New Economy

Our economy lost 95,000 jobs last month. Many were government jobs, offsetting a 64,000 increase in private sector jobs.

What kind of private sector jobs make up the majority of this 64,000 increase? Ambulatory health care services and leisure and hospitality -- "food services and drinking places" accounted for 34,000 of those jobs...nearly 50% the total.

These are fake jobs. They are fake jobs for cities, municipalities, and taxing authorities. The are very nearly fake jobs for many of those 34,000 people who are taking them on, as they really want other work. They are fake because they don't pay well, and therefore, they don't support a level of taxation necessary to support that person's use of government services, like freeways to get them to their fake jobs 22 miles distant, or maintenance of the freeway sound walls, or the launching of the next generation of spacecraft, or the twin wars abroad to provide for their "security," or what have you. These jobs are not net-gainers to society. They are needed, yes, but only in tandem with higher paying jobs and their higher marginal tax rates...like those in manufacturing and industry...or in electrical engineering, like what I do.

Our supposed new economy of the last twenty years was the creation of jobs in financial services, in innovation, in high-tech services. Yet we jettisoned an awful lot of those recently with the latest meltdown. Software engineering -- dispatched abroad. Bulk power transformer manufacturing -- dispatched abroad.

We may want to blame the housal unit bubble and the derivative and securitized debt obligation meltdown as to why we have 6,100,000 people currently long-term unemployed. Nope. I argue that this is just a symptom of what happens when professional services and manufacturing is sent to cheaper labor markets. Now that "they" are engaged in the icky, icky work of welding steel laminate transformer cores, these decreased labor costs have enriched only a certain segment -- shareholders and Wall Street, of which many of us are also engaged, yes, but at the expense of our middle class incomes.

And! We masked that loss beautifully during the last fifteen years, didn't we? Although wages didn't appreciably rise, boy our standard of living sure did! iPhones, docking stations, a new SUVs every three years and bigger than the last, 3,235 sq ft housal units, GPS navigation devices, 21" computer monitors, on and on and on.

We got all this because we borrowed from today. We borrowed from now. The loss of our middle class incomes was masked by rising housal unit equity re-fi's and the extension of cheap-ass credit to everyone with a pulse and we spent and we spent and we spent and we spent and we spent. Now, whoa! consumer debt expansion has run its course. We even tried to revive it somewhat, through Cash For Clunkers and $18,000 tax credits for taking on a new 30-year mortgage. We borrowed from tomorrow, too.

The compression of consumer income does not bode well for an economy seventy percent dependent on its spending. Consumer demand has been removed as a driving force in our economy....so all this $700,000,000,000 stimulus spent from tomorrow's earnings is having little effect against such a dropoff in spending.

And never forget that there's no reason to believe the shipping of even more tradable professional services and manufacturing won't continue. Why wouldn't we see further job losses in these areas?

There you have it. Our new economy. Workers in drinking places.