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Saturday, April 2, 2011

When lower unemployment is nothing to Cheer

240,000 new jobs were created in the private sector in March. That means over the last two months the private sector has added almost 500,000 jobs.

Unemployment has improved..

And you should Not be happy about it.

What could I possibly mean?  Rather than write large paragraphs stuffed with statistics and other numerical breakdowns, I will try to explain what is really going on in this nation amongst the business community as concise as possible using an example:

I am Owner and President of XYZ, Inc.- I sell cookies.  XYZ is a big company, like Nabisco and Mrs. Fields- I have tens of thousands of employees nationwide.  The average wage I paid employees back in 2008 specifically to make, package and distribute the cookies was around $15/hr.

~ Yum Yum-- Everyone Loves XYZ brand cookies...

Then the market crashed in Sept. 2008 and credit was extremely hard to come by.  XYZ like all other businesses was in survival mode- slashing budgets and letting employees go left and right.  This allowed my company to stay afloat and more importantly, hoard cash to buffer against future crashes.

Move forward to 2010-  I think the worst is behind us economically so XYZ is ready to hire--  but now we're hiring at $11.75/hr.  And my former employees are thinking- What the F?   And I'm thinking- well, its a recession, take it or leave it.

Some people return.. but most of those positions I can not refill at $11.75/hr.  Too many people getting unemployment benefits which means people are not desperate enough to accept my 25% wage cuts.  But there's one bright side for me-  its called '99ers'- these are people who have exhausted 99weeks of benefits and are not entitled to receive anything else.

So I am patient.. I'm a corporation so I can afford to be.  And now its March/April 2011--  The 99ers and other unemployed have used up all their life savings, their credit cards, the college fund for the kids is spent..  and now these people need work-- desperately...

~Pointing and Tap Tap Tapping on my "We're Hiring- $11.75/hr" sign...

~ Everyone Loves working for XYZ, Inc.-  See?

And now I am filling up those slots while saving 25% per hour in wages and cutting benefits I'd have to pay out...  People are back at work

And the unemployment numbers go down...

The business community like recessions- not severe ones, mind you.  But its part of the cycle of business- you hire people at X wage..  over time wages and benefits rise which cut into profit.  The desire is to let people go in masse then re-hire them for less, but as a business, you can only be successful if other businesses are doing the same thing at the same time- otherwise, you're spiting your nose to save your face, as the old adage goes.

When recession does occur, you can dump the expensive salaries and benefits, make due with a streamlined workforce that is scared to death of being released so they work harder.  Then in time you re-expand your business by offering lower wages to a workforce desperate to put food on the table.

~ This man is smiling because we're putting Americans back to work!

This is part of the cycle of business

 And meanwhile prices for Everything rises...

And the government is happy because it means we must be in Recovery, yes?

And statistics never lie...

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