then identified and removed the waste from their operations. That is how they lowered prices, paid unprecedented wages and made enormous profits simultaneously.
Before the commonwealth asks for more tax money, it needs to similarly figure out what it can really do with what it already has.
A few simple examples show the underlying thought process. Suppose you have people who are getting very modest pay to lay bricks. It’s hard work because the masons bend over 125 times per hour to pick up each brick. Anybody off the street can advise the employer to charge higher prices, and/or make less profit, so he can raise wages. Frank Gilbreth, the father of motion efficiency, developed instead a scaffold that delivered the bricks at waist level so the masons no longer had to bend. Now they could lay 350 bricks an hour, and with far less physical effort than it had taken them to lay 125. That is how you pay higher wages, charge lower prices and make more profit all at the same time.
There are similarly $15- or even $20-an-hour jobs in fast-food restaurants, and the employers and workers need only dig them from under the waste motion. Go into any such establishment and see how much time the workers must spend walking, fumbling with packaging and so on rather than delivering value to customers. You could not pay somebody like Wolfgang Puck much more than minimum wage to do the jobs as they are currently designed.
We don’t need to raise property taxes to build a $100 million school, either. The Japanese productivity expert Shigeo Shingo once demanded of a plant manager whether his goal was to paint parts or air (as most of the paint was missing the parts), and he might ask similarly whether our goal is to build schools or educate students. Why not hold classes (other than gym, sports, music and similar activities that require physical presence) over the Internet? This eliminates the cost of everything but the gym, music rooms and auditorium as well as utilities, school buses and the teachers’ cost of commuting. The latter is how one raises the teacher’s de facto pay without raising taxes. On yet another note, a 225-day school year would allow students to graduate with associate’s (community college) level degrees if they wanted them. That would in turn cut their cost of college by half, and get educated workers into the workforce two years early.
Does our Legislature really have to meet in Harrisburg, or could much of its work be done by Web conferencing? Cut the cost of travel and lodging to save millions of dollars and, noting that legislators don’t get paid for their commuting time or nights away from their homes and families, they also get a de facto pay increase.
Credible estimates of waste in health care range from 30 to 60 percent. State Rep. Eddie Day Pashinski and former Rep. Phyllis Mundy tried to pass legislation to encourage health care providers to implement off-the-shelf productivity and quality methods to reduce these costs, but the Corbett administration was not receptive to them. The Wolf administration might provide an opportunity to try again.
Henry Ford wrote that “every economic depression is a challenge to every manufacturer to put more brains into his business – to overcome by management what other people try to overcome by wage reduction.” He added that cutting wages is “slovenly,” and the same goes for price increases and (by implication) going offshore for cheap labor.
The commonwealth does not need higher income or sales taxes; it needs to put Ford’s proven principles into practice.