Employment Costs Surge Most In 6 Years As Initial Claims Miss

Tyler Durden's picture


Following last week's "seasonal volatility"-driven plunge in claims to new cycle lows, this week saw a 32k rise to 302k, missing expectations for the first time in 4 weeks. However, what is more worrisome for bullish equity market investors is the surge in employment costs. The Employment Cost Index jumped 0.7% (beating expectations of a 0.5% rise) - its biggest jump since Sept 2008. This is the biggest variance from expectations in 8 years and suggests Janet Yellen's 'slack' just got a lot tighter. Good news is bad news for bonds and stocks (for now).

Employment costs jump most in 6 years...


As claims miss for first time in 4 weeks...


Charts: Bloomberg

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Thu, 07/31/2014 - 08:40 | 5026699 PlusTic
PlusTic's picture

No jobs, but higher pay...BULLSHIT

Thu, 07/31/2014 - 08:44 | 5026711 Space Animatoltipap
Space Animatoltipap's picture

Higher taxes, forced health "insurance", higher everything but higher net wage.

Thu, 07/31/2014 - 08:59 | 5026766 Master_Blaster
Master_Blaster's picture

I was talking with our finance team yesterday, they assured me employee fully burden costs are now 44% of target salary.....I remember when it was 30% 10 years ago.....main contributor is medical, go figure.

Thu, 07/31/2014 - 09:08 | 5026779 LawsofPhysics
LawsofPhysics's picture

And my guess is that if, like me, you are providing the healthcare coverage, none of your employees can go onto the exchange and actually look for a better deal.

So, let me get this straight.  You tax me and my employees to build a national healthcare exchange, but then prohibit us from participating in the exchange we paid for.  Why hasn't any clever attorney taken up this case.  We all know what the supremes would say.  We need a "Boston Tea Party" type response to this.

Thu, 07/31/2014 - 10:57 | 5027247 laomei
laomei's picture

The exchange is generally shit.  Options on it are limited and the plans basically suck.  Sure, if you're poor or at least under the subsidy cliff, you get that subsidy to ease the pain.  However, it's a gimmick as the cost of actually USING the insurance is insane.  It's a scam.  The insurance company relies on premium payments that go unused to cover costs, but in reality you are just giving interest free loans that you may or may not claim one day.  Then, just for the hell of it, they charge you fees to access your premium.  And even once they give you access, well, surcharges.  Enjoy your $10k deductible with 50/50 copay on everything I guess.  Don't worry it's "cheap".  What? And you are being FORCED to participate in this mockery?  


Now to those who see "single payer" as something horrible, here's all it is.

You know how a large company can get good rates on a good plan because the pool of employees is large?  Well, just pool that company and others together... hey, even better rates.  Ok, now pool everyone together into a single decent basic plan that covers 99% of everything most people are likely to run across in a lifetime.  Now take that single plan with that single company and strip it of profit.. not "non-profit" where they jew around the money to make the numbers work, but ACTUAL non-profit.  Oy vey, what if basic isn't good enough? Supplemental insurance to give you more coverage... which is now all dirt cheap because that 99% of risk is gone.  All rates for everything are negotiated, it's simple now.  Administrative overhead (31% of healthcare cost) is now finito, gone, no more.  All that supplemental shit is easy now too.  Want nicer rooms? A daily in-patient cash allowance? Access to non-generics? Specialized care at private clinics?  Supplemental.


This isn't rocket science.  It's everyone in the same damned pool, paying premiums indexed to income (a TINY percentage) with the haves subsidizing the have nots.  Oh no laomei, that's dirty filthy socialist communism! Poors with access to preventative care gives them more advantage and opportunity to actually get into a position to PUT skin in the game.  It releases employers from the healthcare burdens and makes a more level playing field... job sucks but you're in it for the healthcare package? You can now leave and go work where you want without fear.  No more healthcare kickbacks to employers or excuses for not giving raises because "health insurance".  No more fucking COBRA to suck the life out of you if you lose your job either.  

