Can Organizations Like Tesla Reduce Poverty in the US?

Jul 24, 2021

In 1914, Henry Ford left the country dumbfounded when he announced he would be raising wages for his workers from $2.25 a day ($59.61 following inflation) to $5 a day ($132.48 following inflation).

However, the wage increase came with plenty of money print. Ford’s impact was huge on the American economy, and it could be felt nationwide. 

As employees started earning more money, they could afford to spend more, which resulted in overall economic growth. His competitors clamber to match or beat his pay rate, as many of their workers heard the news of Ford’s better pay.

Eventually, Ford’s goal was for his employees to afford the purchase of a Model T car, which was around $450–$550 ($11,923-$14,572.56 following inflation). As manufacturing increased, cost went down to $270 ($7,153.80 following inflation) in less than ten years.

The price decrease made the Model T affordable to the working class. After the wage increase, people earning less could afford to purchase a car in less than a year of working at the Ford Motor Company.

Sometimes history repeats itself.

Currently, the federal minimum wage is $7.25 an hour (or $58 after an 8-hour workday), similar to Henry Ford’s pay of the 1910s. Although the price of Ford’s best-selling car — the Ford F-150 — was around $29,000 before taxes and fees, double the cost of the Model T in the 1910s. 

Just like in the 1910s, Poverty is still uncontrolled.

In the US, the lowest average income is in Georgia. The median household income for people living in Wheeler County, Georgia, is $30,192, as reported by the Census Bureau.

According to the Economic Policy Institute, an individual living in Wheeler County requires $36,042 to cover all his expenses.

As stated by the Census Bureau, 34% of people living in Wheeler County live in poverty. It means a third of the population in Wheeler County cannot cover expenses. 

It is not the only place where there is extreme poverty. In Buffalo County, South Dakota, the median household income is $34,808, and $35,962 is needed to cover all the expenses.

A $7.25 minimum wage cannot cover basic needs in both places, nor could it cover any emergency expense like healthcare. 

As reported by ABC News, 40% of the population in the US does not have $400 to cover an emergency expense. Both Wheeler County and Buffalo County have close to 40% of people living in poverty.

Elon Musk the Savior: Could Help End Poverty

Recently, Elon Musk announced he would be moving to Texas from California. He started a Gigafactory in Austin, which will manufacture and assemble the Cybertruck, which he announced lately. 

Although, Austin has a lower poverty level than Wheeler or Buffalo Counties. Travis County, which is in Austin, only has 13% of people living in poverty. And their median household income is $71,576. Two people in Travis County only need $43,192 to survive.

Elon Musk has his reasons to choose Austin as a preferred place for his Gigafactory. He could start manufacturing jobs in areas outside of Austin where incomes cannot cover living expenses. Places like Hidalgo and Starr County in South Texas, where 27% and 32.5% of individuals experience poverty, respectively. In Hudspeth County, 28% of people live in poverty.

All three counties are just a few hours away from Austin. Elon Musk may be planning to start Gigafactory in those counties and create thousands of jobs to help decrease poverty in those counties.

How much do Tesla workers earn?

As per indeed.com, assembly workers for Tesla earn $19.75 an hour, which is $41,080 a year, before taxes. That’s over $10K more than the median income in Wheeler County and $6,272 more than Buffalo County. 

Tesla can establish factories in lower-income counties to remove poverty. These jobs created in penurious counties will help people who earn more to spend more. 

People could purchase goods or services or repair their cars; creating these jobs will lead people to invest more into their communities, allowing other small and medium businesses to flourish.

What about other corporations who must fight against poverty?

Should it only be Tesla? Absolutely Not.

Other top corporations like Microsoft, Google, Walmart, and Amazon should lead the fight against poverty. Although, jobs are not available everywhere in these corporations.

Tesla can provide fair wages nationwide and reduce poverty.

Organizations like Tesla can establish unskilled or semi-skilled jobs in penurious counties and provide higher than the minimum wage.

Suppose top organizations like Microsoft, Google, Walmart, Amazon, etc., targeted the top 25 counties in the nation to create jobs and start paying their workers more than the minimum wage of $7.25. In that case, they could decrease poverty in the US.

Like what Henry Ford did in the 1910s, Elon Musk could compete with other organizations if he raised wages to $5 a day if he provided jobs to areas where businesses offer the minimum wage.

As more people look to Tesla to earn more wages, it will force corporations like Walmart, Amazon, and Google to increase their salaries and help reduce poverty nationwide.

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