The Good Times Are Here? Tell That to the Unemployed
I love baseball, but when the commissioner of Major League Baseball (MLB), Bud Selig, makes $19.0 million annually along with half a million dollars in expenses, you’ve got to wonder about the sanity of the value assigned to various jobs. Then there is Vikram S. Pandit, the CEO of Citigroup, Inc. (NYSE/C). The bank was saved by the government and is still in recovery mode, but Pandit made around $14.0 million in 2011. On the Yahoo! web site, his salary is not listed, as this would likely bother many readers.
Then there are the 23.5 million or so Americans looking for work who are unemployed or underemployed, with about 13 million fully unemployed. These are not good job numbers, as many of these people are taking minimal wage jobs just to fight off the creditors and put food on the table, albeit it’s likely they cannot even do that.
The key non-farm payrolls job numbers for February came in better than expected at 227,000 new jobs, but it represented a decline from the upwardly revised 284,000 in January. Many argue that the job numbers reading was the third straight month of 200,000-plus jobs created, but, while the job numbers are encouraging compared to the past coming out of a recession, more and better quality jobs need to be created. Some pundits believe that job numbers of around 500,000 per month are needed for a healthy jobs market.
The official unemployment rate held at 8.3%, but I wonder about the validity of this jobs number as far as an accurate reflection of the nation’s jobs situation. My thought is that the unofficial unemployment rate is most likely much higher than the advertised 8.3%. The reality is that there are likely millions of Americans who have dropped out of the labor force, tired of pounding the pavement to get shut out of jobs or working at minimal wage jobs.
As I have said in past commentary, the millions of jobs that have vanished from the U.S. landscape to faraway places such as China, India, Mexico, and Latin America are gone for good. For instance, the average hourly wage of factory workers in southern China is around $0.80 per hour, $32.00 per week, and $1,664 annually based on a 40-hour week, according to averagesalarysurvey.com. In the U.S., the average annual salary is $47,000.
Similar job numbers comparisons are found in the other poor developing countries. The reality is that wages are too high in this country for jobs to come back home. Companies selling mass market goods need low wages in order to compete along with delivering results to shareholders.
President Obama suggests that he will add taxes to the U.S.multinational companies that employ cheap labor, but I really don’t think it will have a major effect on the job numbers. Adding to the cost of American manufacturers by adding taxes could backfire, as it would increase the price of the goods sold to Americans, which is counter-productive and inflationary.
Unfortunately, jobs will be lost and there must be a strategy to create new and better jobs here.
The retail sector continues to be a tough place to make money, but there are companies doing just that, including the discounters and high-end luxury retailers, which I recently discussed in How to Make Money with Retails Stocks Right Now.