Guest Post: iDepression 2.0

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Submitted by Jim Quinn of the Burning Platform

iDepression 2.0


            Depression 1.0


            iDepression 2.0

As I listen to pundits, politicians and populists expound on the jobs
situation in our country day after day, as if they knew what they were
talking about, I’m reminded of the Seinfeld episode where
George quits his job as a real estate agent. He sits in Jerry’s
apartment and ponders whether he could become the general manager of the
Yankees, a sportscaster, getting paid to watch movies, or a talk show
host. After the discussion with Jerry, he realizes that he has
absolutely no skills that are transferable to another career. Everyone
in America would like to be the General Manager of the Yankees or get
paid for watching movies, but that isn’t how it works in the real world.

A little reality about the job situation in this country is in order.
The unemployment rate reported by the Bureau of Labor Statistics and
parroted by the mainstream media is currently 9.6%. Once you stop
counting people who have given up looking for jobs and “left the
workforce”, discouraged workers, marginally attached workers and workers
forced to work part-time, you magically get a 9.6% rate. Using the
method of measuring unemployment used during the Great Depression and
reproduced by,
the real unemployment rate is a depression-like 22.5%. The peak
unemployment rate during the Great Depression was 25%. There is no doubt
that we are in the midst of 2nd Great Depression, but where are the
bread lines and the lines of unemployed winding around the corner? No
need. This is the electronic Great Depression – iDepression 2.0. Your 99
weeks of unemployment and food stamps are direct deposited into your
bank account so that you don’t have to leave the comfort of your
McMansion that you haven’t made a mortgage payment on in the last 14
months. There were no credit cards in 1933. Without a job or a house,
you needed to move to where there might be a job. Hence the mass
migration from the Midwest to California – ala The Grapes of Wrath. Today,
a neighbor in a matching McMansion down the street, with the perfectly
manicured lawn, could be unemployed for three years and no one would
ever know. They could sustain themselves on unemployment payments, food
stamps, and credit cards. Welcome to the iDepression 2.0.

Dude, Where’s My Job?

Every politician in the U.S. is running for election on a platform of
“creating” new good paying jobs for Americans. Only one problem.
Politicians don’t create jobs. Businesses create jobs. When politicians
and the Federal Reserve get involved in the job market, bad things
happen. The excessively low interest rates put in place by the Federal
Reserve created a housing bubble that led to the “creation” of 1 million
new construction jobs between 2002 and 2006. Of course, the bubble
burst has led to the loss of 2 million construction jobs since 2007.
What the myopic pundits on CNBC don’t realize, because they aren’t
programmed to think, is that the Greenspan Housing Bubble “created”
millions of other jobs that had no chance of being sustained. The number
of realtors grew from 750,000 in 2000 to 1.3 million in 2006. We needed
hundreds of thousands of new mortgage brokers and appraisers to falsify
documents and not conduct proper due diligence. Wall Street needed to
hire thousands of new MBA shysters to create fraudulent packages of
toxic mortgages and the rating agencies needed to hire thousands of
Burger King level thinkers to stamp AAA on the packages of toxic
mortgages. These were just the direct jobs created by Easy Al. Home
Depot, Lowes and a myriad of other home retailers built thousands of
stores to service the needs of all these new “homeowners” and hired
hundreds of thousands of clerks, installers, and cashiers. Once the
delusion really got going, the “equity” from the homes generated jobs at
car dealers, restaurants, cosmetic surgery centers, cruise lines, and
yacht retailers.

Barry Ritholtz described how the Federal Reserve provoked housing
bubble further warped an already unbalanced American job market:

Job creation has taken place across a wide swath of industries –
much more than just residential construction. Sure, developers,
builders, and subcontractors saw job growth explode. But it was far more
than that. From real estate agents to mortgage brokers, from designers
to contractors, plus the many employees of stores like Home Depot (HD)
and Lowes (LOW), the Real Estate industrial complex was responsible for a
disproportionate percentage of new job creation. From 2001, to the
housing peak in 2005, the total number of Realtors, as a percentage of
the Total Labor Force, gained nearly 50%.

The reality is that Greenspan, Bernanke, and the rest of the Federal
Reserve Governors “created” millions of jobs that were not sustainable.
Their policies distorted an already tenuous economic model, dependent
upon consumer spending, no savings, and delusions of home wealth. The
chart below paints the picture of sorrow. The key points are:

  • The number of employed Americans has declined by 7.4 million since 2007.
  • Goods producing jobs have declined by 19% since 2007, while service jobs have only declined by 2.8%.
  • Luckily, Government jobs have actually increased since 2007.
  • The population of the US has increased by 10.8 million since 2007.
  • The working age population has increased by 6.5 million since 2007, while the work force has only increased by 1 million.
  • Only 58.5% of the working age population in the U.S. is currently employed versus 64.4% in 2000, a lower level than in 1978.

Type of Jobs 2007 Today Change % Change
Manufacturing 13,879 11,670 -2,209 -15.9%
Construction 7,630 5,604 -2,026 -26.6%
Mining & Logging 724 745 21 2.9%
      TOTAL GOODS PRODUCING 22,233 18,019 -4,214 -19.0%
Trade & Transportation 26,630 24,785 -1,845 -6.9%
Education & Health Services 18,322 19,611 1,289 7.0%
Professional & Business Services 17,942 16,734 -1,208 -6.7%
Government 22,218 22,231 13 0.1%
Financial Services 8,301 7,577 -724 -8.7%
Leisure & Hospitality 13,427 13,169 -258 -1.9%
Information Services 3,032 2,711 -321 -10.6%
Other Services 5,494 5,364 -130 -2.4%
      TOTAL SERVICES 115,366 112,182 -3,184 -2.8%
ALL JOBS 137,599 130,201 -7,398 -5.4%
U.S. Population 299,398 310,233 10,835 3.6%
% of Population Employed 46.0% 42.0%    


When I hear Obama and his minions blather on about the jobs we have
added in the last six months, I want to break something. The truth is
that the country should still have 64.4% of the working age population
employed today as we did 10 years ago. That means we should have 153.5
million employed Americans today. Instead, we have 130.2 million
employed Americans. That is a 23.3 million job deficit and the Obama
administration crows when we add 50,000 new jobs in a month. Welcome to
iDepression 2.0.  

