A Continuing discussion of the Economy.

The other day I commented about the economy and I wanted to continue that discussion. For those that missed the article (July 18th) here are some figures concerning unemployment.

"A word about job creation for those that don't appreciate the numbers. It is generally acknowledged that it takes between 200,000 and 250,000 new jobs EVERY MONTH to offset immigration and graduates entering the work force. A quarter of a million new jobs every month JUST TO BREAK EVEN! So when the news reports that last month the economy grew by 115,000 jobs, we are falling further and further behind. It takes 225,000 new jobs to break even and even more to recover those who lost jobs and graduates of the 2008, 2009, 2010, 2011, 2012 classes. (Yes, I could have simply said 2008 - 2012 but I wanted to list them for the effect of how long a time frame we have to recover.) I can only guess what the new jobs figure would have to be to recover those lost people within the next two years while more new graduates continue to enter the economy but it is a safe bet that we won't hit anything close to the required numbers for a long time. "

One thing I failed to mention in that discussion is that the number of graduates is about to skyrocket as many college graduates are "hidden out" in graduate school working on Master's and PhD's hoping the economy will somehow be miraculously better when hey get out in two or three years. But many of those are not having to get out of school and enter the job market anyway and the economy simply cannot take the impact at the current time with the current conditions. 

Now some further analysis of the economy. The question is, how are people surviving? The answer, They Aren't! 

Retirement Savings raided by 35% of laid off workers. 
http://www.usatoday.com/money/perfi/retirement/story/2012-07-18/401k-retirement-loan-withdrawals/56280996/1

"Making matters worse, many who have lost their jobs have defaulted on 401(k) loans, causing taxes and penalties to further deplete their retirement savings. .... Displaced workers in their 40s and 50s have median household retirement savings of only $2,300, the Transamerica study says. .... 
For example, if a displaced worker defaults on a loan of $6,542, it would drain $9,934 from his retirement savings, because of taxes and penalties, Singer's report says." 

Their advice to go back to school or move to another less expensive city is meant well but they obviously are not in the same boat and those the article discusses. For a worker 50 - 60 years old, four years of school puts them at 55 - 65 and many firms are not hiring people that age. Yes there are laws against age discrimination but that hasn't helped anybody yet, there always seems to be "another official reason." 

Even if they are fired, they most likely will be in a low paying job as all to many have discovered. To many skilled experienced workers are relegated to entry level jobs even though their life experiences more than qualify them for better position. 

Also, consider the issue that no matter what job they get, after raiding their savings for whatever time to survive, they will most likely not be able to recover that lost savings and as a result will be force to continue working long after. Our economic business model is built upon older workers retiring and spending their savings enjoying life and as they leave those jobs, room is made for people to be promoted and the younger people to enter the work force. Now we are faced with the harsh reality of older workers continuing to work well pas their 65th birthday in lower paying jobs making it difficult if not impossible to "retire". As they stay in those lower paying jobs longer, they effectively block younger people from moving into the workforce. 

One issue I see the author fails to mention is how many people who are not laid off or "unemployed" but are in the great mass of people who are "significantly under employed" are also raiding their savings to make it another month. Too many people are "off the radar" in unemployment figures but are existing in low paying part time jobs that do not pay sufficient wages to live on. Don't say, "They just have to live within their means." Too many jobs now are Part TIme with wither no health or other benefits or benefits that are entirely inadequate. But for now lets focus on making that living. Typical job at a major retail store chain - Store Manager and a hand full of Supervisors are Full time, everybody else is Part-Time paid approximately $8 and hour and allowed to work only 24 hours a week.   $8/HR for 24 hours a week!!! Let's see that works out to $192 a week BEFORE Taxes! Of course taxes will be low as they make so little. That comes to $9984 a year! Try living on that without dipping into savings! Try living like that for long dipping into savings! Unless you have accumulated a very nice savings account, most people are looking at a bleak future. 

