Friday, July 11, 2014
Random ruminations from your resident curmudgeon...
Last week, we heard from the Bureau of labor Statistics that hiring is on an upswing and that unemployment has fallen to 6.1%. That news was delivered and immediately hosannas were sung throughout the land about the strong "recovery" that was underway in our nation.
Yeah... about that.
Wal-Mart CEO Bill Simon says that we may want to take a second look at those numbers. In particular, Simon says that with so many people who have dropped out of the work force that those numbers are, for all intents and purposes, bogus.
According to Simon,
"The unemployment numbers have been particularly hard to read, especially with so many people dropping out of the work force," adding, "that middle class and lower class consumers are still economically challenged, only spending for the holidays and family occasions."
The fact remains that the unemployment numbers that we hear trumpeted in the news are grossly misleading. The 6.1% unemployment rate is the U-3 rate, and it counts those that have lost their jobs and are drawing unemployment and are searching for another job.
The more accurate U-6 unemployment rate counts those that are in the U-3 category AS WELL as those that have stopped looking (discouraged workers) and those that are no longer receiving unemployment benefits (even though they are still unemployed..
Care to guess that number?
Currently, the U-6 rate is closer to 13%.
And there are 92 million Americans of working age that do not have a job.
This situation is made worse by the fact that our economy, in response to overall weakness and the impact of Obamacare, is adding far more part time jobs that full time jobs. The June jobs report was heralded as good news with 276,000 jobs added. Look at the numbers and you find that we lost 592,000 full time jobs while adding 799,000 part time jobs.
Replacing full time jobs with part time jobs results in stagnant wage growth and makes it difficult for many families to make ends meet. Real income has fallen for seven consecutive years, mostly as a result of the loss of good paying full time jobs.
Many of the full time jobs that are now being created in our economy are in lower paying industries: food service; hospitality; and leisure. The industries that are hiring are food service (fast food and food preparation), hospitality (mainly cleaning jobs); and leisure (ticket takers, for example). All of them lower wage jobs.
There is absolutely nothing wrong with any of these jobs. But when this is the bulk of the full time jobs being created, one can see the problem with growing wages in the overall economy and with supporting a family specifically.
So while job creation is being lauded, one would be wise to take a closer look at the numbers. When you do, you can begin to understand why our economy is struggling and families cannot make ends meet.
Wal-Mart is the canary in the coal mine. They should serve as a warning to all of us that this economy is much weaker than the numbers suggest.
And that weakness is going to take a long time to overcome.
And that, my friends, is my view.