Where’s quantitative easing (QE) for the jobless?
A recent survey of manufacturers in the U.S. found that at least 600,000 jobs are going unfilled due to a lack of technical skills (source: Deloitte). This is happening while there are 12.7 million people looking for jobs in the U.S. jobs market (source: Bureau of Labor Statistics).
Boeing is confronting a large retirement issue, where 28% of its 33,000 machinists are entering the retirement stage of their lives. Young people are lacking the technical skills required to perform this work in the U.S. jobs market.
One transportation firm, as it usually does, visited its local government jobs market center to find the 100 drivers it needs for the upcoming summer moving season. Federal money previously paid the $4,000 for the classes so that those unemployed who were interested in being truck drivers would be able to obtain their commercial licenses without incurring the financial burden. Unfortunately, this program had to be eliminated due to lack of funding, so the company is having a difficult time finding drivers in this jobs market, because many unemployed can’t afford the $4,000 fee for the program.
In Seattle, the seven jobs market centers have enough funds to train roughly 5,400 unemployed, while the city currently has 120,000 unemployed (source: New York Times). In Dallas, the city has 23,500 people who have lost their jobs, but only enough federal money at its jobs market centers to train 43 unemployed people.
In 2000, when the unemployment rate was four percent, the federal government was spending more than $2.1 billion a year for jobs market training. In 2012, with the unemployment rate more than doubled, at 8.2%, jobs market training programs have dropped 57% to $1.2 billion (source: New York Times).
These numbers are just shocking. In his latest budget proposal, President Obama is requesting $280 billion dollars a year more for jobs market training, but even at that, the total federal funding would come to just $1.48 billion, well short of the $2.1 billion spent in 2000 in the jobs market.
The Workforce Development Council found that every dollar spent on training dislocated workers in the 2009 jobs market returned $8.70 to the local economy. This makes sense, because the unemployed person finds work in the jobs market after being trained. That person then is able to go out and spend. This money spent filters back into the economy.
The other aspect of training and getting the unemployed back to work is that of course it means no taxpayer unemployment check and lower health costs. A person who feels better about him/herself because he/she is employed and able to support his/her family reduces costs to our healthcare system.
There has been a lot of money printing that has found its way to the large U.S. banks in the hopes of turning this economy around. According to the Workforce Development Council, instead of taxpayers helping the banks, the investment of one dollar to return $8.70 sounds like the better investment. (Also see: Pathetic Job Numbers Expose Fake Economic Recovery.)
Where the Market Stands; Where it’s Headed:
This morning, we received the news that China’s economy, now the world’s second largest, grew at only 8.1% in the first quarter of 2012—its weakest quarterly growth rate since the second quarter of 2009.
A softening Chinese economy likely means China’s central bank will loosen its monetary policy. If easier lending requirements in China do not keep its economy on “soft landing” flight, then the world will be in for trouble.
While I believe that the stock market rally that started in March of 2009 is getting close to the top, I have been reluctant to throw the towel in just yet. I believe a form of QE3 is still coming and I believe the Fed and government will fight a downturn in the stock market tooth and nail. But, in the end, the natural forces of the bear market will be too much to overcome.
What He Said:
“For the economy, the message from retail stocks is quite clear: Consumer spending, which accounts for roughly 70% of U.S. GDP, is in jeopardy. After having spent like ‘drunkards’ during the real estate boom years, consumer spending is taking the same trend as housing prices, slowing down faster than most analysts and economists had predicted. As news of the recession continues to make headlines in the popular media, the psychological spending mood of consumers will continue to deteriorate, lowering earnings at most high-end retailers and bringing their stock prices down even further.” Michael Lombardi in PROFIT CONFIDENTIAL, January 28, 2008. According to the Dow Jones Retail Index, retail stocks fell 39% from January 2008 through November 2008.