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By now, you've had a few days to digest the "wonderful" jobs numbers reported from Washington last Friday.
Well, don't get too excited about the economy. We've been conned again.
First off, 59% of all jobs created this year are in 3 sectors: Leisure/Hospitality, Retail Trade and Administrative/Waste Services. Wages in those sectors have fallen by 0.7%. These jobs pay an average of $15.80 per hour versus the $23.98 average hourly wage. Which means "jobs creation" just equals cheaper labor.
The American jobs participation rate is at 34-year lows and falling, as people give up and leave the workforce.
Underemployment is between 14% and 15% and rising.
America still suffers from 2 million fewer jobs today than it did when the financial crisis started.
But perhaps worst of all is what I call the "part time-fication of America. And this is key to understand if you want to navigate the new American economy (and do well for yourself).
Thanks to years of punitive hiring regulations, taxes and Obamacare, American companies are going "part time." Meaning, Americans themselves are living on less and less.
USA Today, for instance, reports that the "ranks of part-timers have swelled to 791,000 people versus 187,000" since March. In other words, for every full-time job created over the past 6 months, there have been 4.22 part time jobs created.
Since the beginning of the year the data is even more graphic. According to Keith Hall of George Mason University's Mercatus Center, 97% of the net job creation has been part-time employment.
Despite the fact that denial is pandemic in Washington, ObamaCare is driving this in a dramatic demonstration of the Law of Unintended Consequences. Congress voted it in against the wishes of the vast majority of American people and is only just now - to paraphrase Nancy Pelosi - figuring out what's really in it.
Naturally companies are figuring this out first with the net result that millions of workers are being told they have to go part time (or else), because most companies don't want the healthcare costs dropped on them when they're barely able to survive as it is.
Here's the thing...even this isn't the whole story - in order to get to the meat of the problem facing our country now you have to go back about 50 years and look at the top companies then versus the top companies now.
The top dogs then were companies like U.S. Steel, GM, Goodyear and Standard Oil. Now they're companies like Wal-Mart, Google, Apple, McDonalds and UPS.
Can you spot the shift?
Make vs. Made Culture
In the 1950s, our country made stuff that the rest of the world needed. People had to come to us because they couldn't live without what we manufactured. Estimates suggest that as much as 70% of the world's economic activity was tied to companies within our borders.
Now it's the reverse. And the companies at the top of the list reflect this. Nobody actually needs these companies; what we need is inexpensive stuff that we can consume and throw away for which there is very little lasting economic value.
But these companies need international markets where, as I have long highlighted, the real growth is taking place. Today 80% or more of the world's daily economic activity is created outside our borders. Our companies have to go to there to grow.
So now what?
About the Author
Keith is a seasoned market analyst and professional trader with more than 37 years of global experience. He is one of very few experts to correctly see both the dot.bomb crisis and the ongoing financial crisis coming ahead of time - and one of even fewer to help millions of investors around the world successfully navigate them both. Forbes hailed him as a "Market Visionary." He is a regular on FOX Business News and Yahoo! Finance, and his observations have been featured in Bloomberg, The Wall Street Journal, WIRED, and MarketWatch. Keith previously led The Money Map Report, Money Map's flagship newsletter, as Chief Investment Strategist, from 20007 to 2020. Keith holds a BS in management and finance from Skidmore College and an MS in international finance (with a focus on Japanese business science) from Chaminade University. He regularly travels the world in search of investment opportunities others don't yet see or understand.
You aren't telling us anything that us oldtimers don't already know. The "partification" of America started a long time ago. I was in the workplace from 1962 to 2000 and I have seen all of the different ways employers scam their employees.
It isn't some new thing that just happened because of Obamacare. In the sixties, at least there was loyalty in the workplace. Most employees could expect to have a job for a long time if they did the work and kept out of trouble. The wages were terribly low but benefits and job stability helped to keep people working. In those days you could plan a future based on the fact that you would probably have a full time job with benefits for as long as you wanted it.
Then things started to go off the rails as employers started cutting back on benefits by creating more and more part time jobs. Mergers caused mayhem in the workplace and instability was everywhere.
Now employees have no loyalty to their employers and justly so. You can try to blame all of this on healthcare, but in reality the entire economy drives the workplace and that does not all fall on trying to provide healthcare for all citizens.
