-
How Tax Cuts and Consumption Affect America's Jobs
If you're new here, you may want to subscribe to my RSS feed. Thanks for visiting!
It has been common in politics to hear that tax cuts in the higher income tax brackets will be good for the economy because the wealthy and the well-to-do will be able to save and provide funds for capital investment spending and jobs.
Americans must have jobs. Large scale unemployment in an urban society guarantees untenable social, economic and political conditions. It is total spending that generates jobs, which includes the investment spending generated by our savings, but also consumption spending including government spending.
In the last two posts I quoted from Alan Greenspan, who told us there are not enough investment opportunities for our savings since the year 2000. Creating hedge funds or other speculative financial investments does not create many jobs: mostly financial advisors and lawyers.
Since financial investment speculation does not create enough jobs, America must rely more on consumption spending to keep ourselves employed.
The consumption spending America needs the most is for domestic services. Consumption spending that goes for luxury products imported from abroad creates foreign jobs, but not American jobs.
The growing importance of consumption spending for creating jobs makes credit card spending a necessity. Given the wages and taxes for millions of Americans, keeping up spending requires credit card borrowing. For those of us who save and read savings blogs, it is sobering that so much of our savings supports credit card spending.
It would be better if it helped pay for long-lived physical assets, but at least we can have an interest return knowing our savings support jobs and the economy.
The growing importance of consumption spending brings us back to the politics and tax cuts I mentioned above. If America is going to have enough jobs, the well-to-do must see to it that all of their income goes back into the spending stream.
They can only save if it helps create jobs, otherwise they must consume.
Washingtonian Magazine published an article over a year ago describing the proper things to buy for the well-to-do lifestyle. They included landscaping, flowers, dog walkers, sports tickets, club memberships, personal trainers, spa memberships, dining out and charity events. For those with kids, include coaches' fees, soccer camp, piano lessons, college consultants and live in nannies.
Perhaps the editors at Washingtonian were celebrating conspicuous consumption or encouraging the wealthy to do their duty and create jobs. That I cannot tell, but tax cuts to the wealthy pose a threat to jobs and economic growth unless they go into consumption. Like it or not; that's a fact.
Fred Siegmund covers America's jobs as part of work doing labor market analysis and projections for a client base of recruiters, trainers and counselors. Visit him at www.americanjobmarket.blogspot.com
-
How Lower Retail Prices Depress Buying Power
Retail trade has an average monthly employment of nearly 15.5 million. While it is not the biggest part of America's economy (government is bigger and health care is almost as big and gaining fast), it is the percentage of America's jobs that makes retail different from other sectors.
In 2007, retail trade had 11¼% of wage and salaried jobs in the United States. It was also 11¼% in 1975. Back in the late 1940s, it was 10¼ to 10½%, but the percentage slowly crept up to 11% in the 1970s and briefly reached 12% in the late 1980s before beginning an 18-year decline to 11¼% today.
Using computer technology in trade, especially for barcodes and inventory management, increases labor productivity. Retail and wholesale sales volumes per work hour are up and sometimes at rates comparable to productivity in manufacturing.
Higher productivity means potential savings as lower costs and competition pressures retailers to lower prices, but the savings limits job growth and decreases the retail share of jobs.
Employment data by state or metropolitan area tells the same story. The percent of retail jobs by state cluster tightly around the 11.25% average and the percent variation above and below that total is usually less than a percent.
Because retail jobs remain at roughly the same percentage of total employment, the only way to have more retailing jobs is to have a bigger population to serve. For anyone in local government or a chamber of commerce who wants to boast local employment by luring in a big national retailer, the plan will not work.
Before much time goes by, the new retailer displaces existing retailers and jobs fall back to 11 or 12 percent.
The matter of displacement is controversial because the retailer Wal-Mart has the reputation of charging low prices but paying the lowest wages in the retailing industry. When a large retailer such as Wal-Mart enters a new market in a new location, there will be potential savings for consumers from lower prices if Wal-Mart really has lower prices.
However, if Wal-Mart really does pay lower wages, then lower wages without new jobs depresses local buying power, which will depress all of the local economy.
While it may appear that lower prices are savings for many, lower paying jobs have secondary effects that spread throughout the area. Savings are more complicated than lower prices. Savings over time depends on prices and wages.
