More Economic Tea Leaves

As our stock market soars, there are skeptics looking behind the numbers. Some say there’s no place else to park investment capital. Interest rates are too low to generate income from debt instruments, and real estate is rather illiquid. Behind the scenes are little breezes of change, suggesting that the economy, while growing, may be ready to shift, and that those growth numbers are rather shallow and fragile. Bubble trouble or continued “growth”?

Although the Federal Reserve has not formally announced any increases in their interest rates, unless you have fairly direct access to money at Fed rates, the cost of corporate borrowings has inched up of late. And if interest rates ever reach genuine returns, you can pretty much figure on a massive move away from equities (as reflected in the stock market) into those debt instruments, bonds and corporate paper.

But most folks aren’t feeling the better numbers where they matter most – their wallets. Average workers have lost buying power over the last decade plus. While investment returns are high at this moment, those working for a living are still fidgety and unsure, willing to work longer hours in jobs with lower advancement opportunities and stagnant pay. The teas leaves that I would like to look at today reflect that relative job insecurity where workers are willing to tolerate “less” because they are still scared of the alternative. Indeed, for job-seekers, the best place to come from is already having a job. No job? A whole lot harder to find alternative work, or at least satisfying work.

The hidden numbers can be found in comparing statistics relating to job tenure in existing employment versus this notion of lots of job-hopping. In his February 23^rd blog, Paul Patrone, Communications Director at VoiceGlance.com, addressed the myth that millennials are notorious job-hoppers, even in this economy. Starting with the above chart (which originally appeared in the Washington Post), he noted that if anything, this scary economy seems to be keeping those younger workers in place much longer than in the past, and the tenure lines are actually getting longer. Millennial-aged workers are staying in their current jobs longer than at any time since 1983 according to that chart.

People will gravitate towards opportunity when it is clear, and cling to security when it is not. Right now, the numbers tell us that clinginess is the predominant feeling in the job market, which in turn tells you that too many that even have jobs are exceptionally skeptical that the “recovery” in the news is either real or relevant to the average worker. When those tenure lines shorten and job-changing increases, we’ll have the tangible evidence that average workers actually believe in that elusive recovery. Meanwhile, policy-makers have to learn that people still do not believe that our economy has yet solidified, at least for “most of us,” and claims that we are in good shape just don’t resonate yet with enough voters.

“There’s always going to be a part of it that stems from people changing their minds about their careers. But if history has taught us anything, it’s that human nature has stayed relatively stable over the past 10,000 years or so, so the percentage of chronic job hoppers in the world probably is the same as it always was.

“No, what really causes ‘job hopping’ is amount of job opportunity out there. After all, if there are a lot of new jobs being created with higher salaries and better chances for advancement, logic suggests more people will take those jobs, leaving their old ones behind… So what is causing the decline in job hopping? As the old presidential slogan goes, ‘it’s the economy, stupid.’” Patrone.

So what happens when interest rates climb and access to corporate growth capital becomes more expensive? Will the tenure lines extend, and that fragile recovery rock backwards to reflect that skepticism that most workers already feel? Or will we weather that storm and convince “the rest of us” (beyond that 5% of top earners) that we are in fact in better times for us all? Don’t hold your breath.

There is too much instability in the world – from Ukraine to ISIS, from the Greek battle with the EU to moderating growth rates in China, from lower oil prices to a Congress too mired in doctrinaire politics to get anything done – for anyone to be complacent or wildly optimistic. We’re not spending enough on education (still watching cutbacks here), government-sponsored research (a real job creator) or infrastructure (an economic efficiency booster) to build our own future. Looking beyond the political rhetoric, even if we are doing better than Europe, read the tea leaves of truth if you want real answers. And the readings are still not very pretty.

I’m Peter Dekom, and despite claims from left or right that they have restored America, the reality is that few of us actually believe that rhetoric where it matters most.