Did you know that 89 percent of all minimum wage workers in the United States are not teens? At this point, the average age of a minimum wage worker in this country is 36, and 56 percent of them are women. Millions upon millions of Americans are working as hard as they can (often that means two or three jobs), and yet despite all of their hard work they still find themselves mired in poverty. One of the big reasons for this is that we have created two classes of workers in the United States. “Full-time workers” are entitled to an array of benefits and protections by law that “part-time workers” do not get. And thanks to perverse incentives contained in Obamacare and other ridiculous laws, we have motivated employers to move as many workers from the “full-time” category to the “part-time” category as possible. It may be hard to believe, but right now only 44 percent of all U.S. adults are employed for 30 or more hours each week. But to get any kind of a job at all is a real challenge in many parts of the country today. As you read this article, there are more than 100 million working age Americans that are not employed in any capacity. And according to John Williams of shadowstats.com, if the federal government was actually using honest numbers the unemployment rate would be sitting at 23 percent. That is not an “employment recovery” – that is a national crisis.
The following infographic comes from the Economic Policy Institute. I certainly do not agree with a lot of the things that the Economic Policy Institute stands for, but I think that these numbers do accurately reflect what “part-time America” looks like today…
So what is the solution to this problem?
Most Democrats believe that raising the minimum wage would fix this. But as Zero Hedge has pointed out, it isn’t quite that simple…
Last week, we noted that Democratic lawmakers in the US are pushing for what they call “$12 by ’20” which, as the name implies, is an effort to raise the minimum wage to $12/hour over the course of the next five years. Republicans argue that if Democrats got their wish and the pay floor were increased by nearly 70%, it would do more harm than good for low-income Americans as the number of jobs that would be lost as a result of employers cutting back in the face of dramatically higher labor costs would offset the benefit that accrues to the workers who are lucky enough to keep their jobs.
Yes, raising the minimum wage would make life better for many minimum wage workers in America. But a large number of them would also lose their jobs completely, and a lot of small businesses would deeply suffer financially.
Ideally, what we would love to see happen is for the U.S. economy to be producing so many good jobs that the only people that are looking for entry-level part-time jobs would be teens, people just starting out in the workforce, etc. Back when I was a teen, I remember walking into a McDonald’s and getting hired on the spot because they were in dire need of workers. Sadly, those days are long, long gone.
Over the past several decades, millions of good paying American jobs have been shipped overseas, and millions more have been lost to advancing technology. And as I wrote about the other day, Barack Obama is deeply betraying American workers by working on a global economic treaty that would destroy millions more good paying jobs.
Thanks to the foolishness of our politicians, there is now intense competition even for minimum wage jobs at this point.
We keep hearing about an “employment recovery”, but it is a giant lie. Posted below is a chart of the civilian employment to population ratio. As you can see, the percentage of the working age population that is actually employed is much, much lower than it used to be…
In recent months, we have seen the employment-population ratio move slightly higher. But can this be called “an employment recovery”? Of course not. We are still way, way below the level that we were at just prior to the last recession, and now the next recession is just about upon us.
Meanwhile, the quality of our jobs continues to decline as more Americans are being pushed into “part-time work” with each passing year.
Since February of 2008, the size of the U.S. population has grown by 16.8 million people. But during that same time frame, the number of full-time jobs in this country has actually decreased.
And at this point, the majority of American workers simply do not make enough money to support a middle class family. The following income numbers come directly from the Social Security Administration…
-39 percent of American workers make less than $20,000 a year.
-52 percent of American workers make less than $30,000 a year.
-63 percent of American workers make less than $40,000 a year.
-72 percent of American workers make less than $50,000 a year.
Are you starting to see why I am so fired up about all of this?
We have developed a business culture in this country which does not care about workers. In business schools all over America, future executives are taught that a corporation only has one goal – to maximize wealth for the shareholders. Taking care of those that are part of your team is treated as an afterthought at best.
As corporations have gotten bigger, they have shown less and less concern for those that work for them. These days, employees are generally regarded as “expensive liabilities” that are to be discarded the moment that their usefulness has come to an end. And news of layoffs is often rewarded by Wall Street by a surge in the stock prices of the companies making those layoffs.
In the old days, more businesses in America were family-owned, and employees were often regarded as almost “part of the family”. Unfortunately, those days have disappeared forever.