Dear god, for what the US spends on healthcare, just the public cost, not private, healthcare should be $0 additional cost and it would still be the most expensive in the world.  Who the fucking hell cares if it's pulled out directly from the paycheck or you pay it after? At present it eats 17.6% of GDP.  It would save $600 BILLION PER YEAR.  95% of EVERYONE would pay much less and EVERYONE would have insurance... not shitty insurance, but GOOD insurance.  Oh but wait times and stuff.  Guess what you can use that savings for? PUBLIC HOSPITALS with massive funding that sets a standard.  So long wait times, hello even higher standard of care.

I seriously do not understand why Joe Fucking Lieberman is not dancing from a lamppost.  Obama sat down with the insurance companies who wrote their idea of reform and agreed to it.  The public wanted single payer.  Well, can't ignore the public can we? All the dems vote yes, except for fucking Joe who is resigning anyways and is chosen to be the fallguy.  Oh well, we tried so hard, but Joe didn't like it... as they then ignored the issue entirely.  If it wasn't Joe, it would have been someone else, the point is that they were all bought and paid for, they are all fucking corrupt illegitimate treasonous criminals and should be summarily executed for that single issue right there.  That, by the way, also happened to be my motivation to leave the US for good.  It was either leave or start assassinating members of congress... I decided it's simply not worth it... might as well leave for somewhere that's sane.

Thu, 07/31/2014 - 09:08 | 5026770 LawsofPhysics
LawsofPhysics's picture

Yes, ignore the participation rate or the fact that the "higher net wage" still hasn't kept up with inflation. - winning.

Thu, 07/31/2014 - 08:45 | 5026713 Dr. Engali
Dr. Engali's picture

It's not higher pay, it's higher costs. Zerocare doesn't come cheap.

Thu, 07/31/2014 - 08:46 | 5026720 fonzannoon
fonzannoon's picture

Goddammit Doc it's wages. Turn on cnbc and get with the narrative.

Thu, 07/31/2014 - 08:53 | 5026748 DeadFred
DeadFred's picture

They carefully nutured those green shoots and now they find out they're growing kudzu.

Thu, 07/31/2014 - 09:05 | 5026765 LawsofPhysics
LawsofPhysics's picture

Little known fact regarding kudzu, the nectar is blue and it will turn the honey of local bees blue.  The asians believe the blue honey has special properties and will pay 3x-10x more for this honey.  Just for fun we typically move one or two hives to local kudzu patches mid-summer.

Thu, 07/31/2014 - 08:57 | 5026759 LawsofPhysics
LawsofPhysics's picture

Regardless guys, people don't simply "dissappear" once they become unemployed.  Add to that, exisiting people dependent on SNAP, disability, or medicare and things are going to start getting interesting shortly.


Albert Bartlett was correct - "The greatest shortcoming of the human race is our inability

 to understand the exponential function.

Thu, 07/31/2014 - 08:45 | 5026715 GetZeeGold
GetZeeGold's picture



Because Obamacare.

Thu, 07/31/2014 - 08:42 | 5026702 B2u
B2u's picture

ooops....the FED never had control and the data is blowing up in their faces....

Thu, 07/31/2014 - 08:54 | 5026738 Bossman1967
Bossman1967's picture

Its the data they want us to have. Monthly number will be under 6 percent! Happy Days are hear so smoke a joint and enjoy the cooler weather 75 for a high today in oklahoma city

Thu, 07/31/2014 - 08:43 | 5026708 Sudden Debt
Sudden Debt's picture



Thu, 07/31/2014 - 08:44 | 5026709 fonzannoon
fonzannoon's picture

Employment costs = wages for anyone who missed it and wants a good laugh. Now you know why the 10yr is selling off and stawks are selling off. Yellen is finally going to be forced to raise rates because real inflation is on the way because we are all making so much fucking money because things are so fucking great.

Thu, 07/31/2014 - 08:47 | 5026719 Dr. Engali
Dr. Engali's picture

Employment costs = Zerocare.

Thu, 07/31/2014 - 08:48 | 5026722 fonzannoon
fonzannoon's picture

See my reply above. I don't want to have to report you but there are like 7 agencies I am supposed to be contacting right now about you.

Thu, 07/31/2014 - 08:48 | 5026727 Dr. Engali
Dr. Engali's picture

Lol..... Thanks for the laugh. I needed it today.

Thu, 07/31/2014 - 09:17 | 5026833 Everybodys All ...
Everybodys All American's picture

It's called stagflation ... same as it ever was. No different this time.

