Quantum Pranx

ECONOMICS AND ESOTERICA FOR A NEW PARADIGM

The McJobs Era – Would you like rage with that?

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by Justice Litle
Editorial Director, Taipan Publishing Group 
Posted originally 25 April 2011

THE U.S. JOB MARKET AND AMERICA’S HIGHER EDUCATION SYSTEM ARE BADLY BROKEN, and current policies are a recipe for rage. What is a good way to lift the spirits of the unemployed? According to Gary J. Earl, the answer is Superman capes. Via the Associated Press:

Florida officials are investigating an unemployment agency that spent public money to give 6,000 superhero capes to the jobless. Workforce Central Florida spent more than $14,000 on the red capes as part of its “Cape-A-Bility Challenge” public relations campaign. The campaign featured a cartoon character, “Dr. Evil Unemployment,” who needs to be vanquished…

Perhaps it is Mr. Earl (the director of Workforce Central Florida) who needs to be vanquished. Some ideas are so plain bad, doing nothing is a preferable choice. And that about sums up what is being done in this era of deteriorating jobs quality: A whole lot of nothing. America’s unemployment problem is far more serious than the numbers suggest.

Consider the landscape for higher education:

  • According to the Center for American Progress, U.S. student loan debt is on track to hit a cool $1 trillion in 2011.
  • At $829 billion, total student loan debt has now outpaced credit card debt.
  • The student loan burden of the typical undergraduate has more than doubled – up 108% in a decade.
  • Student loan default rates make subprime look tame: Between 25% and 43% of all loans default, depending on the type of loan (government, community college, two-year college, etc.).

Remember, too, that there is no bankruptcy option for a student loan gone bad. You cannot walk away from it… and interest rates compound with each passing day. These young defaulters are checking themselves into debtors’ prison. But it’s all for a worthy cause. After all: Higher education is always for the good, is it not?

Maybe not. Two sociologists, Richard Arum of New York University and Josipa Roks of the University of Virginia, decided to track college students through four years of education and into the job market. Via The New York Times, here is what they determined regarding the Class of 2009:

Since graduating, 60 percent have full-time jobs, nearly 36 percent have moved back home to live with either their parents or relatives and nearly one-tenth are carrying more than $60,000 worth of debt. Of those who have jobs, more than two-thirds were making less than $35,000 a year and 45 percent were earning $15,000 or less.

Read that paragraph twice if you will. In exchange for a yoke of debt that can never be broken, 45% of those with jobs –nearly half – are earning $15,000 a year or less. Assuming a standard 2,000-hour work year, that is the equivalent of $7.50 an hour (or less).

“Would you like fries with that?”

Everybody “knows” you have to go college, just like everybody “knows” (or believed at one point) that buying a house is a no-brainer. But the government has screwed up the higher education market, just like they screwed up the housing market, through good intentions gone completely awry.

In a nutshell, politicians considered home ownership to be as American as mom and apple pie, so various means were dreamed up (mortgage tax credits, “government-sponsored entities” or GSEs) to support it. The ultimate result was the housing crisis. With higher education, the government decided everyone should go to college, and tried to bring this result about by mass-subsidizing student loans.

The net result? Too many student loans chasing too few educational opportunities. A market flush with indiscriminately allocated government funds. Skyrocketing rates for the cost of college, at an annual inflation rate that would make Hugo Chavez blush. And, in the end, demoralized college students taking up jobs at McDonald’s… after checking into debtors’ prison.

This is what happens when big, dumb, ham-fisted government intervenes. Like the worthy goal of home ownership, one might think the worthy goal of “higher education for all” makes a difference. It doesn’t. The government is an absolutely horrible allocator of capital, and positive intention isn’t worth a hill of beans. Not to knock McDonald’s too hard, by the way. A burger flipping job is better than no job at all, as evidenced by Mickey D’s recent “hiring day” event. Via USA Today:

Managers at a McDonald’s in Cincinnati said a dozen or so applicants had lined up by 7 a.m., an hour before the restaurant planned to start interviews. By 10 a.m., the store had interviewed 100 people and had 25 waiting. Tiwian Irby, 28, was hoping for a full-time job and wasn’t particular about what it would entail. He said he’d had trouble finding regular work since being laid off from his construction job two years ago.