Now, employees are treated like scum by many big companies, and if they don’t like how they are being treated they are told that they can leave. For example, just consider what was going on at a security company down in Florida…
Jose Molero worked as a site inspector for the company, which provides security for neighborhoods and companies across the country, for more than a year.
Molero says when he went to the Kensington Golf and Country Club guardhouse, he found wooden paddles on a desk, some with staff names on them and one reading “for staff discipline.”
He says there was also what is called a “Wall of Shame,” where the supervisor points out and posts reports that contain grammatical errors.
When Molero complained about these things to his district manager, he was told that if anyone was offended “maybe they shouldn’t work here”…
Molero contacted his operations manager, who told him to speak with the district manager. He says the district manager sent him an email response that said, “if that hurts their feelings then maybe they shouldn’t work here.”
Do you have a similar horror story to share?
Most of us do.
The U.S. economy is absolutely dominated by cold, heartless corporations that have no interest in listening to the little guy. If they could find a way to do it, many of them would operate with no low-level employees at all. And as technology continues to advance, they will replace as many of us as they can with robots, drones, machines and computers.
I’ll be honest with you – the future for workers in America looks really bleak. The competition for any jobs that can’t be shipped overseas or replaced by technology is going to become even more heated. This means that the middle class is going to get even smaller, the number of Americans dependent on the government is going to continue to explode, and the disparity between the wealthy and the poor is going to become even greater.
So what is the solution to this giant mess? Please feel free to tell us what you think by posting a comment below…
Could you imagine being a single parent and trying to survive in America today on $10.50 an hour? For a moment, I want you to imagine that you are living in a moldy apartment that is so badly maintained that rain seeps in whenever it rains. You are employed, but you are completely dependent on government programs such as food stamps and Medicaid in order to make ends meet. Sometimes you would really like to take your small child somewhere fun, like a movie theater, but you can’t really afford the gas money. You are working as hard as you can, but you never seem to get anywhere, and you feel trapped because nobody seems to want to hire you for a better job. What I have just described for you is real life for a 22-year-old single mother from Chicago named Adriana Alvarez, but there are tens of millions of other Americans that have similar stories. If every day seems like it is a soul-crushing struggle for you, I want you to know that you are not alone. The long-term economic collapse that I chronicle on my website is not just about facts and figures. It is about real people that are quietly leading lives of silent desperation, and by now it has becoming exceedingly apparent that our politicians, the mainstream media and the gigantic corporations that dominate our economy do not really care much about the rest of us at all.
Life fundamentally changes once you become a parent. Instead of living just for yourself, all of a sudden you have a precious little child that is completely and totally dependent on you. And it is absolutely heartbreaking for any parent to look into the eyes of a little child and try to explain why there is not enough food or why they can’t afford a better place to live.
I’m a single mom with a three-year-old son named Manny. To support him, I work full-time as a cashier at a McDonald’s in Chicago.
I’ve worked at McDonald’s for five years, but still make only $10.50 an hour. The only way my son and I can make it is with food stamps, Medicaid, and a child care subsidy. Most of my coworkers are in the same boat, no matter how long they’ve held their jobs.
With child care, transportation to work, food, rent, and our other basic expenses, there’s no money left over for living. Every time I think about taking Manny somewhere fun, like to a movie, I have to think about whether we can really afford the gas.
When you only make $10.50 an hour and you have a child to take care of, you are obviously very limited as far as where you can live, and where Adriana lives sounds extremely depressing…
We live in a basement apartment, because it’s all I can afford. When it rains, water seeps into the apartment. This wetness brings mold, and I can’t get rid of the smell. We can’t even leave anything on the floor, which is tough with a three-year-old. Toys or anything else on the floor may get ruined when the water comes in.
So what is the solution for Adriana?
Well, she is taking part in nationwide strikes to try to force McDonald’s to pay workers like her a livable wage.
Unfortunately, that simply is not going to happen. McDonald’s restaurants are already experiencing a sales downturn, and if they raise wages substantially they will get crushed by the competition.
And of course those jobs were never meant for people that are trying to raise families. When I was growing up, it was teenagers and senior citizens that worked at McDonald’s. I know, because I was one of those teenagers.
But now millions upon millions of Americans in their prime working years are doing these kinds of jobs. As good jobs have disappeared from our economy, the competition for the jobs that remain has become extremely intense. It is really easy to tell Adriana that she should “get a better job”, but that can be extremely difficult in this economy, especially if you don’t have much education.
