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What Happens To High-Wage Jobs Next?

Tyler Durden's picture




 

Yesterday, during his conference call, in the context of the collapse in the US shale industry, DoubleLine's Jeff Gundlach said something that we first noted over a month ago: that "all of the job growth in the (economic) recovery can be attributed to the shale renaissance." He was likely looking at the following chart from a Manhattan-Institute report:

And while he added that if low oil prices remain, the U.S. could see a wave of bankruptcies from some (or most) leveraged energy companies which we also observed two months, there is a different and perhaps far more important tangent to the above chart. 

Wages.

Because recall that now that the unemployment rate is an artificially low 5.6% thanks to a record number of Americans out of the labor force (all that would need to happen for the jobless rate to double is for 8 million of the 93 million American not in the labor force to return to it for whatever reason), the one key indicator that the Fed is focusing on, is average weekly compensation. And as those who followed last Friday's jobs report recall all too well, in December nominal wages saw their biggest monthly plunge in years.

So our question is this: if indeed the shale boom is now turning to bust, and if indeed the vast majority of jobs created were thanks to the shale revolution (which is about to go in reverse), what happens to the primary source of high-paying jobs: the energy sector?

Before you answer, take a look at the following chart, courtesy of the Dallas Fed.

 

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Wed, 01/14/2015 - 20:18 | 5662635 rsnoble
rsnoble's picture

$15hr fast food jobs?  At least until Robby the burger flipper shows up.

Wed, 01/14/2015 - 20:26 | 5662660 stocktivity
stocktivity's picture

Let's see...oil up 6% today. Watch how quick gasoline goes up. Probably already being raised.

Wed, 01/14/2015 - 20:48 | 5662724 kliguy38
kliguy38's picture

We fired some folks..........

Wed, 01/14/2015 - 21:27 | 5662879 RaceToTheBottom
RaceToTheBottom's picture

Pretty soon po people will be swimming the RioGrand the other way to steal some beaner jobs.

Oh wait, steal is raccist

Wed, 01/14/2015 - 20:31 | 5662676 MalteseFalcon
MalteseFalcon's picture

When you are on the losing end of a bet, try to hide behind "jobs".

These "jobs" were created by malinvestment, which is bad, right?

If it's all about jobs, let's print money and hand it to people to dig ditches and then fill them in @ 30/hour.

Note that this scheme doesn't allow for parasite speculators, so I suppose it might be the dreaded "socialism".

Wed, 01/14/2015 - 22:00 | 5663004 BraveSirRobin
BraveSirRobin's picture

"$15hr fast food jobs?"

Most fast food employees would drool over a $15/hr wage. Where are these?

Wed, 01/14/2015 - 20:19 | 5662639 Equality 7-25-1
Equality 7-25-1's picture

Back to school, proles.

Wed, 01/14/2015 - 23:35 | 5663351 A Nanny Moose
A Nanny Moose's picture

learn to go analog in an increasing digital world

Thu, 01/15/2015 - 10:07 | 5664491 Ariadne
Ariadne's picture

The most important thing I have learned from the affirmative action criminals is that you don't have to be the best, you just have to eliminate everybody better than you. Remember this as you watch the charts depicting all sectors and entities and test scores going down in flames...

Wed, 01/14/2015 - 20:24 | 5662640 Kreditanstalt
Kreditanstalt's picture

Well, they've had it coming.   Grunt labor shouldn't be paid $20-$30-$40/hour anyway...and if it weren't for social welfare payments, minimum wages and union "recognition" laws - all enforced by the government gun - those characters would have found A LOT of cheaper competition out there bidding for their jobs, even before this...

Hope they didn't spend it all on RVs, quad bikes, hot tubs, cell phones for every kid, alcohol and trips to Mexico...

Wed, 01/14/2015 - 20:28 | 5662666 Its_the_economy...
Its_the_economy_stupid's picture

they should be paid a living wage. And by the way, you're not too bright.

Wed, 01/14/2015 - 20:32 | 5662679 p00k1e
p00k1e's picture

Remove all minimum wages!  But redefine the homicide rules and lighten sentencing guidelines. 

Wed, 01/14/2015 - 21:05 | 5662778 Kreditanstalt
Kreditanstalt's picture

Strange, isn't it, how the free market is doing my dirty work for me...!  Sortng out who getsa job and at what salary.

The oil patchers got too expensive and now they're losing their (overpaid) jobs as a result...

Wed, 01/14/2015 - 23:39 | 5663364 A Nanny Moose
A Nanny Moose's picture

Define "Living wage" please?

Wed, 01/14/2015 - 20:30 | 5662671 p00k1e
p00k1e's picture

Grunt labor has to be paid $20-$30-$40/hour in order for the skims to work. 

Wed, 01/14/2015 - 20:32 | 5662678 The Shape
The Shape's picture

Better to pay desk jockeys millions to speculate.

