The BLS (U.S. Bureau of Labor Statistics) recently announced the creation of 120,000 jobs for the month of March.
If you factor out the much maligned birth/death calculation, which is revised every year anyway, the actual count would only be 30,000 new jobs.
While the bears had a field day, the bulls scrambled and tried to convince each other this was merely a one-off event and things would right themselves sooner rather than later. As everyone was focusing on the numbers, I thought it would be much more beneficial to actually focus on one single job.
I talked to a friend of mine who had been an underwriter with a well-known insurance company. His income was $78,000 per year and coupled with his wife’s part-time teaching job their combined annual income was $100,000. But notice that I said “had been.”
For over 18 months, my friend (we’ll call him John) had been unemployed pounding the pavement looking to replace a $78,000 salary.
With no luck and nothing on the horizon, John decided to seek out one of the HELP WANTED companies.
He now finds himself working nights and weekends at Lowe’s for $27,000 per year, without benefits. Statistically, he is one of Obama’s, Geithner’s, and Bernanke’s success stories.
He found a job and was removed from the unemployment rolls. Unfortunately, his revised total family income is $49,000 per year.
Yes, that’s a healthy sum which certainly beats a government check; however, the negative impact on the community is very dramatic.
To start with, he and his wife Linda go out to eat half as much as they did before while birthday gifts and Christmas presents for family and friends were reduced by more than 50%.
The use of grocery coupons has increased significantly and the Friday night wine and cheese date has been eliminated altogether.
Their shopping is now done at thrift stores and automobile usage has been cut by a minimum of 33%.
John no longer makes monthly 401k contributions, and in fact, the 401k itself was totally depleted in just 12 months as he borrowed against it. Society might congratulate John and Linda for adapting to their newfound situation and for learning to live within their money.
Yet regrettably, all the businesses that John and his wife had patronized in the past are now suffering because of John and Linda’s cutbacks.
Yes, John found a job and the unemployment rate is reduced. Yet, the domino effect of business failure has just begun and the negative results can be multiplied by millions. Now matter how you paint it or who does the painting (Obama, Bernanke, or Geithner), there is just so much money to go around no matter if you’re employed or unemployed.
And a 50% cut in pay has a dramatic effect on the entire economy regardless of whether our three musketeers want to admit it or not