I have been watching the job market over the past 6 months and since the weekly unemployment claim number move from 300,000 to over 650,000 and now it sits at 610,000 and people rejoice over it. Am I the only person that sees that the economy has become even more rotten over the past six months? So, like most of the time I have been thinking about this like a priest in prayer, and I have come to the conclusion that the job market is going to get worse, and this scares me for the simple reason that I know what I would do if I was in charge of a company, and unfortunately this means that it may get look as though it is getting better, but it is not… and here are my reasons why.
First, the unemployment data is released tomorrow, and it is going to go up, but maybe to not as much as the market has predicted. So, I asked myself the question why. A few reasons I could come up with without looking at numbers and finding it data come from a macro theoretical look at the general economy. Many of the number could be jumbled by the government; the data could be seasonally adjusted; misgiving and mistaken data; people have given up looking for jobs; initial jobless claims do not include the people that are on unemployment; companies have reported their earnings and the easiest way to meet their bottom line is to remove labor costs. These are just some of the ideas that came to mind when I was thinking about the job market and again it scares me.
Second, the government has bullied themselves into the market to control it. As anyone can tell you about the government they are completely inefficient because of a many of issues. Size, politics, personalities, etc. and because of this, the dollar system may be falling to the way size. Most countries believe that the US has lived off the backs of other countries by ‘forcing’ them in a way to finance the US debt by keeping reserves in their major banks across the world. So, I come back to employment, or the lack of employment in the US. The financial crisis of late 2008 blackened the eye of the US dollar. Our representatives in Congress moved quickly to stop this and still the US dollar move up against the other world currencies but next year deficit is about 3.6 trillion dollars and our own economy only has about 12.25 trillion dollars in it. So yes, there is not an endless supply of money, and we can not rely on the banks to pay out, or other countries to pay for our public debt. That leaves no one. Thank you…
Third, since I studied business I will bring about another issue with the job economy. We can see that the job market maybe getting better. But, this comes at a cost. Inflation. You can not put 50 lbs of potatoes into a bag and expect something to not give when the bag only holds 5 lbs. The dollar is going to be fall quickly against the other world currencies. What does this mean, and how does it relate to the job market. As anyone that works in business will tell the number one cost of running a business is labor. (There are exceptions, but a general rule) Considering that Congress just moved to put too many potatoes into a small bag, something has to give. The money is on the way, businesses must adjust to survive. Now, how would I do it? Easy, hire now, fire at 89 days before the 90 day review. Businesses have been doing this for months to lower costs, but this is a short term band-aid to a major issue, since the second largest cost is to a business is training and training new people every few months is very costly. So, as the recession ends, the stock markets bottom are reverse, businesses have about nine months to decide for the future. How do you save money in the long term with inflation about to grip the country? Easy, hire early before the inflation takes hold and force contracts onto employees and as the job market turns, they will be the ones standing out making less ‘money.’ They will make their salary, but it will not allow them to buy as much as before. Purchasing power is the term, and we just forgave it to have a job (And pay out taxes) and allow the government to grow and inject itself into the free market. So, a turn in the job market maybe premature so that companies may protect themselves and the only one to lose in the deal is the typical employee.
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