The solution? For now, if you are in a management level position, take a long hard look at what you are paying people and remember one important thing, the workers you pay are also you customers. If your workers can't qualify for a store credit card at your store because of what you pay them, what does that say about what you pay them. Could survive on what you pay your workers? Probably not. 

We need to start paying people a decent wage and quit exporting our jobs overseas. Whenever we export a job, we import that countries' poverty. 

A Comment on the economy and unemployment. (No presidential remarks )

One of the most influential people on the US economy has spoken. Not the president, but the Chairman of the Federal Reserve System, Ben Bernanke. Like his predecessor, Alan Greenspan, Bernanke has great influence with well chosen words. He understands the power, limitations, and authority of each of the government branches as well as the federal Reserve System.

You won't find comments on either presidential candidate here, incumbent or the challenger, but rather a discussion on the economy and Congress. Many people blame the president for just about everything from the price of gas to the traffic jam they are stuck in while the reality is that the president simply does not have that much power. The people that make the changes that affect us are found in other groups, primarily Congress. The recent health care legislation was not passed by the president but Congress. It was the inability of Congress to act in a civilized manner and cooperate in a non-partisan manner that cost this country its valued AAA credit rating as Congress played party politics instead of resolving the major issues to adjust the debt ceiling and have a viable budget.

Breaking news now is that Ben Bernanke, Chairman of the Federal Reserve indicates that if Congress fails to act quickly , the US economy is likely headed back into another recession (I thought we were still in one based upon the current economy and job situation).

  http://www.thenewstribune.com/2012/07/18/2218402/bernanke-recession-likely-if-congress.html

"If Congress doesn't take action by the end of the year, a package of tax cuts adopted during George W. Bush's administration expires, while deep spending cuts kick in. If that happens, the economy would go over a "fiscal cliff." { Note that it was the administration i.e. Congress, not the president.}

Note that Bernanke recognizes the limits on authority on both the Federal Reserve System and Congress. " Bernanke stopped shot of telling Congress how to proceed. He challenged them to think broadly. 'Congress in in charge here, not the Federal Reserve,' he said."

From other sources, " Bernanke noted what the Congressional Budget Office has warned: A recession would occur, and 1.25 million fewer jobs would be created in 2013.


A word about job creation for those that don't appreciate the numbers. It is generally acknowledged that it takes between 200,000 and 250,000 new jobs EVERY MONTH to offset immigration and graduates entering the work force. A quarter of a million new jobs every month JUST TO BREAK EVEN! So when the news reports that last month the economy grew by 115,000 jobs, we are falling further and further behind. It takes 225,000 new jobs to break even and even more to recover those who lost jobs and graduates of the 2008, 2009, 2010, 2011, 2012 classes. (Yes, I could have simply said 2008 - 2012 but I wanted to list them for the effect of how long a time frame we have to recover.) I can only guess what the new jobs figure would have to be to recover those lost people within the next two years while more new graduates continue to enter the economy but it is a safe bet that we won't hit anything close to the required numbers for a long time. 

As we approach the elections, it is imperative that we vote wisely for people who will speak their conscience and vote according to the issues. All too often today we see votes at both the Federal and State level split along party lines. THAT is what upsets me so greatly. We the people (Nice phrase) voted for representatives to represent US, not a particular party. I am not aiming this at either political party but rather at both. Both sides consistently fail to carry out their sworn duties to represent the people.

Ben Bernanke clearly recognizes that it is on the back of Congress to secure the future of this country. The problem is that Congress is failing at their job. They are so wrapped up in their efforts to have their particular party prevail that they ignore the needs of the people they represent.

Now is the time for people to put serious effort into voting not for one party or another but for people who will vote to represent their people, no matter what the party says. It does happen and I greatly respect those who do so even when I disagree with them.

If we continue voting in party politicians, we have only ourselves to blame for the continuing mess we find ourselves in.

[Note: While I welcome and encourage discussion on both sides, all comments are moderated and political comments in reference to Obama or Romney will not be published so don't bother going there. This is about the economy and Congress.]