If This Is What You Call a Recovery in the Jobs Market, Then What Will a Slowdown Look Like?
As I hear more and more talk about jobs being created in the U.S. economy, it’s obvious politicians and the mainstream are not looking at the conditions in the jobs market—they are simply following the government’s “official” manipulated unemployment rate.
The reality is that the jobs market is fundamentally tormented; and hands down, it has become the biggest hurdle for an economic recovery in the U.S. economy.
As I have said many times, the unemployment data provided by the government do not depict what’s really happening with the jobs market. The so-called “recovery” we have seen in the jobs market of the U.S. economy has been nothing but a large number of jobs created in low-wage-paying sectors.
Consider Texas, the second most populous state in the U.S. economy. In 2012, Texas had 282,000 people working at jobs that paid the minimum wage set by the federal government—$7.25 per hour—and there were 170,000 others who earned less than that.
Combining these together, those earning minimum wage or less totaled 452,000 people or 7.5% of all hourly paid workers in the state. But back in 2006, before the U.S. housing bubble burst, there were only 173,000 hourly paid workers in Texas who earned minimum wage or less. (Source: Bureau of Labor Statistics, March 12, 2013.) In six years, there has been a 161% increase in the number of workers who are earning minimum wage or less in Texas.
Sadly, this isn’t just happening in Texas. Other states in the U.S. economy have very similar issues. In North Carolina in 2012, there were 137,000 workers who earned minimum wage or less, a jump of 200% from 2007, when only 46,000 individuals were in this category. (Source: Bureau of Labor Statistics, March 28, 2013.)
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The government can pump out its monthly official unemployment rate, which shows us that less than eight percent of the population is unemployed, but the truth is that these figures do not include people who have given up looking for work and people who have part-time jobs but want full-time jobs, which they can’t find. Add those two numbers to the mix, and the real unemployment rate in the U.S. is between 13% and 14%.
The fact is the U.S. economy will only experience real economic growth when consumers increase their spending. But right now, with the anemic jobs market, consumers simply don’t have the financial resources to increase their spending.
In fact, in May, the Bureau of Labor Statistics reported the average hourly earnings for all employees in the U.S. economy fell 0.2%. (Source: Bureau of Labor Statistics, June 18, 2013.) What this means is that the pockets of consumers have shrunk even further.
The number of people in the U.S. economy with a full-time job and a secondary part-time job has also been on the rise. In May, there were 3.7 million Americans who were working two jobs. This number has increased five percent in the U.S. economy since the beginning of 2013. (Source: Federal Reserve Bank of St. Louis web site, last accessed June 19, 2013.)
U.S. consumer spending makes up almost 70% of the U.S. gross domestic product (GDP). With only minor improvements in the jobs market since the credit crisis hit in 2008, real economic growth in the U.S. economy is far from happening.
What He Said:
“The conversation at parties is no longer about the stock market, it’s about real estate. ‘Our home has gone up this much’ or ‘our country home has doubled in price.’ Looking around today, it would be very difficult to find people who believe that one day it could be out of vogue to own real estate because properties would be such a bad investment. Those investors who believe a dark day will never come for the property market are just fooling themselves.” Michael Lombardi in Profit Confidential, June 6, 2005. Michael started warning about the coming crisis in the U.S. real estate market right at the peak of the boom, now widely believed to be 2005.