I’ll conclude my ongoing series dedicated to jobs by
evaluating the potential for a change in direction as it relates to our current
labor market. It’s been said that in
order to solve a problem, you must first understand what the problem is, and
perhaps more importantly, you must also acknowledge that a problem even
The “fast-food folk” — and everyone who supported the recent “fast-food folk” walkout in which McDonald’s, Wendy’s, and Burger King employees demanded 60% wage increases — obviously don’t understand the current job market situation, or even the word “leverage.” In April of 2011, while disclosing they had received more than one million job applications, McDonald’s announced the hiring of 62,000 people in the U.S. Therefore, it’s quite obvious that if every fast-food worker quits their job tomorrow — after their wage demands were not met — they would be replaced immediately by someone who was either willing to accept the existing wage level, or willing to accept an even lower wage.
Regardless of wage level, when the supply of workers outweighs the demand for workers, the direction of that wage will continue to move lower. Every job seeker, in order to receive a steady paycheck, will always attempt to undercut their fellow job competitor. As someone once said, “Ah, that’s the rub,” and so it is. As people become desperate, they will certainly accept lower and lower salaries.
As smartphones continue to eliminate thousands and thousands of jobs, we somehow continue to train and educate people as if those jobs still existed. This discrepancy exists because our educational system is still operating as though we currently need hundreds of thousands of architects, philosophers, political scientists, lawyers, and a multitude of other jobs, to the point of ad nauseam. Yes, there will always be some demand for these types of jobs, but the demand is definitely not what it used to be — and you can thank technology for that. In order to carefully reevaluate the true benefits of an educational system, or even transform the ingrained philosophy of “my kid will go to college,” it will take decades or maybe even longer. Yet, until that time comes, then the simple law of supply and demand will continue to be the dominate force in the labor market. Moreover, technology will not deliver the so-called fourth industrial revolution, which had the potential to absorb a large number of jobless individuals. Consequently, more and more people will be forced to compete for a dwindling number of jobs.
Hussman's Open Letter to the Fed; The Problem with Bubbles; Textbook Pre-Crash Bubble; Reflections on Not Chasing Bubbles; Integrity vs. Respect | Mike Shedlock