Fred Siegmund covers America's jobs as part of work doing labor market analysis and projections for a client base of recruiters, trainers and counselors. Visit him at www.americanjobmarket.blogspot.com
-
How Saving Fuel is Costing Jobs
According to the Washington Post's "A Switch on the Tracks: Railroads Roar Ahead," rising fuel costs for 18-wheeled trucks has generated a rapid turnaround in rail traffic with freight rail tonnage and rail ton-miles surging ahead.
The article cites a 3 to 1 fuel advantage for rail over trucks, but the fuel advantage also means less environmental pollution in an eco-conscious society.
Using less fuel to transport a ton-mile of freight represents a physical savings of resources that potentially benefits many because fuel costs are reflected in grocery store prices and for just about everything else we buy at stores.
Savings that lower costs should always be good, but because even though a higher share of freight traffic could go on the rails, changing modes of transportation will affect jobs.
Trucks have been dominating freight traffic measured by value and tons. The latest commodity flow survey data published by the Bureau of Transportation Statistics and Federal Highway Administration compiles domestic freight shipments.
It shows that trucks haul 70 percent of freight measured by value and 60 percent of freight measured by tons.
Rail, on the other hand, has only 3 percent of freight measured by value and a little over 10 percent measure by tons. Truck traffic measured in value of shipments is bigger than rail by a ratio more than 20 to one. In tons of freight, trucks are bigger than rail by a ratio of 6 to 1.
Freight measured by ton-miles, or tons multiplied by miles, shows the relative advantage of rail as a bulk carrier. Trucks haul 34 percent of freight measure by ton-miles compared to 31 percent by rail. In ton-miles, trucks are about even with rail by a ratio barely above 1 to 1.
However, the ratio of tractor trailer and heavy truck driving jobs to locomotive engineering jobs tells a different story. Heavy and tractor trailer drivers have 1,860,000 jobs compared to 46,600 jobs as locomotive engineers and operators.
Heavy truck driving jobs outnumber rail engineer jobs almost 40 to 1. Those totals count only heavy and tractor trailer jobs. There are a million additional light and delivery service trucking jobs.
Efficiency sounds so much like something we should like, but saving energy and reducing air pollution by shifting to rail and away from trucks will eliminate thousands more jobs than it will create.
If America wants efficiency, we may need to think of some new ways to share their work.
Fred Siegmund covers America's jobs as part of work doing labor market analysis and projections for a client base of recruiters, trainers and counselors. Visit him at www.americanjobmarket.blogspot.com
-
Travel Reimbursements Are a Pain. Seriously.
I've been traveling a lot recently for work — during the month of March, I traveled for three straight weeks; Boston the first week, Orlando the second, then back to Boston the third.
Normally, I don't mind traveling, but three weeks in a row is stressful. It doesn't help, though, that I have to deal with getting all of my expenses reimbursed.
Now that's stressful.
For some reason, my travel expenses are always coming under scrutiny by the accounting department.
THEM: "These receipts don't add up."
ME: "I don't have receipts for a $20 group lunch I paid cash for — I wrote it on the expense report."
THEM: "You need receipts for everything."
ME: "I got a $1.50 soda from a vending machine. How am I supposed to get a receipt? Call up Coca-Cola and ask for one?"
THEM: "If you spend over $55 any day, you have to pay for the rest."
ME: "So if I spend $65 one day then nothing the next, I still have to pay the difference? What kind of sense does that make?"
There's a problem when you're worried that the money you personally put forward for the company may not come back to you. I lose interest on every penny I spend for the company.
I'm not trying to rip them off, I'm just trying to get my money back. But they make it seem like I'm a thief for wanting my money back.
This month, because the accounting person was on vacation when I booked a hotel room, they apparently charged the room to me — even though the company has a corporate account. Too bad my receipt didn't note it. Now I have to carry a balance or transfer money around because I need to submit a second expense report.
There's got to be a better system than employees putting their money first and hoping to get reimbursed. Why not a pre-paid card good for X amount of dollars for employees who travel? If there's any large purchases that exceed the pre-paid amount (like group dinners), you charge it and submit an expense report.
How do you deal with travel reimbursements?
-
How Our Taxes Came Out Perfectly
I finally got around to doing our taxes over the weekend — I had been putting them off for a bit and then couldn't find a good time to sit down and do them.