I know a lot of sharp, talented, responsible people that have been unemployed for a very long time or that are working at places like McDonald’s because nobody else will hire them. I am amazed that there is not a place for their talents and abilities in the “greatest economy on Earth”. But you know what? Things are about to get a whole lot worse out there.
A few months ago, I wrote that the crashing price of oil was going to cause massive job losses in the energy industry, and now it is happening.
According to Yahoo, more than 100,000 layoffs have already been announced, and this could be just the tip of the iceberg…
Since crude prices began tumbling last year, energy companies have announced plans to lay off more than 100,000 workers around the world. At least 91,000 layoffs have already materialized, with the majority coming in oil-field-services and drilling companies, according to research by Graves & Co., a Houston consulting firm.
And remember, these are not $10.50 an hour jobs. Many of these jobs pay well into the six figures annually. These are exactly the kinds of jobs that the U.S. economy simply cannot afford to lose.
Meanwhile, Barack Obama is colluding with Congress to push through the next great job killing trade agreement. The following was in the Wall Street Journal on Thursday…
Lawmakers introduced fast-track trade legislation into the House and Senate Thursday that could pave the way for President Barack Obama to conclude a major agreement with 11 nations around the Pacific.
What our economy desperately needs is more jobs, not less jobs.
And traditionally, small businesses have been the primary engine of job growth in this country.
Unfortunately, our politicians have been absolutely killing small businesses for decades. Just look at the chart below. It comes from the U.S. Census Bureau, and it is extremely alarming. Back in 1980, nearly half of all firms in America were considered to be “young”, and those young firms accounted for almost half of all job creation. Since that time, there has been a slow, steady, depressing decline…
Jim Clifton, the Chairman and CEO of Gallup, says that the percentage of Americans that are employed full-time has been hovering near record lows since the end of the last recession. But most Americans don’t realize this because the official unemployment numbers are extremely misleading. In fact, Clifton says that the official 5.6 percent unemployment rate is a “big lie”. Gallup regularly tracks the percentage of U.S. adults that are employed for 30 or more hours per week, and it is currently at 44.2 percent. It has been hovering between 42 percent and 45 percent since the end of 2009. This is extremely low. As I discussed the other day, there are 8.69 million Americans that are considered to be “officially unemployed” at this point. But there are another 92.90 million Americans that are considered to be “not in the labor force”. Millions upon millions of those Americans would work if they could. Overall, there are 101 million U.S. adults that do not have a job right now. But you won’t hear that number being discussed by the mainstream media, because it would make Barack Obama look really bad.
Most Americans just assume that the economic numbers that we are being given accurately reflect reality. That is why it is so refreshing to have men like Jim Clifton step forward and tell the truth. His recent article entitled “The Big Lie: 5.6% Unemployment” is making headlines all over America. The following is an extended excerpt from that article…
There’s another reason why the official rate is misleading. Say you’re an out-of-work engineer or healthcare worker or construction worker or retail manager: If you perform a minimum of one hour of work in a week and are paid at least $20 — maybe someone pays you to mow their lawn — you’re not officially counted as unemployed in the much-reported 5.6%. Few Americans know this.
Yet another figure of importance that doesn’t get much press: those working part time but wanting full-time work. If you have a degree in chemistry or math and are working 10 hours part time because it is all you can find — in other words, you are severely underemployed — the government doesn’t count you in the 5.6%. Few Americans know this.
There’s no other way to say this. The official unemployment rate, which cruelly overlooks the suffering of the long-term and often permanently unemployed as well as the depressingly underemployed, amounts to a Big Lie.
And it’s a lie that has consequences, because the great American dream is to have a good job, and in recent years, America has failed to deliver that dream more than it has at any time in recent memory. A good job is an individual’s primary identity, their very self-worth, their dignity — it establishes the relationship they have with their friends, community and country. When we fail to deliver a good job that fits a citizen’s talents, training and experience, we are failing the great American dream.
Gallup defines a good job as 30+ hours per week for an organization that provides a regular paycheck. Right now, the U.S. is delivering at a staggeringly low rate of 44%, which is the number of full-time jobs as a percent of the adult population, 18 years and older.
And Gallup is being extremely generous.
I certainly would not define a 30 hour a week job at minimum wage as a “good job”, but Gallup does.
So the truth is that the percentage of U.S. adults that do have “good jobs” is actually far lower than 44 percent.
