May 25 2015

Are you looking to earn low wages? A college degree might be your ticket. College earning power dwindles over the last 15 years.

We constantly hear the loud drumbeat that a college degree is your ticket to untold fortunes.  Of course we never get the detailed report showing students that are drowning in debt and also many that went to for-profit schools or pursued unmarketable majors and guess what?  These people would largely have done better by not going to college (you avoid that mega debt).  The amount of debt people are taking on to obtain a college degree is at an all-time record high.  You would assume that simply having a college degree is sufficient to boost your earnings potential.  That is not the case at all.  We now have the largest percentage of adults with a college education in history.  A good thing right?  But we also have the largest number of Americans with unmarketable degrees and many from schools that are one step above a paper-mill.  Many would have been better learning a trade (and their earnings would be much higher).  One recent report that reflects this big change is the percentage of low wage workers with college degrees (think of the person with the master’s degree serving as a Starbucks barista).

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May 20 2015

China has overtaken Mexico as the source of the largest number of immigrants to the U.S. – the Far East is the new Southwest.

It should come as no surprise that the US is a net immigration country while China and Mexico are both net emigration countries.  What may be a surprise is that now China has overtaken Mexico as the top importer of immigrants.  The flood of money from China into key cities has been nothing short of breathtaking.  China is undergoing a massive expansion in their country and all of the challenges that come with exponential growth.  For most in the public, they simply have no idea that China is now the biggest importer or immigrants to the US now overtaking Mexico.  This is a fascinating trend and something that is largely ignored in the media.  The US has recently seen a very strong dollar and this has taken an impact on our own domestic manufacturing sector.  A stronger dollar makes our goods less competitive in the global stage.  As the low wage race to the bottom continues, many are leaving economies where the booms are uneven.

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May 16 2015

The low wage employment tsunami: Low wage jobs now make up 25 percent of all employment in the United States.

The employment report continues to provide deceptive bread and circus fodder for the mainstream press.  Never is any thorough analysis given to the 93+ million Americans that are now part of the “not in the labor force” category.  In large part, we have a low unemployment rate because this massive army of Americans is simply not counted in the employment report.  Then, if you dig deeper into the report you realize that a wide spectrum of Americans are now part of the low wage economy.  The “recovery” in terms of jobs can be summed up as follows: tons of low paying work, a shrinking of middle class jobs, and few jobs at the top.  It is a crony salad bowl of financial incentives to the banking sector while turning a large portion of the country into modern day debt serfs.  You need debt to keep up.  Good debt (i.e., mortgages) is now tougher to get since banks have crowded out regular families in buying homes.  Junk debt (i.e., auto loans) is easy to get and you can simply drive down to your local car dealer and drive away with a new car.  With that said, the US has a massive number of workers employed in what are known as low wage jobs.  The number is surprising when compared to other nations.

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May 14 2015

Student and auto debt fuel credit bubble 2.0: Student loans carry the highest delinquency rate of all debt classes. Student and auto debt up $1.15 trillion in last decade.

A large portion of our recent recovery has come from debt fueled consumption.  The bailouts have been favorable to financial institutions but access to debt for American families has been in segments that are counterproductive to wealth accumulation.  There is no benefit in having access to cheap loans for purchasing a car, an “asset” that loses value immediately after you pull it off the lot.  This is what is going on and we have seen a surge in subprime auto loans which is a double-whammy in slamming your financial future.  The biggest non-housing debt class in the United States is now with student debt.  Student loans are now viewed as the pathway for accessing college.  Over $1.2 trillion in student loans are now outstanding in the US and this debt class has the highest delinquency rate of all debt classes.  What this tells you is that many with student debt are unable to pay their bills.  That is problematic.  But this debt fuels the economy in odd ways.  Let us take a look at the two fastest growing debt fields.

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May 10 2015

34 percent of Americans financially carry the country: Those not in the labor force hits another record at 93,194,000.

The unemployment rate is calculated by those in what is deemed the labor force.  With the unemployment rate dropping you would think that somehow, we’d be back in a glorious economy where everyone was financially moving up.  That is definitely not the case.  Every single day we have 11,000 Americans hitting 65 years of age and many are approaching retirement with the “work until I die” mentality because they are financially ill prepared.  We also have a gargantuan number of Americans not in the labor force.  These are people able to work but are simply not doing so for a variety of reasons.  Many of the reasons are legitimate like old age, college, or a disability but millions are on here that should be counted in the unemployment rate.  While the market was cheering the unemployment rate dropping to a level that takes us back to pre-recession levels, we now somehow have a record number of Americans not in the labor force.  The number is downright shocking.

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May 7 2015

Low wage America: People think minimum wage is for young workers but the average age of someone on minimum wage is 36. Half of Congress is made up of millionaires.

People have a hard time understanding the vast number of Americans working in low wage jobs.  There is a very real reason why dollar stores paint the heartland.  We also have 46 million Americans on food stamps.  One of the big issues that we will certainly hear about during this campaign season is the erosion of the middle class.  Even though the stock market is hovering near all-time peaks, the regular worker is feeling like the economy is pulling past them.  Since the recession officially ended in the summer of 2009, a large portion of the jobs added came in the form of lower wage segments of the economy.  There is now talk about boosting the minimum wage.  I think most people think that minimum wage only impacts teenagers trying to pocket some money for going to the movies on the weekend.  That is absolutely not true as the figures will highlight.

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May 3 2015

The death of the American pension: How older Americans are entering their golden years with a lack of retirement savings.

Listen carefully to the sales pitch from Wall Street.  In the late 1970s and the early 1980s there was a push to get Americans away from pension plans and into 401k style retirement plans.  The notion was that Americans would save enough on their own and would have the financial wherewithal to play in the Wall Street finance game.  Well here we are a generation later and for most Americans, the self-directed retirement experiment has been an abject failure.  We have now learned about a litany of mutual funds that have charged high expense ratios that basically ate into a good chunk of savings.  The ETF and index fund world is new for many since it isn’t heavily marketed.  And these are the options for the savvy people that actually dive in.  Pension plans used to be commonplace.  Now, they are rare and are headed to extinction.  For most elderly Americans, the number one source of income is coming from Social Security.  What happened to the pension plans of America?

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