They were a little bit more confusing this year, thanks to our inter-state move in November and reaching a high enough income on my Web publishing gigs to pay self-employment taxes.
Once I was able to get it all straightened out, the results came out about as perfectly as they could.
The final totals?
Federal: $136 refund
Massachusetts: $175 refund
Maryland: $179 to paySo, in the end, we'll be getting $132.
Not a lot, but that's okay — remember, every dollar the government pays to you is a dollar you've given to them, interest-free.
Now, I know that a certain school of thought would rather pay taxes than receive any refund — and I respect that — but I would rather err on the side of getting a little bit back than having to shell out more.
If you ended up with a really large refund, take back your salary today. Talk to your HR person and adjust your W4 to have more withholdings — you'll get more money in your paycheck and you won't be loaning out your cash to the government interest-free.
-
Investing in Education: How Much It Pays
There are several ways to estimate returns on investments in education. One way is to compare wages between jobs using general workforce skills with jobs that need college degree skills.
Compare wages for a certified teacher with a college degree to wages for a teaching assistant, for example.
Another way converts college tuition and expenses into an estimate of a minimum wage or minimum salary increase that will make college a paying investment. The process requires interest calculations because money paid for college tuition and expenses could be used to buy stocks and bonds or other interest earning assets.
Tuition and expenses amounts to an investment in a higher paying job, even though college students may want to go to college for other reasons.
Suppose in-state tuition at public college is $6,000 per year each year for four years. In some states like North Carolina, the state tuition is reported as $3,886, while in others like Michigan it is $7,115. Some are above and some are below, but let's use $6,000 as a representative tuition for 2007.
In the first year, $6,000 invested in stocks and bonds would earn interest or dividends. Similarly in the second year, except $12,000 would be invested and the second year earns interest or dividends on $12,000.
At the end of four years at the time of graduation, the principal invested and the interest earned is a total amount, which will equal $27,230.82 at 5 percent interest.
The principal amount of $27,230.82 earning 5 percent interest over the next 10 years and compounding monthly will be equal to $44,849.42. Start at graduation and $288.82 of extra income each month over the next 10 years using 5 percent interest will also be the same $44,848.63.
The $288.82 equals the minimum extra monthly earnings necessary to pay for a college education at an interest rate of 5 percent. Using a forty-hour week and 160 hours a month, it is less than $2.00 an hour of extra wage and salary that pays for college.
Nothing is a guarantee — but expect college to pay.
Our thanks for these calculations go to the built-in spreadsheet functions on MS Excel. Experiment yourself.
Use the Excel help file under FV, which is the future value function. The spreadsheet entries above are =FV(.05/12,120,0,-27230.82,1) and =FV(.05/12,120,-288.82,0,0).
Fred Siegmund covers America's jobs as part of work doing labor market analysis and projections for a client base of recruiters, trainers and counselors. Visit him at www.americanjobmarket.blogspot.com
-
Why Bill Gates Shouldn't Be Worried About Technology Grads
When Bill Gates testified before Congress on March 13, he had his usual requests: more money for math and science education, more funds for research, and more visas for foreigners to come and work in the United States.
He claims foreigners need to come here to "maintain a competitive edge in technology innovation."
The Bureau of Labor Statistics defines 7 different computer occupations that need at least BA degree skills, and one in computer and information science research that requires a doctorate. The Bureau of Labor Statistics reports these 8 occupations totaled 3.2 million jobs in 2006 and growing year by year.
However, computer programming jobs are down from over 500,000 in the late 1990s to fewer than 400,000 in 2006. The above mentioned research occupation has reported employment of 25,000 for 2006, but here the Bureau of Labor Statistics is forecasting annual growth under 1,000 per year.
When we look at the National Center for Education Statistics, we find 1,679 doctoral degrees in computer engineering and computer information sciences for the year ending June 2006.
The remaining 6 occupations needing at least BA degree skills include two specialty jobs in software engineering, and one each for systems analyst, database administrators, network computer systems administrator, and network systems and data communications analysts.
In our logical minds, recent graduates should compare to recent job growth for the United States to fill its computer jobs with graduates from American Universities. For the year ending June 2006, the National Center for Education Statistics reports 72,400 BA and MA degrees granted in computer and information science and degrees in computer engineering.