In the video that I have posted below, there is much more from Clifton about our current employment crisis…
Pretty strong stuff.
But Clifton also understands that there is danger in speaking out like this.
For example, just check out what he told CNBC during one recent interview…
“I think that the number that comes out of BLS [Bureau of Labor Statistics] and the Department of Labor is very, very accurate. I need to make that very, very clear so that I don’t suddenly disappear. I need to make it home tonight.”
So why are there so few good jobs for Americans?
Well, for one thing, our control freak politicians have absolutely murdered job creation in the United States.
Traditionally, small businesses have been the primary engine of job growth for the U.S. economy. But for each of the past six years, the number of new businesses being created has been lower than the number of businesses that have died.
Prior to 2008, we had never seen this happen before in all of U.S. history.
A confluence of factors are coming together to create a perfect storm that is going to be extremely bitter for American workers.
Spending our wealth is not a path to prosperity. We have got to create wealth in order to be a prosperous nation.
But instead, we continue to buy far, far more from the rest of the world than they buy from us. We just learned that the trade deficit increased to 46.6 billion dollars in December, and the total trade deficit for the year was more than half a trillion dollars.
This is complete and utter insanity, but at this point the trade deficit is not even a political issue for either major political party anymore.
And the really bad news is that this is about as good as things are going to get for the U.S. economy. The next major economic downturn is right around the corner, and our employment crisis is going to get much, much worse once that strikes.
Already, layoffs in January were 17.6 percent higher than they were in January a year ago and businesses all over the country are shutting down following a very disappointing holiday season.
In addition, the Baltic Dry Index has dropped to stunningly low levels. In fact, it is already lower than it was at any point during the last recession. The following is an excerpt from a recent article by Mac Slavo…
The Baltic Dry Index (BDI) is used by economists and stock traders alike as a leading economic indicator because it predicts future economic activity. The index tracks in US dollars and measures global supply and demand for commodity shipments among bulk carriers including raw materials like lumber, coal, metallic ores, and grains. What makes this particular measurement so distinct from others, according to economic Howard Simmons, is that the BDI “is totally devoid of speculative content” because “people don’t book freighters unless they have cargo to move.”
On Thursday, the Baltic Dry Index was sitting at 564, That is not too far above the record low level of 554 that was established in July 1986.
So don’t be fooled by all the happy talk from the mainstream media and from politicians like Barack Obama.
They are lying to you, and their lies will soon be evident for all the world to see.
Barack Obama and the Federal Reserve are lying to you. The “economic recovery” that we all keep hearing about is mostly just a mirage. The percentage of Americans that are employed has barely budged since the depths of the last recession, the labor force participation rate is at a 36 year low, the overall rate of homeownership is the lowest that it has been in nearly 20 years and approximately 49 percent of all Americans are financially dependent on the government at this point. In a recent article, I shared 12 charts that clearly demonstrate the permanent damage that has been done to our economy over the last decade. The response to that article was very strong. Many people were quite upset to learn that they were not being told the truth by our politicians and by the mainstream media. Sadly, the vast majority of Americans still have absolutely no idea what is being done to our economy. For those out there that still believe that we are doing “just fine”, here are 19 more facts about the messed up state of the U.S. economy…
#1 After accounting for inflation, median household income in the United States is 8 percent lower than it was when the last recession started in 2007.
#2 The number of part-time workers in America has increased by 54 percent since the last recession began in December 2007. Meanwhile, the number of full-time jobs has dropped by more than a million over that same time period.
#3 More than 7 million Americans that are currently working part-time jobs would actually like to have full-time jobs.
#4 The jobs gained during this “recovery” pay an average of 23 percent less than the jobs that were lost during the last recession.
#5 The number of unemployed workers that have completely given up looking for work is twice as high now as it was when the last recession began in December 2007.
#6 When the last recession began, about 17 percent of all unemployed workers had been out of work for six months or longer. Today, that number sits at just above 34 percent.
#7 Due to a lack of decent jobs, half of all college graduates are still relying on their parents financially when they are two years out of school.
#8 According to a new method of calculating poverty devised by the U.S. Census Bureau, the state of California currently has a poverty rate of 23.4 percent.
#9 According to the New York Times, the “typical American household” is now worth 36 percent less than it was worth a decade ago.
