34% of all Americans financially support the rest of the country – 112 million private sector workers support 211 million people.

The latest employment report was lackluster.  The math on the employment numbers has concealed a deeper problem in the economy.  Many Americans are struggling and the middle class continues to lose ground.  The most startling figure coming out was that 562,000 people dropped out of the labor force.  While there is a bit more information on those “not in the labor force” the press is still largely quite on this issue.  You can frame the topic in a more poignant way by saying that 34 percent of all Americans financially support the rest of the country.  With an aging population and record levels of debt, this might be a problem.

1 out of 3 Americans supporting the rest

The reality is that 1 out of 3 Americans is supporting the rest of the country.  We are talking about the private labor force since government work is supported by this group as well.  We have over 94 million Americans not in the labor force.  Another 16 million Americans are unemployed but looking for work.

The numbers make more sense when you look at a chart:

private workforce

Source:  Jobenomics, BLS

It might be worth breaking down the categories:

112 million in the private sector labor force – this is largely the 1 out of 3 supporting the rest of the country

32 million government workers – this is supported from funding coming from tax revenues

94 million not in the labor force – these are people that can work but are not looking

70 million cannot work – this is mostly children

16 million unemployed – looking for work and unable to find a job

This should give you a good sense as to how the economy is doing.  The not in the labor force category is really worth exploring further.  We have many older Americans hitting retirement age but completely unready to face the financial burden of retiring.  The assumption is that once you hit 65 you have all the money in the world to get by.  The reality is starkly different in that most older Americans are one Social Security payment away from being homeless on the street and starving.

Last month those not in the labor force increased by 562,000:

people not in labor force

This is a big issue here.

Going back to the private labor force, it should be noted that roughly 40 percent of the labor force is part of the contingent labor force.  Many of these people are part of the new low wage America where benefits are little to nonexistent.  This is also another reason why new home sales or building is simply not picking up.  Why would you commit to a 30 year mortgage when you are drifting from project to project?

So what we have is fewer workers supporting a growing number of people not generating income.  And the expenses of our country only continue to go up.  Basic math will tell you that something is going to give at some point.

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4 Comments on this post

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  1. Dick Mazess said:

    You could also exclude all FIRE “workers”(finance, insurance, real estate) since they produce nothing and get disproportionate income derived from those who are productive

    May 9th, 2016 at 8:58 am
  2. dbtuner said:

    I don’t agree that the 32M government workers are being supported. They also pay payroll and income taxes. So maybe you should subtract out 25% of those 32M and redo the math. So 37% support the rest.

    Then you have to account for retired folks who are living off their savings, pensions, and social security. They pay tax on their investments and dividends. How is it that they are being supported? So that probably means it is a 50/50 balance.

    May 12th, 2016 at 7:57 am
  3. sharonsj said:

    Stuff like this makes me laugh because it doesn’t address the fact that corporations no longer pay their fair share of taxes. And it never occurs to the sheeple that the less money collected from these corporations, the more money everyone else has to pony up.

    If you want to know why all your taxes, services, fees, utilities and rent keep going up, it’s because ExxonMobil can make $5 billion in profit and not pay a penny in Federal income tax. You can also thank your Congress and your local legislators who give every break and benefit to the corporations that shovel millions of “campaign” money their way–and in exchange your representatives write the laws that screw you while helping their donors.

    Oh, and why should American corporations hire people here when they can get a Chinese worker for $3 a day? Problem is that they can’t see far enough into the future to understand that people without jobs or who have low-paying jobs can’t buy their products–and neither can the Chinese worker.

    May 20th, 2016 at 12:08 pm
  4. Sage said:

    Government workers pay fica, federal, state and all local taxes as do private workers. In essence, deducting from their private pay to pay themselves a salary.

    To say they do not support the overall economy is a misnomer at best. That said, government also uses capital expenses such as buildings, 10 billion dollar ships and fighters and has to build roads and bridges that all come strictly form tax dollars of private AND government workers.

    Plus, I guess, we all have to pay the generous salary and benefits for Congress, thought these days that seems to be a big waste of money.

    May 22nd, 2016 at 6:19 am

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