Creating Jobs

Jobs report for July is very much like the jobs reports we have been getting for the last few years, which is of course good since the Obama recovery continues.

Now that is a good thing and the fact that it continues is fine.

What was criticized as tepid is now praised as great but the rhetoric is sort of meaningless.

Now it wasn't manufacturing jobs, with service type jobs, hospitality, business services and health care being the main movers.

Hourly wages are fairly flat because the jobs being created are on the lower end of the scale and not creating much pressure to increase wages.

Its not worth arguing about what is fueling the economy, the issue is what can derail it.

The way this recovery has gone is that growth, while below historical norms, was generally sustainable.  The economy has and is shifting from a manufacturing base to a service base with high tech and automation leading the way.

People talk about trickle down as if business leaders will create high paying jobs because they have more money.  They create jobs to make more money, not to spend it.  The real trickle down is when the people who have money spend it.

Clearly buying things creates jobs, in creating the thing being bought.  Those jobs can drive the economy but you have to think about what they are spending their money on.

For day to day items and even many luxury item there are caps.  If I make $10,000 almost 100% of it goes on real items, like food, clothing, housing etc.  As I make more money the percentage decreases, even if the item I buy get more expensive.  So what about the money I don't spend on real things?

Well it gets invested or saved.

This is a form of consumption but the jobs it creates are financial services and banking.

However, one broker can invest millions of your dollars creating just one high paid job.  Of course there are some jobs associated with executing the trades but the number of jobs created that way are negligible.

Buying groceries impacts a whole lot more people, farmers, packagers, truckers, retailers.

So giving more money to wealthy people is only going to create a small number of jobs.

Now the money invested could theoretically fuel start up companies or help large companies expand, but of course the markets are already awash in capital so what that money does is create demand for existing market instrument, driving up their prices.

Of course at some point the money will move out of stocks and into something else driving down prices.

All of this is fine, and some people make a lot of money because of it, but the ex blue collar workers in the old manufacturing states aren't getting much out of it.

Just math really. But as they get older and sicker, it creates health care jobs, so there you go.