Solving the Issue of Unemployment

Kartik Chowtkur, Staff Writer

According to California’s Employment Development Department, the City of Santa Clara alone accounts for 27,700 of America’s 6.2 million unemployed citizens. As of September 2018, 3.9% of the U.S. population is unemployed. Though there have been improvements, unemployment is still a major problem in our country today. As the midterm elections are approaching, many members of Congress and candidates running for Congress are attempting to address this issue. The problem of unemployment is especially important to address because of its relevance in the state of California and our district. As of September 2018, the state of California’s unemployment rate exceeds the country’s average by 0.3%. California’s Employment Development Department also states that there are currently 825,600 jobless people in California, which is 13.3% of America’s overall unemployed citizens.
The developing manufacturing and information technology industries can be held accountable for America’s employment situation. According to the United States Department of Labor, there were 3,000 manufacturing jobs lost between July and August 2018 in America. In 2012, district seventeen’s Congressman Ro Khanna wrote a book titled Entrepreneurial Nation about why America is slowly but steadily losing its edge over other countries due to the outsourcing of manufacturing. In an interview, he told me that companies will take their manufacturing overseas because of a lack of American workers who possess the proper skill sets. The Chief Executive Officer of Apple Inc., Tim Cook, had also backed this claim about the lack of skilled workers. In an interview, he had stated that “in the US you could have a meeting with tooling engineers and I’m not sure we could fill the room. In China, you could fill multiple football fields.” Congressman Khanna stated that we can fix this issue by developing our community college program. Community colleges are an affordable way for students who cannot attend a four-year college program to develop the necessary skills they need in the workplace. According to Khanna, another way to develop these skills is through apprenticeships. He is currently working to create more high-tech apprenticeship opportunities for our district. As the Information Age is on the rise, many jobs are becoming automated. This poses a problem because humans are slowly being replaced by machines to perform certain tasks. However, this is not necessarily true. Congressman Khanna says that the automation of certain jobs opens up a lot of new jobs because humans are still needed in order to run machines. He said that “the skills will change but the jobs will stay.”
Another reason companies will take their manufacturing overseas is because of our corporate tax system. Local politician, Ron Cohen of the Republican Party, has a different approach from Representative Khanna in mind to solve this issue. Cohen states on his campaign page that changing our corporate tax system can bring back manufacturing ultimately, bringing jobs back to the U.S. The corporate tax system is a system in which the government directly taxes a corporation or company’s income. Our current system taxes American-based companies on their domestic income and their foreign income which, would have already been taxed by the foreign country. The highest marginal tax rate is 44% in California, 35% federal tax and 9% state tax. That means that companies should be losing 44% of their income just to corporate taxes. Corporate tax is a factor that really draws companies away from having their operations based in California and the United States. Corporations lose a majority of their profit due to production and taxes. For instance, take Apple’s iPhone. It is almost sixty five dollars more expensive to manufacture an iPhone in America than it is in China. An iPhone typically sells for six hundred dollars. According to the Business Insider, Apple has a average gross margin of 40% on iPhone sales. This means that Apple only makes two hundred forty dollars for every iPhone sold. Where do the other three hundred sixty dollars go? They go to taxes and manufacturing fees. Ron Cohen also states that our tax system is not competitive on an international scale. Cohen believes that the simplest solution to this issue would be to drop taxes on foreign income, as it would be a form of double taxation, and lower the federal marginal tax rate to less than 25%. Cohen states that “this is important to everyone, as it will provide incentives to keep corporate headquarters, factories and research facilities in the U.S., with many in the 17th District, creating and keeping thousands of high-paying jobs.”
Though they have different approaches, Ro Khanna and Ron Cohen are just two of many politicians who are working to create jobs in California and the United States, As the midterm elections approach, members of the House of Representatives, such as Paul Ryan of Wisconsin and California’s Nancy Pelosi, are also hard at work to solve certain issues they believe will create jobs in America. As a matter of fact, members of Congress from all over the nation are working to address key issues they think will bring back and create new jobs.