#10 In 2007, the average household in the top 5 percent had 16.5 times as much wealth as the average household overall. But now the average household in the top 5 percent has 24 times as much wealth as the average household overall.
#11 In an absolutely stunning development, the rate of small business ownership in the United States has plunged to an all-time low.
#12 Subprime loans now make up 31 percent of all auto loans in America. Didn’t that end up really badly when the housing industry tried the same thing?
#13 The average cost of producing a barrel of shale oil in the United States is approximately 85 dollars. Now that the price of oil is starting to slip under that number, the “shale boom” in America could turn into a bust very rapidly.
#14 On a purchasing power basis, China now actually has a larger economy than the United States does.
#15 It is hard to believe, but there are 49 million people that are dealing with food insecurity in America today.
#16 There are six banks in the United States that pretty much everyone agrees fit into the “too big to fail” category. Five of them have more than 40 trillion dollars of exposure to derivatives.
#17 The 113 top earning employees at the Federal Reserve headquarters in Washington D.C. make an average of $246,506 a year. It turns out that ruining the U.S. economy is a very lucrative profession.
#18 We are told that the federal deficit is under control, but the truth is that the U.S. national debt increased by more than a trillion dollars during fiscal year 2014.
#19 An astounding 40 million dollars has been spent just on vacations for Barack Obama and his family. Perhaps he figures that if we are going down as a nation anyway, he might as well enjoy the ride.
If our economy truly was “recovering”, there would be lots of good paying middle class jobs available.
But that is not the case at all.
I know so many people in their prime working years that spend day after day searching for a job. Most of them never seem to get anywhere. It isn’t because they don’t have anything to offer. It is just that the labor market is absolutely saturated with qualified job seekers.
For example, USA Today recently shared the story of 42-year-old Alex Gomez…
“I’ve had to seriously downgrade my living situation,” said Alex Gomez, a 42-year-old with a master’s degree in entrepreneurship. Gomez lost his last full-time job in 2009 and has been looking for work since a short-term contract position ended in 2012.
Gomez’s home was foreclosed on, so the Tampa resident lives with three roommates in a college neighborhood. He drained his 401(k) trying to save his house, and he has around $150,000 in student loans. His mother is tapping her 401(k) to pay his rent. Gomez subsists on that and about $200 a month in food stamps.
“I have been applying and looking for pretty much anything at this stage,” he said. Although he’s looking for work in engineering or data management, “I applied to a supermarket as a deli clerk because I used to be a deli clerk as a teenager,” he said. He was told he was overqualified and turned down.
Does Alex Gomez have gifts and abilities to share with our society?
Of course he does.
So why can’t he find a job?
It is because we have a broken economy.
We are in the midst of a long-term economic decline and the system simply does not work properly anymore.
And thanks to decades of very foolish decisions, this is only the start of our problems.
The U.S. economy has had six full years to bounce back since the financial collapse of 2008, and it simply has not happened. Median household income has declined substantially since then, total household wealth for middle class families is way down, the percentage of the population that is employed is still about where it was at the end of the last recession, and the number of Americans that are dependent on the government has absolutely exploded. Even those that claim that the economy is “recovering” admit that we are not even close to where we used to be economically. Many hope that someday we will eventually get back to that level, but the truth is that this is about as good as things are ever going to get for the middle class. And we should enjoy this period of relative stability while we still can, because when the next great financial crisis strikes things are going to fall apart very rapidly.
The U.S. Census Bureau has just released some brand new numbers, and they are quite sobering. For example, after accounting for inflation median household income in the United States has declined a total of 8 percent from where it was back in 2007.
That means that middle class families have significantly less purchasing power than they did just prior to the last major financial crisis.
And one research firm is projecting that it is going to take until 2019 for median household income to return to the level that we witnessed in 2007…
For everybody wondering why the economic recovery feels like a recession, here’s the answer: We’re still at least five years away from regaining everything lost during the 2007-2009 downturn.
Forecasting firm IHS Global Insight predicts that real median household income — perhaps the best proxy for middle-class living standards — won’t reach the prior peak from 2007 until 2019. Since the numbers are adjusted for inflation, that means the typical family will wait 12 years until their purchasing power is as strong as it was before the recession. That would be the longest period of stagnation, by far, since the Great Depression of the 1930s.
Of course that projection assumes that the economy will continue to “recover”, which is a very questionable assumption at best.
Meanwhile, total household wealth has been declining for middle class families as well.
