The Unemployment-Wealth Spend Down-Benghazi Connection

"Is it then that we just don't know what money is these days?" asked Louis Rukeyser to economics Professor Emeritus George McKinney who replied "Never did know." – May 21, 1981 Wall $treet Week

 

That type of dialogue is part of why college economics books don't get around to a section on "What Is Money?" until around page 380 & these books then explain that money is a medium of exchange, a measure of value, & a store of value.  They will go on to say that money is much more than just cash & many things have been used for money, such as seashells, bullets, & metals.  Source – Economics Of Social Issues – Sharp, Register, & Grimes – page 380

 

Even if we never did know what money is we do know that its value only comes from private sector people working & investing that results in a vibrant economy – it is also true that government can destroy the value of money by borrowing or taxing the private sector into oblivion.

 

With re to people working in a vibrant economy – we still have anything but.  Although the headline number of the decrease in the unemployment rate in April to 7.5% sounds like progress the underlying trend has not changed much @ all.  See stats below from the Bureau of Labor Statistics (BLS).

 

The civilian labor force participation rate was 63.3% in April, unchanged over the month but down from 63.6% in January.  The employment-population ratio, 58.6%, was unchanged over the month and has shown little movement, on net, over the past year. 

 

In April, the number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) increased by 278,000 to 7.9 million, largely offsetting a decrease in March. These individuals were working part time because their hours had been cut back or because they were unable to find a full-time job. 

 

There were 2.3 million persons marginally attached to the labor force in April, essentially unchanged from a year earlier. These individuals were not in the labor force, wanted & were available for work, & had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey.

 

And worst of all the U-6 unemployment rate increased in April to 13.9%.  U-6 is the most comprehensive measure of unemployment & currently totals 21.9 million people.  It includes the total unemployed (11.7 million), plus all persons marginally attached to the labor force (2.3 million), plus the total employed part time for economic reasons (7.9 million).  These numbers should seem familiar to RTE readers because they are little changed from previous postings.

 

Of course the real question for those who found employment is how does your total compensation compare with what you were earning before losing your job?  Unfortunately we know the answer is not good & with ObamaCare steaming along employers will be less likely to increase hiring - the 30 hour per week cut off rule for determining whether someone is part time or full time will only exacerbate this situation resulting in more involuntary part time workers.

 

The answer for many people over the past several years has been for families to move in together with every able bodied person getting whatever mediocre job they can find & of course topping this off with government benefits & their own wealth spend down.  What a way to make ends meet.

 

This family consolidation trend includes college graduates returning home with no job or job prospects.  If parents are not careful their wealth spend down hurts their own retirement plans.  The WSJ reports 22.6 million adults between 18 & 34 living with their parents, 26% of the parents have taken on debt because of the kids living with them, 7% of parents have delayed their retirement because of the kids moving back in, & 30% of parents gave up privacy due to their adult children.

 

All of this deterioration of America is exactly what BO is working for.  BO didn't create all of this but he sure came along @ the right time to accelerate it.  In that way it is a blessing if only because it is so much more obvious than if we continued on a slow burn that was less noticeable.

 

The deterioration presented above & in many other postings have effects far beyond economics.  For instance the murders of four Americans in Benghazi, Libya on September 11, 2012 has attracted no interest from anyone starting with Mitt Romney during the presidential debates last fall.  In times past Benghazi would have been important if people had satisfied their employment needs; but since they haven't they have no time for such matters apparently not caring @ all that Hillary & BO may be involved in a cover up plot that makes Watergate look petty anti.

 

Now what the American people care about and where they are heading will be revealed if Hillary & BO are proven to be up to their necks in the Benghazi murders & then either Hillary or MO (more likely) gets elected president in 2016.