#economy #wages #prices #PerceptionOfEconomy #EconomicData
The data show the economy is good, even robust.
But people don’t always see it that way. They see prices that are higher than a few years ago on almost everything.
So why the difference between data and perception?
First, almost everything costs more than a few years ago for a few reasons. First, some companies are trying to make up for their losses during the pandemic. Some may call that price gouging, but it becomes that only when prices stay up AFTER the losses have been made up.
Secondly, almost everyone is getting paid more than they were a few years ago. If you are not in this category, look around for other opportunities. They are out there, in many places.
To help pay for those higher wages, companies raise the price of what they sell or make.
There are certain categories of prices that have unique issues. Housing (rents and purchases) prices are up. There are lots of entities out there competing with individual families for housing. They buy properties for cash and rent them out at rents that are often unaffordable for many.
That takes many houses off the market for individuals, and raises rents for renters.
Auto insurance and repairs are another unique category. Today’s cars are a lot more complex than those from the past. What may look like a simple repair gets complicated because systems in the cars may have to be recalibrated. That could double or triple the cost of a simple repair.
The same could be said for home repairs. That may be why repair insurance companies have a market, and why auto and homeowner’s insurance in general have risen in price.
No matter who serves in the U.S. government, he or she can only do so much to bring prices down.
The good news here is that if you are making more money in your job, most data show that your higher pay is outpacing inflation.
That begs the question: would you prefer lower pay and lower prices, or the current situation? Before answering that, know that the data again shows price inflation coming down.
We may never see $1 a gallon gasoline again. Those pandemic prices, when no one was going anywhere, may not return unless there is another pandemic. No one wants that.
Food prices are also affected by distributors, who are raising their prices. Also, one has to consider climate issues that affect the growth of what we eat. If food can’t grow as well, or gets destroyed in storms, what is not affected is going to be more expensive.
Therefore, be skeptical of anyone who runs for public office who says he or she will lower prices.
There may be things they can do to mitigate inflation, but the government can’t subsidize everything, and it has limited ability to force producers and sellers to lower prices on what they make or sell. The main thing that will affect pricing is whether people buy things at the price charged. Some necessities have to be bought, but we may want to try to use less of those if we can.
The government can lower your taxes on certain things as one mitigation. But, the government can’t control pricing, nor do we necessarily want it to.
Certainly, your parents or grandparents paid less to live in their younger years than you do now. But, in that time, much progress has been made. Society, as a whole, has seen much improvement.
The betterment of society comes at a price. Most of us do not want to go back to the “good old days.”
Peter
Tag Archives: wages
IT CAN COST YOU TO GO TO WORK
#employers #employees #jobs #work #wages #salaries
You have a full-time job making, to use a number, $7 per hour.
Multiply that by 40 hours, and your weekly pay is $280.
If you live, to use a number, five miles from your job, you will travel 10 miles per day, back and forth to work.
If gasoline, to use a round number, costs $3 a gallon, you will spend $150 a week in gasoline to get back and forth to work. Subtracting that from your $280 salary, that leaves you with $130.
Multiply $130 by four weeks (a month), you’ll have $520 left for food, rent etc.
If your rent is $1,000 a month, you won’t make it.
We’ve not even figured in wear and tear on your car from commuting, any medical needs you may have – much less discretionary spending. If you have children who must be cared for while you work, you can’t afford that.
Politicians of many stripes make a big deal about people sitting home collecting government benefits while not working. Most everyone who is able would like to work – if not merely for the money, but to get out and about, meet people etc. But, most workers do not want to be taken advantage of by an employer.
The good news in today’s labor market is that hourly wages are going up because people are “choosing” – that’s the term many politicians use – not to work, and companies are trying to entice them back, or keep the workers they have.
The point of this discussion is that people, by and large, are not lazy. They want to work. But they also want that job to cover their necessities. When that doesn’t happen, people are less likely to want to work.
Chances are, if your job pays $7 an hour, you do not have the option to work from home. You have to go someplace to work.
Even in professions like teaching, salaries in some places make it difficult to work and otherwise take care of yourself and your family.
Regarding teaching, we won’t even discuss the harassment, political hassles etc., that add stress to an already undercompensated job.
In short, the economics of going to work are not cut and dried. Everything depends on what you make, where you live and whether you can meet your expenses with what you make.
Employers who long for the days when workers were plentiful, and would work for whatever they would pay them, keep dreaming. Those days are gone, particularly as the U.S. cracks down on immigrants.