According to the New York Times, the “typical American household” is now worth 36 percent less than it was worth a decade ago.
That is a pretty substantial drop. But you never hear our politicians (especially the Democrats) bring up numbers like that because they want us to feel good about things.
So why is all of this happening?
The biggest reason why the middle class is struggling so much is the lack of good jobs.
As the chart posted below demonstrates, the percentage of the working age population that is actually employed is still way, way below where it was prior to the last recession…
The “employment recovery” (the tiny little bump at the end of the chart) has been so miniscule that it is hardly even worth mentioning.
At the moment, we still have 1.4 million fewer full-time jobs than we did in 2008 even though more than 100,000 people are added to the U.S. population each month.
And a lot of the workers that have lost jobs since the start of the last recession have never been able to find a new one.
According to a brand new survey conducted by Rutgers University, more than 20 percent of all workers that have been laid off in the past five years still have not found a new job.
Meanwhile, the control freak bureaucrats that run this country continue to kill off small businesses.
In recent years we have seen large numbers of small businesses fail, and at this point the rate of small business ownership in the United States is at an all-time low.
As a result of everything that you have just read, the middle class is shrinking and dependence on the government is soaring.
The Russell 2000 has been diverging from the broader market over the last several weeks, and now technicians point out it has flashed a bearish signal. For the first time in more than two years, the small-cap index has hit a so-called death cross.
A death cross occurs when a nearer-term 50-day moving average falls below a longer-term, 200-day moving average. Technicians argue that a death cross can be a bearish sign.
None of us knows what the market is going to do tomorrow, but a lot of the “smart money” is getting out of the market right now while the getting is good.
So where is the “smart money” putting their assets?
Should we be concerned that the percentage of Americans that are either working or looking for work is the lowest that it has been in 36 years? In August, an all-time record high 92,269,000 Americans 16 years of age and older did not “participate in the labor force”. And when you throw in the people that are considered to be “in the labor force” but are not currently employed, that pushes the total of working age Americans that do not have jobs to well over 100 million. Yes, it may be hard to believe, but there are more than 100 million working age Americans that are not employed right now. Needless to say, this is not a sign of a healthy economy, and it is a huge reason why dependence on the government has soared to absolutely unprecedented levels. When people can’t take care of themselves, they need someone else to take care of them. If the percentage of people in the labor force continues to decline like it has been, what is that going to mean for the future of our society?
The chart below shows the changes in the civilian labor force participation rate since 1980. As you can see, the rate steadily rose between 1980 and 2000, but since then it has generally been declining. In particular, this decline has greatly accelerated since the beginning of the last recession…
We have never seen an extended precipitous decline of this nature before. But instead of admitting that we have a very serious problem on our hands, many mainstream economists are dismissing this decline as “structural in nature”. For example, check out the following excerpt from a recent Reuters article…
A paper published on Thursday by the Brookings Institution, a Washington-based think tank, suggested the decline was primarily due to an aging population and other structural factors, and concluded the labor force would continue to shrink.
But there is a major flaw in this analysis. It turns out that older Americans are the only group for which employment numbers have actually been going up. I really like how Zero Hedge made this point the other day…
Well that’s very odd, because it was only two months ago that the Census wrote the following: “Many older workers managed to stay employed during the recession; in fact, the population in age groups 65 and over were the only ones not to see a decline in the employment share from 2005 to 2010 (Figure 3-25)… Remaining employed and delaying retirement was one way of lessening the impact of the stock market decline and subsequent loss in retirement savings.”
Yes, Baby Boomers are hitting retirement age.
But that does not explain why the labor force participation rate numbers for younger groups have been going down.
Each month, the U.S. economy has to add somewhere between 100,000 and 150,000 jobs just to keep up with population growth. Since job creation has been tepid at best in recent years, the only way that the government has been able to get the official unemployment rate to steadily “go down” has been to remove millions upon millions of Americans from the labor force.
According to the official government numbers, since 2007 768,000 jobs have been added to the economy, but a whopping 13 million Americans have been added to the numbers of those “not in the labor force”.
As a result, the official unemployment rate has magically been “declining”.
But the truth is that our employment crisis has not been solved at all.
And it isn’t just the number of jobs that we need to be concerned about. We are also dealing with a multi-year decline in the quality of our jobs. In fact, the Wall Street Journal just reported that 34 percent of all U.S. workers are “freelancers” now…
More evidence that this isn’t your parents’ labor market: Roughly one in three U.S. workers is now a freelancer.