Thu, 07/31/2014 - 08:45 | 5026717 madbraz
madbraz's picture

Brought to you by the Larry Summers/Bob Rubin team of data manipulation at the highest levels...

Thu, 07/31/2014 - 08:48 | 5026725 buzzsaw99
buzzsaw99's picture

only because the maggots at the top take a bigger bite

Thu, 07/31/2014 - 08:50 | 5026735 ekm1
ekm1's picture

And that's where inflation has gone, COSTS.


This is a short lecture on inflation, deflation and economy.


Profit = Revenue - Cost


There is:

Inflation of Revenue

Deflation of Revenue

Inflation of Costs

Deflation of Costs


Profit must always be >0, otherwise business will not convert any raw materials into consumable products.


Inflation, deflation of each component are not meaningful.

What matters is that Profit=Revenu-Cost (to be >0)


Lecture is over

Economy is dying because business is not making a profit because Quantitative Easing has pushed costs into hyperinflation.


It is that simply.

Just remember this again:


Profit = Revenue-Cost (to be always >0)

Thu, 07/31/2014 - 08:56 | 5026756 ekm1
ekm1's picture

Bullets through heads are coming soon Fonz, not more staged suicides.


Controlling those trading computers is what matters right now.

All oligarchs dream of controlling those computers and only bank lobby has major control of them now.



If bank lobby doesn't surrender, bullets will fly, very, very, very unfortunately. 

Thu, 07/31/2014 - 09:02 | 5026775 fonzannoon
fonzannoon's picture

How does bringing the down down to 5k solve any of this? First off i'd argue that you can't do it anyway. The market would just seize up. The sheep would finally decide they would rather have cash in the mattress. Everything would freeze.

It does not pay off any debt. It may bring oil prices down because the real economy would be in shambles but Oligarchs don't like civil unrest and it would be chaos. Coomplete chaos. It's better to continue to fake it. Better for everyone.

Thu, 07/31/2014 - 09:05 | 5026783 ekm1
ekm1's picture

Good thing with debt is that it doesn't have to be paid off, it can simply be defaulted on, which is about to occur.


The real issue is not debt or interest rates.

The real issue is $60 trillion USD sloshing around the world

Gov and Fed MUST extinguish about $20 trillion, otherwise world abandons USD.

There's too much

Thu, 07/31/2014 - 09:07 | 5026788 LawsofPhysics
LawsofPhysics's picture

Correct, there goes Argentina, again...

Thu, 07/31/2014 - 09:08 | 5026791 fonzannoon
fonzannoon's picture

for all that money sloshing around the world it is interesting that the countries in the worst trouble seem to be the ones that find themselves starved for dollars.

Thu, 07/31/2014 - 09:11 | 5026803 ekm1
ekm1's picture

And argentina is not giving an excrement. They will do bilateral trade with brics and avoid USD. They have plenty of commodities

Thu, 07/31/2014 - 09:12 | 5026810 LawsofPhysics
LawsofPhysics's picture


Thu, 07/31/2014 - 09:14 | 5026821 fonzannoon
fonzannoon's picture

Argentina can't give an excrement because they have no toilet paper.

Thu, 07/31/2014 - 09:15 | 5026830 ekm1
ekm1's picture

That's Venezuela

Thu, 07/31/2014 - 09:22 | 5026857 fonzannoon
fonzannoon's picture

As of right now Argentina is right back where they were over a decade ago. When they start flourishing due to bilateral trade with the bric nations and the dollars start piling up over here I will perk up. I know everyone says it's bound to happen but it never seems to.


Thu, 07/31/2014 - 09:14 | 5026825 dontgoforit
dontgoforit's picture

QE was a breaker to hold back a tsunami.  But they had to keep adding more and more bricks at the top because the wave kept building.  Now the wave will breach and the whole breaker will fail and the end result is 10x worse than if they had let it take it's natural course in the first damned place.

Thu, 07/31/2014 - 09:14 | 5026819 LawsofPhysics
LawsofPhysics's picture

"If bank lobby doesn't surrender, bullets will fly, very, very, very unfortunately. "  -

You sir, are truly an optimist.