Work is desirable for most people, and most employers like to have hiring options. But the math has to work not only for the employer, but also the employee.
It’s difficult to find the sweet spot, in which employees are paid appropriately to live, employers are making money and all is well with the world.
Today’s world is not that simple. For those who believe it is (some politicians believe that people will come back to work those menial jobs when their savings run out), you are living in a fantasy world.
Remember, if you are working at a $7 an hour job, you probably don’t have savings to rely on anyway.
Again, the good news is the job market is getting wise to the situation. More employers are offering more enticements to get workers back. Some assurance that paychecks won’t dry up if another pandemic, or some other disaster, hits, would also be helpful.
People want to work. Employers want workers. The numbers have to jibe on both ends to keep everyone happy.
Peter
You have a full-time job making, to use a number, $7 per hour.
Multiply that by 40 hours, and your weekly pay is $280.
If you live, to use a number, five miles from your job, you will travel 10 miles per day, back and forth to work.
If gasoline, to use a round number, costs $3 a gallon, you will spend $150 a week in gasoline to get back and forth to work. Subtracting that from your $280 salary, that leaves you with $130.
Multiply $130 by four weeks (a month), you’ll have $520 left for food, rent etc.
If your rent is $1,000 a month, you won’t make it.
We’ve not even figured in wear and tear on your car from commuting, any medical needs you may have – much less discretionary spending. If you have children who must be cared for while you work, you can’t afford that.
Politicians of many stripes make a big deal about people sitting home collecting government benefits while not working. Most everyone who is able would like to work – if not merely for the money, but to get out and about, meet people etc. But, most workers do not want to be taken advantage of by an employer.
The good news in today’s labor market is that hourly wages are going up because people are “choosing” – that’s the term many politicians use – not to work, and companies are trying to entice them back, or keep the workers they have.
The point of this discussion is that people, by and large, are not lazy. They want to work. But they also want that job to cover their necessities. When that doesn’t happen, people are less likely to want to work.
Chances are, if your job pays $7 an hour, you do not have the option to work from home. You have to go someplace to work.
Even in professions like teaching, salaries in some places make it difficult to work and otherwise take care of yourself and your family.
Regarding teaching, we won’t even discuss the harassment, political hassles etc., that add stress to an already undercompensated job.
In short, the economics of going to work are not cut and dried. Everything depends on what you make, where you live and whether you can meet your expenses with what you make.
Employers who long for the days when workers were plentiful, and would work for whatever they would pay them, keep dreaming. Those days are gone, particularly as the U.S. cracks down on immigrants.
Work is desirable for most people, and most employers like to have hiring options. But the math has to work not only for the employer, but also the employee.
It’s difficult to find the sweet spot, in which employees are paid appropriately to live, employers are making money and all is well with the world.
Today’s world is not that simple. For those who believe it is (some politicians believe that people will come back to work those menial jobs when their savings run out), you are living in a fantasy world.
Remember, if you are working at a $7 an hour job, you probably don’t have savings to rely on anyway.
Again, the good news is the job market is getting wise to the situation. More employers are offering more enticements to get workers back. Some assurance that paychecks won’t dry up if another pandemic, or some other disaster, hits, would also be helpful.
People want to work. Employers want workers. The numbers have to jibe on both ends to keep everyone happy.
Peter
JOBS AND RECESSION
#jobs #recession #economics #wages
The recent jobs report was double what was expected.
Yet, there is talk of recession.
It’s been said that a recession is defined by how each individual feels about his or her situation.
There are a few questions about the data, and economic perceptions here.
First, if there are a record number of jobs, are they all being filled? Many employers are begging for workers at all levels. Therefore, are they just creating empty slots on a payroll?
Secondly, if the economy has declined for two straight quarters – the technical definition of recession – shouldn’t employers be laying people off, not hiring?
In fact, many companies, Oracle, for example, are laying off people. But, is this a function of technological changes? Remember, as technologies evolve, the masters of the previous technology may not be needed when the new technology emerges. Changing technologies may mean changing staffs.
Thirdly, many people perceive we are heading toward recession because things are costing more, like food and gasoline. Inflation is indeed here, but that has many causes that are unrelated to a declining economy. The aforementioned labor shortages may be one, as companies have to pay workers more to hire or keep them. Supply-chain issues caused by the pandemic may be another, along with the war in Ukraine etc.