The average annual increase from 2004 to 2006 for the 6 computer occupations mentioned above was just over 75,000.
However, some of the nearly 20,000 MA degrees undoubtedly went to those who already have BA degrees in computing or computer engineering, so we doubt the 72,400 degrees represent new people available for computing jobs. Even so, jobs as computer programmers dropped an average of 10,000 per year from 2004 to 2006, which makes us doubt the need for 75,000 new graduates to fill those jobs.
The data for the recent years does not suggest large shortages of available degree candidates in computing from American Universities, despite Mr. Gates' worries. More ominous, though, is a decline in jobs as computer and information systems managers, down from just over 280,000 to just under 24,000 from 2004 to 2006, an average drop of 8,000 jobs a year.
We think Mr. Gates should tell us why!
Fred Siegmund covers America's jobs as part of work doing labor market analysis and projections for a client base of recruiters, trainers and counselors. Visit him at www.americanjobmarket.blogspot.com
-
How Labor Productivity Affects Your Savings
We tend to think of savings in personal terms as income set aside in personal accounts.
But improvements in labor productivity are also saving because new and better ways to produce products and provide services save resources.
Take the customer service representative, a job with potential savings. Customer service representatives serve as a point of contact for customers in nearly every sector of the economy, although they have more jobs in the financial services sector than anywhere else.
There are now almost 2.2 million jobs as customer services representatives, making it the 7th largest profession in America. More importantly, their numbers continue to grow.
Unlike autoworkers, who have to be at the auto plant to do their work, customer service representatives can be anywhere they have a computer and a telephone. Working from home saves the personal costs of transportation.
Even better, the cost of driving for gasoline, car insurance, car repairs and child care saves after tax dollars. The savings go directly to those who hold the jobs.
Telecommuting also saves businesses the expense of providing office space, building maintenance, electricity, heating and air conditioning, which gives them incentives to have some staff working at home at least some of the time.
To top it off, telecommuting saves society from clogged highways, air pollution, road maintenance and traffic enforcement.
Given the complexity of America's many service plans in loans, credit cards, insurance, telecommunications, health care and utilities, customer service work will not be decreasing anytime soon. The growth rate for customer service jobs continues to be above the growth rate for jobs in general with nearly 250 thousand new jobs reported since 2000.
The Bureau of labor Statistics is forecasting annual growth at around 55,000 new jobs a year. Telecommuting for customer service representatives would generate substantial savings given their large numbers in the labor force.
And, unlike so many other jobs, some of the savings goes directly to the workforce.
Fred Siegmund covers America's jobs as part of work doing labor market analysis and projections for a client base of recruiters, trainers and counselors. Visit him at www.americanjobmarket.blogspot.com
Online Savings Blog
search
latest posts
- Savers, Have You Considered Junior College?
- How Tax Cuts and Consumption Affect America's Jobs
- Using Prosper to Diversify in a Down Market
- E-Trade Complete Savings Account Up to 3.30% APY
- Milton Friedman vs. Your Wife: Who Gives Better Financial Advice?
- Should Corporations be Taxed to Avoid Speculation?
- Alan Greenspan on the Turbulence of Savings
latest comments
- DVD vending kiosks: "Change Your Movie Watching Habits" you really have a point. ...
- Christian Finance: Hey, check out my submission for the Pay Yourself First video contest: http://youtube.com/watch?v=wn6YhPPK0v4 Watch and rate it! ...
- Chris: Really nice saving tips, thanks! Already avoiding eating out, and cuted a lot of monthly bills. ...
- Jonathan: I was happy to see this as my first email of the day! That extra $1 a month made my ...
- Tony Roberts: Coulee Bank ( http://www.couleebank.net ) offers an incredible 6.01% APY with their Rewards Checking account. The rate is easy to ...
tags
401k apy carnival of personal finance credit card finances hsbc investing jobs links Money Money Management Online Banking online savings account real estate Retirement saving savings spending Taxes WorkMarketplace
- Business Accounting Software
- Credit Cards
- Credit Card Applications
- Mastercard
- Visa credit card application
social
Copyright
Copyright © 2008 by Online Savings Blog. All rights reserved.Designed by Upstart Blogger.