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Average Job Creation "Cost" In 2013: $553,000
There was a time when the Fed's QE was, at least on paper, supposed to generate jobs (the broad inflation will come on its own, in due course). After all, the prospect of injecting $85 billion in liquidity into a market with the sole goal of pushing the stock markets that benefit the purchasing power of about 10% of the population would hardly have received broad approval even by the co-opted Congress.
So, to all those who still naively claim Fed is not the sole reason for the market's relentless march higher, those billions in liquidity must go into the economy, and specifically into job creation, right?
As a result, we decided to back into what the average private sector job has ended up costing the US population in pure dollar terms (which in turn ultimately manifests itself in terms of unsustainable government debt and pent up inflation) via the Fed's monetary pathway. Well, according to the ADP data released earlier, in which a paltry 130K private sector jobs were created in a month in which the Fed, as always, injected $85 billion, the bottom line came to a whopping $654K per job (since government jobs are always a net drain, we exclude those from the calculation). And taking the average job growth throughout 2013, this number, as can be seen on the chart below, is a laughter-inducing $553K!
Obviously, the above "analysis" is merely a placeholder to show just how absurd modern policy has become, and yes - we do realize that all of that money has ended up solely into capital markets boosting risk assets, as we have been saying since 2009 and as JPM, Pimco and BlackRock now admit.
However, since the next and final tool in the Fed's arsenal is Nominal GDP targeting on the back of direct monetary injections whose purpose is to unanchor inflationary expectations, crush savers, and take the wealth effect to the next level (as we predicted would happen recently), perhaps instead of pretending QE even remotely works on the economy, Bernanke can finally make it rain, and just hand over half a million each month to every man, woman and child... and just brace for the Weimar collapse that would inevitable follow.
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So if most jobs pay around $35k/yr, where has the other $520k (or so) gone?
RE
A) I'd actually say its around $26k/yr (median household income is $52, so half that).
B) Where does the other $520-$530 go? Well, around 1/3rd of that goes into actually posting the job on numberous boards (which requires money), paying people to screen/interview, and paying for the background checks (drug tests aren't free). 1/3 goes into actually paying the person you are hiring (which is projected), and the rest go towards paying UE insurance and health insurance (but this is waning).
It's easier to get a loan than it is a job. But hey, who doesn't love ZIRP!
Administrative costs. All of today's problems can be traced to one simple observation; that being that no-one at the top has been held accountable. As my old boss from high school use to say "Too many corrupt chiefs, not enough indians".
You can start by asking ObamaWookie's friends and bundlers. And like where all the 'Stimulus' for 'shovel-ready' jobs went...
$500,000 for Job Creation in AmeriKa... what job is pay $500,000? Is hire entertainer for SEC staff?
Boris I am Slovak take corn out of ears and reread article then tootle word "cost"
You too, how many of us are here? Just asking.
1099s aimed at getting some bodies without having to pay the admin costs or responsibilities.
Plus the ability to throw the contractors under the bus when entrenched brownosing employee fuck up is priceless....
@Gumbyme
a 35K job at 1% is a 3.5m Jobs worth
a 35K job at 2% is a 1.75m Jobs worth
a 35k job at 3% is a 1.16m Jobs worth
That's how messed up the system is
"So if most jobs pay around $35k/yr, where has the other $520k (or so) gone?"
China, Saudi Arabia, Cronies, Bankers.
Obvious, AmeriKa job creator is not just hire worker, but is must spend money also on assemble job creation committee and to hire efficiency consultant... maybe is $520K spend?
Prison administrators: 450k
Prison Guards: 100k
Prison Nurse: 3k
Free Shit Army: 300k
Prisoners: -300k after taxes
Remember when Steve Jobs said the efficiency the PC added would lead to the 4 day work week? Then the politburo robbed the savings & loans, to keep the slaves busy. Can't have the slaves idle, thinking about what to do about how badly they're getting fucked. Every Monday your day goes to the 'S&L bailout'.
Pussies.
once you calculate reserve ratio requirements this $ per job number explodes.....
Jobs? Who needs a job when Zero will give me everything I need. Screw you working stiffs. I'm taking my Obamaphone, Obamacare, Obamfoodstamps, my Obamaeducation and going on an Obamavacation. Thank you China, future generations, and the 49% of you stupid fuckers who are dumb enough to support this shit.
Another form of entitlerments. Boondoggle-type government jobs paying 6 figures.
I laughed. I cried...
Well we all know that QE had abso feckin lutely nuthin' to do with creating jobs.
@Clowns on Acid
Did the printers not hire extra help?
Ok we need more printing so we can hire another ONE print man
Great! Just last week, at a dinner, I was challenged when I put forth the figure of $500,000 in revenue as needed for a single job being created in the MEMS foundry biz. Now I find out it has the same revenue requirement as a part-time Wall-Mart gig. No doubt I will get some phone calls.
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My old man was a math teacher, university level.
He developed an arcane, little understood equation, that surprisingly enough, most people get very rapidly. At least the little people.
He called it, "The Gozintas". 2 gozinta 4 twice.
Like this:135K of jobs gozinta 85 billion 635K times equals dollars/job.
Always crunch these stats when TPTB talk about X creating Y. You'd be surprised at the gob-smackers that come out the end of that little equation.
Nice catch, ZH!
•?•
V-V
Dr. Evil's cover story is slipping.
That's using the wrong denominator by a factor of ten. As if anyone who puts these plans into motion cares about how many little people benefit.
Instead of dividing the $85 billion each month by the 150 odd thousand people getting new jobs, use the number of Masters of the Universe who really benefit - figure 1,500 people tops - and you’ll see the real reason this music can't stop.
wow, i never knew the cost of selling phony mortgage backed bonds to the fed could be so expenshive
What? No mention of "jobs saved?" Because that will be their next claim.
Tylers, this must be wrong. The whole QE et al. is neutral because Fama said so. /sarc
So basically, the feds injections are saving 1.3 million CURRENT jobs.
QE can never work because the money ends up in the wrong hands (Primary Dealers, TBTFs). They are under no obligation to directly inject it into the economy and job creation. Therefore, they inject it into packaging fees for derivatives and the associated bonuses. The Fed was created to serve financiers and the banking community under the guise of their dual mandate.
Laugh?? No, may i pause to shed a tear? There are millions of shattered lives as a result of this folly. I do not cry for myself, as one of the rich, my portfoliois intact for moment.