I to have been in the workforce from 1960 to just the past few months. Now retired @ 74 and you are correct in most of what you said. The difference is that everything is now escalating and it is because of MANY BAD gov't. policies which definitely include OBAMACARE at the apex, and getting worse as more deceitful items included in the BAD legislature come to light. Thank god I have maintained good health on my own without anyones help,especially the gov'ts. I believe healthcare must improve, but it must start with the INDIVIDUAL not the gov't.
So, are employees entitled to job security from an employer?
I love the idea of employers being ABLE to provide long term employment security, and I'm sure most would love to do so, but what if the viability of the business gets called into question? Does any entitlement remain?
Just curious.
Conceptually speaking, should employees be entitled to disease care insurance from their employers? If so, why?
Remember, the move to employer-provided disease care insurance happened as a way to get around Truman's wage and price controls. Employers couldn't legally pay more in wages or salary, but they could offer benefits as a new form of compensation. That's how this screwball system got started. That was when we had almost zero overseas competition. Businesses could easily afford it. They were growing. Now, employers have every incentive not to hire full timers who would qualify for benefits.
Going to part time workers is one of the ways to avoid the burdensome obligation to provide medical insurance and take away any expectation of lifetime employment. So is simply not hiring anybody.
Great, huh? Who's responsible? The pandering politicians and the people who elected them who wanted something for nothing.
Hey, you know who has job security and great benefits too? Politicians.
Keith:
The part of the story that you miss is that the "victims" like it. Part time work, a little weed and time to "explore your inner self". That suites folks who have no intention of repaying the student loans they took out.
Blinded to the results of Western Europe's embrace of this attitude, they are pleased, not upset by being wards of the state. I would go further and guess they think the German's are stupid for powering Europe's economy forward almost unassisted.
I believe that the youth voting record supports this belief.
Keith, all you have to do is knock the little ball off the stick and go to the awards dinner. (Can you imagine kids taking steroids to knock the little ball off the stick better?) You must think the kids want to be workaholicks!
Emerging markets are not as dependent on traditional sources of energy yet because they just don't yet have the industries that rely on them. So that gives them a leg up on adopting newer energy technologies as they evolve. China's use of solar power is a prime example of this. With the new super capacitors that will soon be on the market, you can count on emerging markets using more and more wind and solar power to charge these new super batteries, and those super batteries will be used to power everything from vehicles to home heating and air conditioning. It is time that the western countries start adapting now, otherwise we will be left in the dust (coal dust and oil smog, that is).
Great info. Could you send me a link on the five things the Fed doesn't want you to know.
Khalfani, here is a link to Five Things the Fed Doesn't Want You to Know http://moneymorning.com/2013/05/08/5-things-the-federal-reserve-hopes-youll-never-find-out/
Yes, I agree.I have ran into a problem Id Theft = I can't access my accounts ,I called Yahoo! Inc. and could not be located with the first quarter right in front of me.A boyfriend has put me in hell.Steels my mail ,notes everything.I'm stuck no health care ,no way out.I have a severe lung condition been living on prayer.I've been a developer sence 1998 or so,was just sitting rolling everything over,reinvesting so on.Letting it grow to do things to make our world a better place.seven yrs I been with him.give me some advice Plz.Sheral Wooden (Choice)
Keith: Obamacare is flawed in that they continued the employer mandate and left the insurance companies ( with their multi-million dollar executive salaries ) in charge. They did not address malpractice tort reform nor did they change Medicare part D to allow negotiating with drug companies for quantity discounts. We would be better off with a universal coverage, single payer system in which one gets coverage based on citizenship. This would lift the burden off employers. It could be paid for by consumers via a national sales tax. Canada is not perfect and there are some waits. But it was obscene that, in the USA, some 40 million people had no medical coverage. One serious illness or injury could bring ruin and the loss of a home. Insurance companies were happy to take premiums but worked to avoid paying for care. Do we want to go back to that?
VOTER'S UNREALISTIC EXPECTATIONS RESULT IN STALEMATE
Exchanging one flawed health care system based on employers (benefits) for Obama Care (ACA) or perhaps in the end, "single-payer" health care (a.k.a. National Health Care paid by the Federal Government) is a stalemate. Just moving from one flawed system to another is merely trading-off one group of beneficiaries for another with NO NET GAIN overall. Not good policy except the politicians are able to claim they are "doing something" to appease the electorate who always have unrealistic expectations of what government is capable of ( very little).