For those that are paying attention, which includes those that follow Asylum Watch, it’s not surprising that the economy and the jobs market are not doing nearly as well as the President and the MSM would like you to believe. What is worrisome, of course, is that so few people are paying attention and the MSM seems to want to keep it that way. The title to a recent post at Mish’s Global Economic Trend Analysis should be the headline in every major newspaper and the lead story on all TV news outlets. But it is not.
First Quarter Hourly Compensation Plunges 3.8%, Most on Record; Manufacturing Hourly Compensation Plunges 6.9%; What’s Going On?
Now Mish didn’t make these numbers up. they come from this Bureau of Labor Statistics news release. This hasn’t happened since 1947. But, apparently the MSM didn’t find it news worthy. Or is it possible that journalist today are just as uninformed as the general public? I don’t know if journalist today are just plain stupid or they are so in the tank for their liberal president that they take everything the administration says as gospel. Along with all the scandals that are occupying our Congress critters, this fall in wage should be at the top of their agenda, but it’s not. The President should be holding a press conference about this and explaining it to the public. That’s not going t happen because the President doesn’t know anything, as he has often admitted, until he hears it on the news. But I’m getting off topic.
So, what is behind this decline in hourly wages? Mish has a theory that it has to do with two things: ObamaCare and the Fed’s Zero Interest Rate Policy (ZIRP).
The Fed believes that holding interest rates low fosters business growth, hiring, and bank lending?
So why isn’t that happening? …. by holding interest rates low, the Fed encourages not hiring, but rather corporate investment in software and hardware solutions that enable companies to get rid of workers.
Why hire someone at increasing minimum wages, and increasing costs of medical care, when you can borrow money for next to nothing and invest in solutions that require fewer workers?
From my own experience in the corporate world, that makes sense to me. When looking at options on how to solve a problem, we would weigh the cost of capital against the cost of labor. If capital cost were high relative to labor cost, we would add labor. When labor cost were high relative to capital cost, we would employ more capital and less labor.
What about ObamaCare? Mish has this to say:
Obamacare is a huge part of the jobless recovery problem as well. I have talked about this on numerous occasions. Here is a partial list:
- October 9, 2012: Is Obamacare Responsible for the Surge in Part-Time Jobs?
- October 20, 2012: Mish Obamacare Mailbag: Expect More Part-Time Jobs
- February 2, 2012: Obamacare in Action: Retail Workweek Hits 3-Year Low
- February 19, 2013: Opting Out of Obamacare (the Unaffordable Health Care Act); Not Even Labor Unions Want It
- May 3, 2013: Obamacare Affects Part-Time Employment Yet Again; Nullification Bill Passes South Carolina House; Analysis of Healthcare Penalty Rates
The evidence is now so overwhelming that no one but Obama and the Democrats can deny that Obamacare is responsible for the massive surge in jobs (nearly all of them part-time).
That makes sense as well, doesn’t it? How many times have you heard about companies reducing the number of full-time workers in favor of part-time workers because of the projected cost of complying with the ObamaCare mandate? I wrote about his trend towards part-time workers in a post on the 8th of May, in which I quoted these statistics for the month of April:
Total employment rose by 293,000 during April, but part-time jobs increased by 441,000. As a result, full-time jobs declined by 148,000.
That important data didn’t make the headlines either.
So there you have it. ObamaCare drives up labor costs so employers respond by reducing the umber of full-time worker and replacing them with part-time workers, which results in a decline in average wages. Jobs aren’t being created because labor costs are high and capital is practically free making it logical for companies to invest in software and equipment instead of people.
We conservative/libertarians often ask ourselves: when are people going to wake-up? The information I have shared here today is the kind of information that has the potential to wake-up the low information types. But, if the media refuse to make this information news, the people will remain poorer, but they won’t understand that their own government is at fault.
Well, that’s what I’m thinking. What are your thoughts?