May 5 2014

Latest jobs report 288,000 jobs added

The latest jobs report showed a relatively healthy month for April 2014.  288,000 jobs were added and the jobs were being added across various industries.  This report came in higher than most economists were predicting.  However, even with this boost the trajectory of added jobs is still very low compared to other recoveries.  One month does not make a trend.  During the same month another survey showed that over 800,000 Americans dropped out of the labor force.  Some of this can be accounted for by the aging of the American population but certainly not the bulk of the drop.  There seems to be many variables at play with the employment report.

When we look at previous recoveries this one is relatively weak.  So far in this recovery we are adding around 150,000 jobs per month.  Compare this to most of the 1990s when we were adding over 200,000 jobs a month with a smaller population.  These figures help us understand why many Americans still feel this recovery as being very lackluster.

Here is some numbers for perspective:

jobs report

Source:  NAR, BLS

Clearly this is not a strong recovery but the latest month of data does show a glimmer of hope for the economy.

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Apr 3 2014

Lowest paying jobs in America. Top 20 lowest paying jobs

There is a growing disconnect in the country between the working class and those in more professional careers.  Part of this is coming from massive globalization that is extracting lower wages for the vast portion of our nation.  The market craves lower costs and higher profits and the two don’t typically align with keeping things steady in a time of massive change.  Innovation and transformation are occurring at dramatic speeds that are beyond the capacity of most regular people trying to live their daily lives.  The expansion of lower paying jobs is simply a consequence of this transformation.  Certain skills are highly valued and wages in these fields are expanding at a healthy clip.  However for those lacking skills the path to a middle class lifestyle is narrowing at a quicker pace.  The need to keep up and stay on top of the market is pushing people to keep their toolkit sharp.

Growth is simply a part of our new economy.  This has brought on some of the most wonderful marvels of all-time.  Even a king in the Middle Ages did not have the access that a regular person has to information today.  You can be more informed than the highest ranking official from only a few hundred years ago which is a fraction of human history.  Yet people are mostly interested in what is going to happen during their lifetime.

This is why it is interesting to look at the top 20 lowest paying and highest paying employment sectors in the United States:

Bottom 20 Jobs


Source:  Zero Hedge

Of course what is typical is that the bulk of jobs are in the lower paying fields:

Workers in Top and Bottom Jobs_0



Something to keep in mind as the recovery continues to go on.

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Feb 23 2014

4% Rule for Retirement Withdrawals is Nonsense. 4% rule plays off of massive consumption society.

A few weeks ago I happened to catch Suze Orman’s show on CNBC.  One caller had her case analyzed.  She had something like $1.5 million in assets and had her home paid off.  She is clearly in a very good position and puts her within the top 2 percent of households in the United States.  The response that was given shocked me.  She was told she did not have enough and had to keep on working for many years.  Now think about this.  At a 4% withdrawal rate she would be pulling $60,000 a year ($10,000 more than the median US household income).  Plus, she had her home paid off which is the biggest expense for most Americans.  This kind of logic is at the core of the issues we have with those giving out financial advice.  They never correct the expense column assuming it is locked in like a sunrise or having water in the ocean.

The 4% rule recently came under “scrutiny” that it was a good rule under better economic times.  As if we haven’t had our share of wars, recessions, and societal issues in the past?  The conclusion of some of those in the financial industry is that the new safe withdrawal rate is now something like 2.8% and therefore, you need more saved to retire.  Of course, the financial industry survives by fees generated on these balances so to say they are unbiased is an overwhelming understatement.  The problem as well is that this industry of experts never bothers to attack the expense side of the equation.

What is interesting is that most Americans never come anywhere close to saving $1 million in their nest egg.  Most will end up depending on a Social Security check to get by in their later years.  The fact that someone can tell a person with $1.5 million saved and a paid off house that they are far from retirement is amazing.  What should have been said is “how can you cut down your expenses to live on $60,000 a year when your house is paid off?”  Where is the rest of your money going?  Of course, the response is to keep on pumping more money into the financial sector so they can collect more fees along the way.  I’m sure you have caught on at this point that many in this consumption based society want to see you part with your money as fast as possible.

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