Fifty-three million Americans, or 34% of the nation’s workforce, qualify as freelancers, according to a new report from the Freelancers Union, a nonprofit organization, and Elance-oDesk Inc., a company that provides platforms for freelancers to find work. These individuals include independent contractors, temps, and moonlighters, among others.
In other words, about a third of all workers in the country are “temps” at this point.
I don’t know about you, but to me that is an extremely alarming statistic.
If the economy really was recovering, this would not be happening.
And as millions upon millions of Americans are being forced out of the official labor force, an increasing number of people are turning to the underground economy.
But our authorities never seem to want to admit what our real problems are.
Instead, they love to come up with alternative theories for our economic struggles.
One of the latest theories being put forward by the Federal Reserve is that the economy is not moving along like it should because ordinary Americans are “hoarding money”…
One of the great mysteries of the post-financial crisis world is why the U.S. has lacked inflation despite all the money being pumped into the economy.
The St. Louis Federal Reserve thinks it has the answer: A paper the central bank branch published this week blames the low level of money movement in large part on consumers and their “willingness to hoard money.”
This seems completely absurd to me.
From what I can see, most families are just doing their best to survive from month to month these days.
I certainly don’t see a lot of people “hoarding money”.
What about you?
What do you think?
Please feel free to share your thoughts by posting a comment below…
Has the next major economic downturn already started? The way that you would answer that question would probably depend on where you live. If you live in New York City, or the suburbs of Washington D.C., or you work for one of the big tech firms in the San Francisco area, you would probably respond to such a question by saying of course not. In those areas, the economy is doing great and prices for high end homes are still booming. But in most of the rest of the nation, evidence continues to mount that the next recession has already begun for the poor and the middle class. As you will read about below, major retailers had an absolutely dreadful start to 2014 and home sales are declining just as they did back in 2007 before the last financial crisis. Meanwhile, the U.S. economy continues to lose more good jobs and 20 percent of all U.S. families do not have a single member that is employed at this point. 2014 is turning out to be eerily similar to 2007 in so many ways, but most people are not paying attention.
During the first quarter of 2014, earnings by major U.S. retailers missed estimates by the biggest margin in 13 years. The “retail apocalypse” continues to escalate, and the biggest reason for this is the fact that middle class consumers in the U.S. are tapped out. And this is not just happening to a few retailers – this is something that is happening across the board. The following is a summary of how major U.S. retailers performed in the first quarter of 2014 that was put together by Jim Quinn…
Wal-Mart Profit Plunges By $220 Million as US Store Traffic Declines by 1.4%
Target Profit Plunges by $80 Million, 16% Lower Than 2013, as Store Traffic Declines by 2.3%
Sears Loses $358 Million in First Quarter as Comparable Store Sales at Sears Plunge by 7.8% and Sales at Kmart Plunge by 5.1%
JC Penney Thrilled With Loss of Only $358 Million For the Quarter
Kohl’s Operating Income Plunges by 17% as Comparable Sales Decline by 3.4%
Costco Profit Declines by $84 Million as Comp Store Sales Only Increase by 2%
Staples Profit Plunges by 44% as Sales Collapse and Closing Hundreds of Stores
Gap Income Drops 22% as Same Store Sales Fall
American Eagle Profits Tumble 86%, Will Close 150 Stores
Aeropostale Losses $77 Million as Sales Collapse by 12%
Best Buy Sales Decline by $300 Million as Margins Decline and Comparable Store Sales Decline by 1.3%
Macy’s Profit Flat as Comparable Store Sales decline by 1.4%
Dollar General Profit Plummets by 40% as Comp Store Sales Decline by 3.8%
Urban Outfitters Earnings Collapse by 20% as Sales Stagnate
McDonalds Earnings Fall by $66 Million as US Comp Sales Fall by 1.7%
Darden Profit Collapses by 30% as Same Restaurant Sales Plunge by 5.6% and Company Selling Red Lobster
TJX Misses Earnings Expectations as Sales & Earnings Flat
Dick’s Misses Earnings Expectations as Golf Store Sales Plummet
Home Depot Misses Earnings Expectations as Customer Traffic Only Rises by 2.2%
Lowes Misses Earnings Expectations as Customer Traffic was Flat
That is quite a startling list.