Wed, 01/14/2015 - 23:40 | 5663371 A Nanny Moose
A Nanny Moose's picture

Bribes to government employees are cash under the table, and don't necessarily add to the economy.

Wed, 01/14/2015 - 21:59 | 5663005 I Write Code
I Write Code's picture

You might recalculate.  $20/hr is below median.  Assuming some of these jobs are a step or two above grunt they should pay median anywhere in the country, and in a boom town for a profitable industry they can easily pay more.

You've just gotten accustomed to the slave wage regime we've been in increasingly the last twenty years or so, real wages for the 99% going down every year.

Wed, 01/14/2015 - 23:36 | 5663362 A Nanny Moose
A Nanny Moose's picture

In their defense, at least an RV is mobile, and alcohol can be used for barter.

Surprised your post got so many down votes. I would venture they are either in denial, or ....in denial. Take your pick.

Wed, 01/14/2015 - 20:26 | 5662655 Keltner Channel Surf
Keltner Channel Surf's picture

High-Wage Jobs?  Given the salary levels of AAPL system programmers, I assumed "High-Wage" was the middle name of Steve, their former chairman ...

Wed, 01/14/2015 - 20:24 | 5662656 drivenZ
drivenZ's picture

Is it me or are those charts from like 2-3 years ago? Someone show me a current chart of sectors where jobs are being created. 

Wed, 01/14/2015 - 20:25 | 5662657 no more banksters
no more banksters's picture

High-Wage Jobs? What is this, a joke?

Wed, 01/14/2015 - 20:44 | 5662680 spinone
spinone's picture

Hmmm, I wonder what could possibly get the price of oil to go back up?

Maybe a war in the middle east.  Yeah, that would do it.  I wouldn't be suprised if they dug up old Cheney for this one.

Wed, 01/14/2015 - 21:08 | 5662794 joego1
joego1's picture

A couple of well placed generic cruise missiles to some refineries in Saudi Arabia ought to balance out the dip in oil prices.

Wed, 01/14/2015 - 21:49 | 5662968 Abbie Normal
Abbie Normal's picture

Or maybe because Russia just cut off more than half the natural gas supply through the Ukraine to the rest of Europe.

Wed, 01/14/2015 - 23:43 | 5663384 A Nanny Moose
A Nanny Moose's picture

dug up old Cheney for this one.

Only in a perfect world....given his heart issues.

Thu, 01/15/2015 - 01:19 | 5663613 Ginsengbull
Ginsengbull's picture

Is Mooktada Al Solder still running around in Shiite Iraq?

 

BHO could just call him up, and say "Mookie old buddy old pal, how about stirring things up a little for old times sake?"

 

"You get more money, I get more money... It's a win win!"

Wed, 01/14/2015 - 20:37 | 5662695 buzzsaw99
buzzsaw99's picture

Henny Penny got hit by the falling Yenny. Meanwhile Loosey Goosey put her head in a Euro Noosey. Turkey Lurkey ate tainted Yuan Beef Jerky with Foxy Shy-Loxy who financed the whole deal with stolen bitcoins bitchez.

Wed, 01/14/2015 - 20:48 | 5662722 Yen Cross
Yen Cross's picture

 Earth to Google? Please don't start charging me for my email accounts.

Wed, 01/14/2015 - 20:59 | 5662764 Jack Burton
Jack Burton's picture

Burger flippers serve mostly their own socio-economic group. Look at the prices in the grocery stores for even basic fruits, vegitables, staples and decent meat. I make home made pizza with all fresh foods as far as I can. The pizza I serve costs three times this fast food Pizza Hut stuff. Naturally the poor are going to feed their kids on Pizza Hut. I buy nice chuck roast and grind it for hamburgers, bakery buns and all the fixings, a home burger costs 3 times what the McDonalds does, naturally Mom is gonn stuff her kids faces with Big Macs. Same, even down to a bowl of chile, i buy and grind chuck roast, nice fresh oinions, celery, tomato, beans, the lot. A bowl of my Chile cost again, 3 times what these chain restaurants will feed you on. I see the poor using fast food for it's cheapness. Real decent foods from the store bot seperatly will cost much more than the fast food non-food products. The poor not only flip burgers, they feed that shit to their familes on account of cheap price. Ever wonder what goes into two pizzas for $10.99? Since I am a scratch cook, I can easily figure what goes into pizza at 1/4 the price of high quality pizza from scratch.

Wed, 01/14/2015 - 21:23 | 5662864 earnyermoney
earnyermoney's picture

LOL. Fast Food is not cheap.

 

I can easily cook a meal with no processed/packaged foods for a fraction of the cost of fast food.

Thu, 01/15/2015 - 01:10 | 5663593 Ginsengbull
Ginsengbull's picture

Grinding your own burger is expensive, but better.

 

No pink slime. No grissle. Only as much fat as you want.