So, you may not feel that the economy is clicking on all cylinders, even if it may be. Inflation will ease as buyers naturally cut back. Therefore, ask yourself: is your job paying you more since the pandemic restrictions were lifted? Certainly, you are paying more for what you buy, which may mitigate your raise, but you could be paying more without getting a raise.
By the way, if you didn’t get a raise, feel free to look for something else. The jobs, and needs, are out there, and you may have more leverage as an employee than you’ve ever had.
Some describe this economy as complicated. Perhaps, it is. Suffice it to say that after pandemic lockdowns, there is pent-up demand not only to buy things, but to do things. And, many of those who sell or provide services to meet that demand are still staffing up to accomplish that.
Therefore, there will be some shortages and closings because there aren’t enough people to provide the products and services.
You, as a consumer, will feel that, and it won’t necessarily feel good. But, as the saying goes, one cannot turn a battleship around quickly. It will take time to resolve.
If you are feeling down about the economy, think of it this way: If you got a raise, chances are the raise will not go away. If prices now are eating away at the raise, and you feel you are no better off than you were, as inflation comes down, your raise will likely still be there.
If what you do for a living is becoming obsolete, and you can see it, try something else. We all have to adjust as times and technology change.
Sure, it’s no easy task to try something different. And, of course, if you learn something different, and THAT becomes obsolete, you are going to ask yourself “why did I bother?” The message here seems to be to keep learning and trying new things.
This economy is complicated. It is in transition. We all may have to muddle through for a time for things to get better.
But, we can say with some confidence that they usually do.
Peter
HOW WILL YOU RETIRE WITHOUT AN IRA, 401(K)?
#ira #401(k), #retirement #savings
The share of American families that have IRAs or 401(k) retirement plans has spiraled down in the past decade, while the amount of assets in the accounts of people who have them has been climbing during that time.
So reported Tim Grant of the Pittsburgh Post-Gazette, quoting the Washington, D.C., based Employee Benefit Research Institute. It reported that the percentage of all families with an individual retirement plan, such as an IRA or 401(k), decreased from 52.8 percent in 2001 to 48.2 percent in 2013.
“For many families, individual account retirement plan savings constitute most of whatever financial assets they have,” Grant quotes Craig Copeland, senior research associate at EBRI.
The bevy of concerns these numbers produce is staggering. What will happen to fewer than 50 percent of the 76 million Baby Boomers, who for the next 18 years will be turning 65 at a rate of 8,000 a day? Grant quotes Thomas Mackell, former chairman of the Federal Reserve Bank in Richmond, Va., who believes many people are unable to save for long-term financial needs because U.S. wages have gone down, not up.
Yet, Grant quotes Mackell, those who have had the ability to save for retirement have benefited from a rising stock market.
Certainly, during the recent Great Recession, many have tapped into their retirement plans early, just to survive. But, they will pay a potentially huge price for that decision down the road.
When one is in middle age and loses a job, and can’t readily find another – or at least one that pays as well as the one he lost – he can feel very desperate. Not only has he lost current income, he potentially has lost the pension he was counting on. Social Security alone isn’t going to provide anyone with a good retirement.
If you are feeling desperate and are tempted to liquidate your retirement savings, stop! Get some financial counseling. Find a way to get through your rough times without sacrificing your future.
Remember, people are living longer. Retirement periods are lasting longer. Don’t let your money run out before you die.
Fortunately, for as many concerns about retirement savings that the ERBI numbers raise, there are many solutions as well. There are many ways to make a potentially great income that have nothing to do with traditional employment. For one of the best, visit www.bign.com/pbilodeau.
Not every income solution is for everyone, so examine them with care. But don’t shy away from looking if you believe you have to dip into your retirement savings early.
If you are young, start an IRA or 401(k) immediately. If you can, contribute the maximum amount you are allowed to. It wouldn’t hurt to check out other income streams, too, because even if you have a great job now, don’t expect it to be there for your lifetime.
Most of all, as we plunge headlong into the holiday season, first and foremost, be grateful for the good things you have in your life. If you are having financial issues, don’t hesitate to ask for – and look for — help. Don’t do anything rash with your money. Think not only about today, but the many years you potentially have left to live.
It’s not good to solving a financial problem today by messing up your financial future. The “help” you thought you were going to get in your elder years may not be there when you need it. YOU have to act, and the sooner, the better.
Live as well as you can for as long as you can. Remember, everything in life is about your choices. Choose wisely.
Peter