What if we buy into the most recent Bureau of Labor Statistics report? It states that well over one million people dropped out of the labor force last month, thereby resulting in a dramatic decline of the unemployment rate.
Columnists, economists, and talk-show hosts such as myself have belittled the BLS report as just another governmental massaging of the numbers. After all, it’s an election year, and unfortunately many people are buying what Obama is selling. But just for a moment, let’s play the “what if” game.
If, in fact, well over one million people have just given up looking for work, the assumption could be made they had no need for a job. Maybe they had accumulated enough assets to live on or their lifestyle was such that government transfers were sufficient.
Not seeking a job because of your wealth is an interesting concept.
However, it definitely contradicts certain other governmental statistics, namely the personal saving rate (the percentage of after-tax income that’s not spent) which has declined dramatically over the past few years. Nonetheless, even if these non-job seekers had been saving their money, the rate of return on their savings would have been negative, thanks to both Ben Bernanke and inflation.
In addition, these “wealthy” people certainly weren’t investing in the stock markets. Mutual funds have shown net withdrawals for the past few years and even though the U.S. markets have experienced an upward bias, the non-job seekers haven’t been participating.
Furthermore, they haven’t achieved prosperity by withdrawing equity from their homes and banking the cash. We all know what they did with that money over the last ten years and we’re also very familiar with the condition of the real estate market.
So, that leaves us with three options. Either these non-job seekers inherited a dramatic amount of money from a family member, just cashed a lottery ticket, or invested all their money in gold ten years ago at $350 per ounce and have now decided to cash out.
No matter which way you look at it, these are the only explanations for those who have decided to bid adieu to the working world.
The other faction that’s included in the one million-plus people category are those who have somehow been able to access the government dole. They’ve recognized that free cars, non-foreclosed homes, food stamps, and other various government programs are sufficient to maintain a lifestyle unfettered by such things as daily toil. In the old days, maintaining a lifestyle while unemployed was extremely difficult, not just the day-to-day survival but also from a psychological standpoint as well.
Deplorably, in many instances, maintaining a lifestyle that relies upon government handouts has now become a badge of honor. So, did millions of people really drop out of the workforce?
Well, it’s possible that either independent means and/or a government gravy train has actually won the day. How sad if this is true, but only in the world of “what ifs.” And that’s a world I choose not to live in.