Those not in the labor force grows by 25,000,000 people from 2000 to 2016: During this same period those employed grew by 15 million and those unemployed grew by 6 million.
The unemployment rate looks dramatically better than it really is because of some funny accounting. Our labor force looks dramatically different from what it did in 2000. A large part of the low unemployment rate is coming from those not in the labor force. I’m fascinated with this aspect of the employment situation because it is rarely discussed and is largely an elephant in the room. Most pundits like to assume that most of the growth is simply coming from an older population. Even if that were the case, many older Americans need to work until they die since they have paltry retirement accounts. The figures have grown so disproportionately large that we have a shadow class of the population that is now voting for non-establishment candidates. The mainstream press tends to report on large sealed off metro areas that neglect most of the country. Let us look at the numbers here.
The math on income inequality: Average annual income of the top 1% is $1,153,293 while that of the bottom 99% is $45,567.
Part of the challenge with distorted income distributions is that it hollows out the middle class. The middle class in the United States is now a minority. We have more people making higher incomes and more people making way less and this group is growing much faster. Our economy has taken a bimodal distribution with extremes on both sides. We have a record number of people on food stamps but also a record number of higher income households. The only problem is that the low range of the ladder is growing much faster than that at the top. For every person that makes it into the upper income brackets you have three that fall out of the middle class and into the low income wage trap. Part of the political anger we are seeing in the US and other parts of Europe is that the elites are simply ignoring the needs of the masses. In many cases this purposeful ignorance is because their wealth is built on keeping many stuck on a perpetual hamster wheel where productivity gains only go to a small section of society.
Spending it all on rent: 11 million Americans spend half their income on rent. Another 21 million spend over 30 percent of their income on rent, a record high.
The financial raiding of the American middle class is moving full steam ahead. The ridiculous structure of the banking bailouts and artificially low interest rates caused hot money from banks and big investors to crowd out regular families in the housing market. Now here we are 7 years after the official conclusion of the Great Recession and regular American families are financially struggling while banks and big investors thrive. Today 11 million Americans spend half of their income on rent. Another 21.3 million spent over 30 percent of their income on rent. With millions of properties being bought by investors since the Great Recession hit, all that has happened is a mega transfer of wealth. You don’t build equity by renting but many people are simply priced out from buying a home.
Too damn broke to afford a house: Americans are largely missing out on home equity gains and there is little they can do about it.
The housing market is once again too expensive for most American families. During the last housing bubble, many Americans were able to partake in the mania and enjoy equity gains even if they were as fleeting as a petal in the wind. This time around most of the gains are going to investors and large institutional buyers that have crowded out the regular buyer. This is a first in history at least on this large of a scale. The homeownership rate is the lowest in a generation as many young people saddled with student loan debt are living at home. Home prices surging with incomes being stagnant is a recipe for problems down the road. We recently saw a report showing total wealth in the U.S. is at a record level again. Too bad most of the gains are in the hands of the very few. And even fewer Americans own homes today. Why? Because they are too damn broke to buy a home.
he employment figures have turned into one giant inside joke. The mainstream press living in perpetual bubbles thinks that most of the American public is following one giant conspiracy theory if they don’t simply accept that everything is fantastic in the economy. The funny thing is that the same reporting agency that gives us a low unemployment rate also shows us that a record 94.7 million Americans are not in the labor force. These are Americans that can work but are simply out of the labor force (we are not counting children here). Wall Street and D.C. thinking is that most of this number is made up of “old people” retiring and playing golf in Hawaii with bucket loads of cash. First of all, most retirees are one missed Social Security check from eating cat food from the dollar store. The narrative has fully broken down and that is why we are having such an angry election year. You don’t need to tell Americans that the economy is bad because they are living it. Last month alone those not in the labor force jumped by 664,000. I guarantee you that most of that number is not coming from people entering retirement.
Geriatric America: 13 percent of US workforce now employed by healthcare industry. Healthcare inflation out of control.
Like most industrialized countries the United States has a large number of people entering into old age. The baby boomer generation is living longer and just because life expectancy is extended, this doesn’t mean people are healthier if we measure quality of life. We have a major problem with obesity and all the implications that come from that. So it is no surprise that 13 percent of the US workforce is now employed by the healthcare industry. How big of a change is this for our economy? It is big and signifies a 44% increase from 1991. Consider hot sectors like nursing homes, ambulatory services, and hospitals as growth industries. You also have a plethora of pharmaceutical companies to cater to this new older population that in many cases, barely has enough money to survive in retirement. Inflation in healthcare services is also out of control.
Class of Underemployed: Nearly 50 percent of recent college graduates are working in jobs where no college degree is required.
We don’t send our young into the wilderness for a vision quest as a rite of passage. There are few things in modern society that signify a transition into adulthood. Going to college is one of them. And in debt addicted America, it is no surprise that for many, college debt is the first debt they will take on. Getting a college education is supposed to give someone a well rounded view of the world and a potential skill set. Some argue that college is not about vocational training. That to some degree is true but when students are going into $50,000 or $100,000 of student debt, then what is this modern day life quest really teaching and why is the price tag so incredibly high? As college graduation season comes into full bloom, many are left with the prospect of having no job lined up. It is also startling to see how many recent college graduates are working in jobs that really don’t require a college degree (so clearly the vocational piece doesn’t matter here).