In New York last week, 1,500 people lined up for 50 apprenticeship positions as painters and decorators. These are union jobs, and only 500 applications are being accepted. Some hopefuls lined up in front of the District Council 9 office for days in extremely cold weather. If they are able to get the job, they will receive $17.20 an hour during the first year. After one year, they may get hired as a full-time employee. (Source: Eyewitness News, January 10, 2014.) This equates to about $37,000 per year considering one would work 40 hours a week.
Hold on a second: I thought the jobs market was strong in the U.S. economy? How come we are seeing such massive lines for a very small number of jobs?
What I just mentioned above is not an isolated event. I have reported other events like this in these pages before—a large number of people applying for very few jobs. It’s a fact that continues to be ignored: the U.S. jobs market remains bleak and the better-paying jobs are just not there.
In the entire year of 2013, the total non-farm payroll jobs market grew by 2.03 million jobs. But the majority of these positions were created in low-paying jobs.
Retail trade jobs in the U.S. economy increased by 358,400 last year—about 18% of all jobs created in 2013. The well-paying sectors of the jobs market, such as construction and manufacturing, didn’t see as much growth: construction jobs increased by 98,000 and manufacturing jobs in the U.S. economy increased by 63,000 in 2013. Together, the higher-paying jobs made up less than eight percent of all the jobs created in 2013. (Source: Federal Reserve Bank of St. Louis web site, last accessed January 13, 2014.)
When the phenomenon of low-paying work prevails in the jobs market, consumer spending eventually becomes a victim, as personal disposable incomes decline as people pay a higher percentage of their income towards necessities like rent.
Looking at all this, I must ask the question I have been asking for the past four years: has quantitative easing really worked? In 2013, the Federal Reserve printed $85.0 billion a month in new money—a total of $1.02 trillion in money out of nowhere.
Sadly, I believe quantitative easing failed (if you don’t include the effects of making the big banks stronger and pushing the stock market to new highs). We saw a spur of retail jobs in the U.S. jobs market created in 2013, but that’s about it for the average American Joe.
In a speech at the American Economic Association’s 2014 Annual Meeting, the president and CEO of the New York Federal Reserve said, “We don’t understand fully how large-scale asset purchase programs work to ease financial market conditions.” (Source: “Remarks at the American Economic Association 2014 Annual Meeting, Philadelphia, Pennsylvania,” Federal Reserve Bank of New York, January 4, 2014.) Trillions of dollars after, this is the sad truth.
With the jobs market facing hurdles and quantitative easing not working as expected, the picture of the U.S. economy going forward doesn’t look so bright, as evidenced by the worst seven-day start to year that the stock market has encountered since 2005. (See “Stocks Off to the Worst Start for the Year Since 2005.”) 2014 could be the year the stock market bubble bursts.