Thursday, March 26, 2015
More Tea Leaves in the Job Market
My Friend Dennis Duitch is a pretty astute management consultant, who has a weekly RSS feed. His latest feed drills down below the much-touted non-farm unemployment rate published by the Bureau of Labor Statistics. The latest numbers, for February, provide a 5.5% rate that would appear absolutely miraculous, until you delve deeper. And when you do, you realize how completely meaningless that number is. Add in the long-term unemployed who want to work but have just given up looking. Throw in part-timers with lousy jobs, no chance for advancement, no benefits and terrible pay. Add in those contract workers, pretty much in the same boat, whose work ends when they’ve completed their limited contracted services.
The negative statistics are staggering and suggest that the United States is mired in not only in a muddied recovery that really only benefits those who invest as their primary source of income (and, of course those who provide services to these well-heeled individuals) but an economic engine incapable of generating sufficient good jobs with a solid future. Sadly, only 10% of America owns 90% of its traded stocks, so the calculations of who benefits from a top-end stock market are rather obvious.
So here are two of Dennis’ most interesting recent findings on the subject: WHOOPDEEDOO. THE U.S. UNEMPLOYMENT RATE FELL THIS MONTH to 5.5% – “TOP END OF THE RANGE CONSIDERED NORMAL by most Federal Reserve policymakers” despite the reservation of Chairwoman Yellen who reported to Congress that “while the labor market has seen improvement, too many Americans remain unemployed or underemployed.” Reality is that employment ‘Recovery’ statistics are bogus. The facts are that: (1) Since 2008, actual full-time jobs have decreased by 140,000; (2) The primary counting flaw is that government now considers nearly 93 million of ‘long-term unemployed’ workers over age 16 to be “not a part of the labor force”; (3) Add in the 8.7 million officially unemployed and that means over 100 million not working – hardly fitting the definition of ‘full employment’; (4) Of those who are employed, well over half only work part-time (below 30 hours/wk) with, according to Social Security Admin, around 40% making less than $20K/yr and 60% making below $40K/yr. While politicians and mainstream media pronounce that all is well, “if the unemployment rate was calculated honestly, the real rate is currently above 23% according to shadowstats.com. [WALL ST. JOURNAL – Mar 6, and ECONOMICCOLLAPSEBLOG.COM – Mar 8, 15]
MILLENNIAL UPDATE: Some 92 million people aged 15 to 35 now comprise the biggest generation in U.S. history and their impact is huge – on their parents as well as the country’s economy. Having come-of-age during years of dramatic economic disruption, technologic change and globalization, the experiences, expectations and behaviors of millennials are quite different than those of Gen X (now 36 – 50) or Baby Boomer (51 – 70) parents. With instant access to product info, pricing and peer reviews, they shop differently; with focus on life balance & wellness, they eat and exercise differently (generally better); less than a quarter now choose to get married and live in their own households. But the biggest societal change is that around a third of adult millennials still receive regular financial support from their parents, including up to 25% still living rent-free at home and/or parents paying for groceries, clothing, cars, vacations, and more. A growing problem is that “even affluent Boomers are putting their retirements at risk by drawing down Retirement funds to subsidize” their kids and the big societal question is whether those kids will be in a position (or willing) to return the favor in their parents’ senior years? [BLOOMBERG BUSINESS WEEK – Mar 9, 15]
How about this further Millennial Update: “The commonly held belief is that with hard work and a good education, a young person in America can get a good job. But despite falling unemployment, college grads age 22 to 27 are stuck in low-paying jobs that don't even require a college degree. The percentage of young people languishing in low-skill, low-paying jobs is 44%, a 20-year high.
“Only 36% of college grads have jobs that pay at least $45,000, a sharp decline from the 1990s, after adjusting for inflation. Perhaps most depressingly, the percentage of young people making below $25,000 has topped 20%, worse than in 1990. In other words, those with a bachelor's diploma were better off before the digital revolution.” CNN.com, March 18th.
What’s more, the growing income gap between the top earning classes and everyone else in the United States threatens to tear our country apart, perhaps even resulting in a violent armed insurrection, a fracturing of the United States into smaller nations seething with hate. God knows that under the misguided and misinterpreted provision of the Second Amendment, there are enough guns around to make this a very hefty threat.
Hedge-fund billionaire Paul Tudor Jones (Forbes net worth estimate: $4.6 billion) broke ranks with the stupor-inducing lie that having a small coterie of mega-rich at the top of society, receiving special tax and regulatory breaks not available to the masses, is good for job creation (read Dennis’ contributions above to satisfy yourself that the jobs that are being created are truly crappy).
In a recent TED talk, Jones called that income inequality gap possibly “disastrous” for the United States, noting that the quest for profits in the financial/corporate world has changed so dramatically that it threatens the very fabric that holds our nation together. The March 20th CNBC.com extracted some of his best quotes: “‘The gap between the 1 percent and the rest of America, and between the U.S. and the rest of the world, cannot and will not persist… Now here's a macro forecast that's easy to make, and that's that the gap between the wealthiest and the poorest, it will get closed. History always does it. It typically happens in one of three ways—either through revolution, higher taxes or wars. None of those are on my bucket list…
“Jones said that he is a proud capitalist ‘because of the successes and opportunities it has afforded me and millions of others… Capitalism has driven just about every great innovation that has made our world a more prosperous, comfortable and inspiring place to live,’ he said… But he said capitalism has shifted in recent years to become too hyper-focused on short-term quarterly earnings, profits and stock prices.
“‘I've seen a lot of crazy things in markets... And unfortunately, I'm sad to report that right now we might be on the grips of certainly one of the most disastrous, certainly in my career… It's like we've ripped the humanity out of our companies and reduced them to a set of numbers,’ he said… ‘Higher profit margins do not increase societal wealth. What they actually do is exacerbate income inequality, and that's not a good thing.’”
But we now have a majority in Congress, bought and paid for by the richest of the rich, who espouse maintaining the special status, that legislatively-passed protective layer, for those who need protection the least, the richest people in the land. The lessons of history have never, never, never allowed such wealth-gap inequality to last, and most of those societal rejections have been very violent. Bottom line, wealthy folks, history really doesn’t care if you’ve read enough to understand the past or simply do not believe it can happen to you. History just is. We could try to equalize our society… or, as philosopher George Santayana once said: “Those who do not remember their past are condemned to repeat their mistakes.”
I’m Peter Dekom, and as our public educational system erodes by the day, I think I am living in a country that is only capable of learning its macro-lessons the hard way.