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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Apr 28 2015

What are the top 10 financial worries of Americans? Two of the most common themes include paying for children’s college and saving enough for retirement.

Financial worries are a big concern for many American families.  In spite of a booming stock market and a resurgent real estate market, most Americans don’t seem to be feeling financially better.  A large reason is that many Americans did not partake in the rise in the investor driven real estate boom and also, many Americans own very little to no stocks at all.  Is it their fault?  For some, yes.  But for many the growing low wage economy simply leaves little left to save after paying for daily expenses.  Having enough for retirement is becoming a growing issue since 10,000 Americans per day are hitting retirement age.  Are they fully retiring in the traditional sense?  No because many will have to work deep into old age.  Many retirees are fully reliant on Social Security as their main source of income.  With this as the backdrop it is no surprise that the big political theme for 2016 is going to revolve on financial and economic inequality.  Gallup conducted a survey and asked different subgroups of Americans what their biggest financial worries were at the moment.  Let us look at the data.

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Apr 24 2015

Two-thirds of Americans don’t understand how credit cards work: The debt addiction in your pocket.

There is something alluring about swiping a card and making a purchase.  It almost seems euphoric and fun.  Credit cards come in a variety of sleek designs to help you part with your current and future income.  Americans are deeply in debt.  Mortgages, student loans, auto debt, and credit cards consume a large portion of future income.  You would think that most people would reflect on the mechanics of how debt works but this is not the case.  Most people are oblivious to how credit cards work but continue to use them and go into deep debt.  Throw in online shopping and you can store your credit information virtually and shop with one-click.  This wouldn’t be such a problem if incomes were moving ahead.  Unfortunately that is not the case and many are struggling to find their economic balance in the new low wage economy.  Credit card debt is once again on the rise and two-thirds of Americans do not understand how credit cards work.

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