Thu, 07/31/2014 - 09:20 | 5026844 ekm1
ekm1's picture

When oligarchs do not share wealth and power with each other, they start killing each other.


That is 4000 years of documented history.




What is happening now, happened to Venice, hence oligarch civil war

Thu, 07/31/2014 - 09:24 | 5026861 LawsofPhysics
LawsofPhysics's picture

"hence oligarch civil war" - and great opportunites for soldiers of fortune.

Just saying...

Thu, 07/31/2014 - 09:29 | 5026883 ekm1
ekm1's picture

Absolutely agree

Thu, 07/31/2014 - 08:59 | 5026764 FrankieGoesToHo...
FrankieGoesToHollywood's picture

Profit must always be >0, otherwise business will not convert any raw materials into consumable products.

You are still living in the old'en times I see.  Havent you seen the books of Amazon, FB, GM, and about 75% of the DOW components?  They strive to not make a profit so as to not pay taxes.  The correct formula would be:


CEO compensation_2014 >= CEO compensation_2013+10%.

Thu, 07/31/2014 - 09:01 | 5026774 ekm1
ekm1's picture

That is fake profit, document profit.

Firms are manipulating money and bonds due to ultra abundance of USD and not expanding output.


It doesn't last long. It is actually about to suffer a sudden death

Thu, 07/31/2014 - 10:00 | 5026993 PT
PT's picture

Re "... about to suffer a sudden death" :

I really wish I could believe you but I keep having visions of people going to "money saving wealth creation seminars" and being convinced of the joy of taking out 20 year loans to pay for a week's worth of groceries "and next week just roll over the debt", and next door there will be a pension fund with a salesman spruiking the joys of Accumulating Collateralised Grocery Obligations.  ...and we'll all be rich!!!

Thu, 07/31/2014 - 10:10 | 5027004 PT
PT's picture

There will be an ad in the newspaper:  How to get rich by cutting your grocery bill by 99.9% and investing the remaining money in ACGOs.

The scary part is that when hyperinflation kicks in, this will be the only survival hedge that will work.  For a little while.  Not to worry, when it all eventually falls over it will all be the peasant's fault becoz they were so stupid and greedy!!!

Thu, 07/31/2014 - 09:07 | 5026787 LawsofPhysics
LawsofPhysics's picture

With almost 40% of the companies on the public exchanges involved in selling financial "products", it's safe to say that approximately 40% of the listed companies don't actually provide anything of real fucking value.  Doesn't even count the "facefucks" etc.

Thu, 07/31/2014 - 09:25 | 5026868 PT
PT's picture

Can I have a turn?  Let me see ...

Profit reported to IRS = revenue - costs

Profit in prospectus = revenue - costs + unsold inventory + change in value of the land that the factory sits on, as reported by accounting firm paid for by company + change in debt - interest that is actually paid as opposed to interest that is acutally owed because the nice bank man is very understanding about these things and you can borrow as much as you like as long as you assure us that you're good for it because we can always sell the bonds to the workers' pension funds

Am I getting close?

Thu, 07/31/2014 - 09:31 | 5026892 PT
PT's picture

Oh yeah, and I nearly forgot:

CEO compensation + Dividends = profit which is good and must be maximized or else the whole capitalist system will collapse

Wages = cost which is evil and must be minimized or else everyone will go bankrupt and we're not a bunch of communists you know

rich customers = someone else's problem, the market will provide, we're not a bloody charity either

Thu, 07/31/2014 - 09:34 | 5026897 ekm1
ekm1's picture

That is because there are too many dollars sloshing around.

It's easier to capture them by manipulating balance sheets rather then expanding output

Thu, 07/31/2014 - 09:31 | 5026891 kenezen
kenezen's picture

I like your thought but I'll add  What profit is made is taxed at 4% in Ireland instead of our much bigger rates. Or sequested in Burmda in Re-Insurance.  Never to be repatriated to America. When is the last time we have seen Industrial MFG here?

Thu, 07/31/2014 - 08:52 | 5026739 youngman
youngman's picture

Its Obamacare....making our products more costly in the world is not good business....

Thu, 07/31/2014 - 08:54 | 5026750 Zgangsta
Zgangsta's picture

Reporting on everything BUT GDP news today, eh?

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