“A job is a job to me,” said Irby, a father of three. “I’ll take whatever is available.”

So what happened to all the better-paying jobs? Well, many of them are going overseas. That’s where the growth is, as The Wall Street Journal points out:

U.S. multinational corporations, the big brand-name companies that employ a fifth of all American workers, have been hiring abroad while cutting back at home, sharpening the debate over globalization’s effect on the U.S. economy.

The companies cut their work forces in the U.S. by 2.9 million during the 2000s while increasing employment overseas by 2.4 million, new data from the U.S. Commerce Department show. That’s a big switch from the 1990s, when they added jobs everywhere: 4.4 million in the U.S. and 2.7 million abroad.

In all, U.S. multinationals employed 21.1 million people at home in 2009 and 10.3 million elsewhere, including increasing numbers of higher-skilled foreign workers.

This trend was around long before the financial crisis. But the inept and deeply corrupt handling of the financial crisis has made it all much worse. A declining dollar increases the incentive for multinationals to head overseas. Profits booked in stronger emerging market currencies look fatter when converted back into U.S. dollars.

At the same time, the staggering debt load taken on via Washington’s “unlimited bailouts for Wall Street” stance will significantly slow down U.S. economic growth, both now and in the years to come. (Professors Carmen Reinhart and Kenneth Rogoff have conducted an in-depth study showing how debt loads, beyond a certain threshold, tend to slow or stall growth.)

And of course, we have talked at length about food and energy inflation costs… a hidden form of tax that hits small businesses and low-income earners hardest. This is all part of an overarching theme: The many being sacrificed for the few. The policies of the Federal Reserve and the wholly corporatist White House are 100% engineered to favor wealthy entities and paper-shuffling corporations, at the direct expense of the American middle class.

With the higher education debacle, and McJobs the last resort, a new generation of serfs is being created before our very eyes. The “financialization” of hard assets has created a vicious regressive tax – paid at the grocery store and the gas pump – that no hard-up American can opt out of.

Meanwhile, deliberate dollar-debasement allows corporations like General Electric – which as a general rule pay little to no taxes at all – to enjoy profit hikes of 77%. (In last week’s earnings report, GE was pleased to note the strongest gains in its “financial services” arm. Surprise!)

Your humble editor is no “class warrior.” But he is a trend spotter. And current trends lead to a place not just of social discontent, but of full-on rage.

As the illusion of general recovery is propagated, large swathes of the country – at both ends of the spectrum, young and old – are getting poorer by the day. Life savings and future opportunities are being stolen, and squandered, with brutal disregard for logic, morality or even common sense

Politicians in Washington can be divided into three groups: Those who line their own pockets with the loot; those who don’t care that the looting is going on; and those with no idea what’s happening.

I wish there were a cheerier conclusion to be had. But as Marlo Stanfield said in The Wire: “You want it to be one way. But it’s the other way.” We are barreling headlong down a path of economic and social disaster. A McDonald’s hiring day is not the answer.

2 Responses

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  1. The problem for countries where democracy is weak – countries where the politicians are unresponsive to an unexpressive populace – means that when the populace do eventually get their act together, it is simply too late.

    It is everyone’s job in a democracy to see that it functions on a day to day basis, both in the government and on the streets. Not to do so leads to the sort of problems that the US has here.

    Gemma

    05/05/2011 at 1:28 pm

  2. Well said, Gemma. Gerald Celente the trends researcher has been saying this for quite some time. What we are about to see is a decade of rage.

    Giselle

    27/07/2011 at 4:59 am


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