But plummeting retail sales are not the only sign that the U.S. middle class is really struggling right now. Home sales have also been extremely disappointing for quite a few months. This is how Wolf Richter described what we have been witnessing…
This is precisely what shouldn’t have happened but was destined to happen: Sales of existing homes have gotten clobbered since last fall. At first, the Fiscal Cliff and the threat of a US government default – remember those zany times? – were blamed, then polar vortices were blamed even while home sales in California, where the weather had been gorgeous all winter, plunged more than elsewhere.
Then it spread to new-home sales: in April, they dropped 4.7% from a year ago, after March’s year-over-year decline of 4.9%, and February’s 2.8%. Not a good sign: the April hit was worse than February’s, when it was the weather’s fault. Yet April should be the busiest month of the year (excellent brief video by Lee Adler on this debacle).
We have already seen that in some markets, in California for example, sales have collapsed at the lower two-thirds of the price range, with the upper third thriving. People who earn median incomes are increasingly priced out of the market, and many potential first-time buyers have little chance of getting in. In San Diego, for example, sales of homes below $200,000 plunged 46% while the upper end is doing just fine.
As Richter noted, sales of upper end homes are still doing fine in many areas.
But how long will that be able to continue if things continue to get even worse for the poor and the middle class? Traditionally, the U.S. economy has greatly depended upon consumer spending by the middle class. If that continues to dry up, how long can we avoid falling into a recession? For even more numbers that seem to indicate economic trouble for the middle class, please see my previous article entitled “27 Huge Red Flags For The U.S. Economy“.
We’re turning down anew. The first quarter should revise into negative territory… and I believe the second quarter will report negative as well.
That will all happen by July 30 when you have the annual revisions to the GDP. In reality the economy is much weaker than that. Economic growth is overstated with the GDP because they understate inflation, which is used in deflating the number…
What we’re seeing now is just… we’ve been barely stagnant and bottomed out… but we’re turning down again.
The reason for this is that the consumer is strapped… doesn’t have the liquidity to fuel the growth in consumption.
Income… the median household income, net of inflation, is as low as it was in 1967. The average guy is not staying ahead of inflation…
This has been a problem now for decades… You were able to buy consumption from the future by borrowing more money, expanding your debt. Greenspan saw the problem was income, so he encouraged debt expansion.
That all blew apart in 2007/2008… the income problems have continued, but now you don’t have the ability to borrow money the way you used to. Without that and the income problems remaining, there’s no way that consumption can grow faster than inflation if income isn’t.
As a result – personal consumption is more than two thirds of the economy – there’s no way you can have positive sustainable growth in the U.S. economy without the consumer being healthy.
The key to the health of the middle class is having plenty of good jobs.
But the U.S. economy continues to lose more good paying jobs.
For example, Hewlett-Packard has just announced that it plans to eliminate 16,000 more jobs in addition to the 34,000 job cuts that have already been announced.
Today, there are 27 million more working age Americans that do not have a job than there were in 2000, and the quality of our jobs continues to decline.
This is absolutely destroying the middle class. Unless the employment situation in this country starts to turn around, there does not seem to be much hope that the middle class will recover any time soon.
Meanwhile, there are emerging signs of trouble for the wealthy as well.
For instance, just like we witnessed back in 2007, things are starting to look a bit shaky at the “too big to fail” banks. The following is an excerpt from a recent CNBC report…
Citigroup has joined the ranks of those with trading troubles, as a high-ranking official told the Deutsche Bank 2014 Global Financial Services Investor Conference Tuesday that adjusted trading revenue probably will decline 20 percent to 25 percent in the second quarter on an annualized basis.
In recent weeks, officials at JPMorgan Chase and Barclays also both reported likely drops in trading revenue. JPMorgan said it expected a decline of 20 percent of the quarter, while Barclays anticipates a 41 percent drop, prompting it to announce mass layoffs that will pare 19,000 jobs by the end of 2016.
Remember, very few people expected a recession the last time around either. In fact, Federal Reserve Chairman Ben Bernanke repeatedly promised us that we would not have a recession and then we went on to experience the worst economic downturn since the Great Depression.
It will be the same this time as well. Just like in 2007, we will continue to get an endless supply of “hopetimism” from our politicians and the mainstream media, and they will continue to fill our heads with visions of rainbows, unicorns and economic prosperity for as far as the eyes can see.
But then the next recession will strike and most Americans will be completely blindsided by it.