Wed, 01/14/2015 - 21:31 | 5662900 quasimodo
quasimodo's picture

Your 3x sounds a little high JB, the Mrs. usually figures 2x or less when she cooks and compares, but perhaps food is a bit less around here? I get, for instance, organic grass fed beef for $4.75 pound, less than the corn fed cattle lot shit in the stores. 

With that said, our kids rarely go to the Dr. for problems, and I am convinced...rather I know that it's becuase we eat much healthier than many others do. Does it cost more? Sure as hell does, but then we are not taking time off of work to tote kids to the med clinic, missing work to care for sick kids....the problem I see is that most folks can't see the long term benefits. Yes, it is extra work, no doubt..but we are to the point where we can hardly stand to eat out somewhere unless it's a place we know uses real foodstuffs. Call us food snobs, but it never fails, the minute someone here eats fast food or other crap, we end up feeling like ass the next day. 

Thu, 01/15/2015 - 00:31 | 5663501 Crtrvlt
Crtrvlt's picture

Do you buy wholesale in volume ?

Thu, 01/15/2015 - 01:07 | 5663588 Ginsengbull
Ginsengbull's picture

I was with you until you tried to include beans in chili.

Thu, 01/15/2015 - 10:02 | 5664470 WhyWait
WhyWait's picture

The swill the poor eat is part necessity, part scam.  I shop almost exclusively at the lowest-price grocery store in my town, which also has the lowest price on some local organic foods and imports from Europe, a growing part of their business.  But overall I see people loading up on cheap swill, especially the ones who need the good stuff most, those with children.  The ones with cars sometimes come is a family and fill two large carts.  There is a steady stream of people at the closest bus stop with as many bags full as they can handle.

The problem is not just cost, but ignorance and misinformation.  We have been sold an astonishing bill of goods about the superiority of vegetable oil over animal fat, the superiority of a high-carb wheat-heavy diet to a high-fat diet, the safety of the additives they put in our food, the equivalence of farm-raised fish to wild-caught, the supposed health value of soy products, the equivalence of fructose and sucrose, the list goes on. And don't get me started on the lies and ignorance about GMO technology and chemical farming.  When I have this conversation with my friends (virtually all, like me, in the burger-flippers socioeconomic category, I get a strong resonance, but our survival wages and income are based on swill.  The natural working of the economy seems to drive us to that level.

I just got out of the hospital, and while it was overall a surprisingly pleasant experience the official ignorance about nutrition was on full display.  The diet was loaded with high-fructose corn syrup, wheat, "sugar" and vegetable oil, low in animal fat, virtually devoid of sodium and probably of any other essential salt, and not a trace of cultured or fermented food.  The ignorance of the medical staff on nutritional matters was as far as I could tell absolute.

Our best hope lies in the movement to grow food locally, organize and use urban gardens and patronize local farmers' markets. There will be a crisis when the money fails however.  A means to move large quantities of food from other states will have to be organized quickly. Food will be power and control.  Local and cooperative efforts to secure it will undoubtedly have to be defended against efforts of the state to monopolize the food distribution.  Our most important weapon for survival will be knowledge, and the time to spread that is now.

I have come to trust Dr. Mercola, www.mercola.com, as a main source of nutrition information.  Not completely - he has become more of a self-promoter since beginning to market his own line of products, and his ignorance of physics gives me pause - but he seems to be looking at the data and scientific evidence with a serious but skeptical eye, he clearly has a large staff and circle of trusted associates, and he shows a deep understanding of the role of agribusiness in the unfolding disaster.  I would welcome other folks' insights and suggestions on this. 

Wed, 01/14/2015 - 22:01 | 5663013 I Write Code
I Write Code's picture

Excellent point.

In normal times, the money that comes out of the oil patch would raise other sectors, but today, the money that is saved by cheaper gas and energy goes to consumption, and all of that money goes to China, the US economy will be hosed bigtime.

Wed, 01/14/2015 - 22:41 | 5663183 Duc888
Duc888's picture

 

 

Don't fret, FEDGOV will just print moar and re-initialize UE for another 4 or 5 years...and everyone gets a free EBT card.  Happy daze are here again. Then FEDGOV can take up the slack and double the employment rolls of DHS.  See?  There's lots and lots FEDGOV can do.

Thu, 01/15/2015 - 00:16 | 5663477 blue gkm
blue gkm's picture

i use 35 percent food grade hydrogen peroxide to cure high blood pressure diabetes and all sorts of illnesses. dont belive me look it up smarty pants, ben around for more then 100 years

Thu, 01/15/2015 - 00:30 | 5663502 heisenberg991
heisenberg991's picture

I get my advice from Captain Morgan.

Thu, 01/15/2015 - 12:16 | 5665137 Ariadne
Ariadne's picture

Look out. Captain Morgan works on commission.

Thu, 01/15/2015 - 01:28 | 5663649 q99x2
q99x2's picture

Oh boy the strippers are coming back to LA.

Thu, 01/15/2015 - 02:44 | 5663742 yrbmegr
yrbmegr's picture

Law school enrollments will start to climb again.

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