No Way Out

The United States of America is a hollowed out shell of the great
industrial machine that dominated the world after World War II. The BLS
data unequivocally proves this is so. The chart below compares American
jobs in 1970 versus today. The storyline about good paying manufacturing
jobs being shipped overseas is absolutely true. The population of the
United States in 1970 was 203 million. Today, the population of 310
million is 53% higher. During this same time frame manufacturing jobs
have declined from 17.8 million to 11.7 million, a 34% decrease. The
corporate oligarchs that run this country will tell you this is due to
efficiency. The truth is that these jobs were shipped to China in order
to enrich the oligarch CEOs and their MBA efficiency “experts”. The key
disturbing facts from this data are as follows:

  • Goods producing jobs as a percentage of all jobs have declined from 31.2% in 1970 to 13.8% today.
  • Lawyers, accountants, financial advisors and other paper pushing
    professions made up 12.4% of jobs in 1970 versus 18.7% of all jobs
  • Obese Americans love to go out to restaurants and be served.
    Hospitality employees now make up 10.1% of the workforce versus 6.7% in
  • Obese, vain, stupid Americans have also benefitted the Health
    Services and Education industries as the number of nurses,
    proctologists, teachers, school administrators and Beverly Hills TV
    surgeons has surged from 6.4% of the workforce to 15.1%. You’d think we
    would be healthier and smarter with these figures. We’re not.

Type of Jobs 1970 % of Total Today % of Total
Manufacturing 17,848 25.1% 11,670 9.0%
Construction 3,654 5.1% 5,604 4.3%
Mining & Logging 677 1.0% 745 0.6%
      TOTAL GOODS PRODUCING 22,179 31.2% 18,019 13.8%
Trade & Transportation 14,144 19.9% 24,785 19.0%
Education & Health Services 4,577 6.4% 19,611 15.1%
Professional & Business Services 5,267 7.4% 16,734 12.9%
Government 12,687 17.9% 22,231 17.1%
Financial Services 3,532 5.0% 7,577 5.8%
Leisure & Hospitality 4,789 6.7% 13,169 10.1%
Information Services 2,041 2.9% 2,711 2.1%
Other Services 1,789 2.5% 5,364 4.1%
      TOTAL SERVICES 48,826 68.8% 112,182 86.2%
                          ALL JOBS 71,005 100.0% 130,201 100.0%


The politicians attempting to buy your vote today are promising new
good jobs. One side is going to impose 100% tariffs on all Chinese crap
coming into the country. This will revive domestic manufacturing.
Another side is going to create millions of “green” jobs. Imagine all
the solar panel jobs coming our way. Someone else is going to rebuild
the infrastructure of the country, generating millions of made in
America jobs. Too bad there are only 7 million people in the whole
country that have a construction background. The Federal Reserve is
going to print our way to millions of new jobs by reducing the value of
the dollar, again reviving our dormant manufacturing sector. I can see
Bethlehem, PA firing up the steel mills that have been dead for 20 years
and closing down their casinos. Maybe if we hire some more government
bureaucrats to administer the implementation of Obamacare and the
financial regulations that are eliminating free checking accounts, the
economy will miraculously revive. Paper pushers don’t morph into
construction workers. Criminal Wall Street MBAs don’t become petroleum
engineers. Unemployed waitresses in Riverside, California aren’t moving
to Washington DC to get a great job at Ruby Tuesdays.

The delusions continue. Unless American union workers are willing to
work for $7 per hour with no benefits, the manufacturing jobs are not
coming back from China. The corporate oligarchs and their bought off
cronies in Congress sold the country down the river over the last 40
years. Mega-Corporation profits are at record levels as goods are
produced by slave labor in the Far East at 80% lower costs than they
could be produced in the U.S. With 86% of the U.S. workforce in the
service industry, introducing tariffs on imported goods and devaluing
the dollar will further put the squeeze on the American middle class who
already have been systematically screwed by the ruling elite over the
last 40 years. Our society took 40 years to dig this hole. It is now so
deep, there is no way out. But, look at the bright side. At least we
don’t have to watch bread lines stretching down the block when we are
watching our 52 inch HDTV, holed up in our 5,000 sq ft McMansions,
ignoring the monthly mortgage payment bill, and waiting for our
unemployment funds to be direct deposited into our bank accounts. I get
all teary thinking about it. This is the iDepression 2.0.

The real people of this country who have worked and saved and done
the right things have been beaten down. It is time to stand up to those
in power and take this country back. We need the moral backbone of  Ma
Joad at the end of  The Grapes of Wrath:

I ain’t never gonna be scared no more. I was, though. For a while
it looked as though we was beat. Good and beat. Looked like we didn’t
have nobody in the whole wide world but enemies. Like nobody was
friendly no more. Made me feel kinda bad and scared too, like we was
lost and nobody cared…. Rich fellas come up and they die, and their kids
ain’t no good and they die out, but we keep on coming. We’re the people
that live. They can’t wipe us out, they can’t lick us. We’ll go on
forever, Pa, cos we’re the people